Keep scrolling down for answers and more stats ...
Definition
Answer
The planned spending by households on goods and services.
Consumption
Illustrates the relationship between consumption and real income.
Consumption Function
A model that shows how money flows within a simplified economy, with households and firms as key components.
The Circular Flow of Income
The proportion of any additional income that is spent on consumption.
The Marginal Propensity to Consume (MPC)
A process through which any change in a component of aggregate demand results in a magnified change in real GDP or national income.
The Multiplier
The proportion of any additional income that is not passed on within the circular flow.
The Marginal Propensity to Withdraw (MPW)
The total quantity of output that producers in an economy are willing to supply at specific price levels over a period of time.
Aggregate Supply
Measures the efficiency with which inputs are transformed into outputs.
Productivity
The minimum amount of capital (expressed in percentage terms) that banks must hold in comparison to the amount they have lent. The current figure in the UK is 3%.
The Leverage Ratio
Organisations that operate with the intention of protecting and enhancing the working conditions and financial positions of their members.
Trade Unions
Exist when firms make less use of permanent full-time employees and rely more on part-time and temporary employees to supply goods and services.
Flexible Workforces
Refers to economic theories based on the work of the British economist John Maynard Keynes (1883-1946).