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48 Cards in this Set
- Front
- Back
GDP
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market value of all final goods and services produced within a country in a given period
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Real GDP/ GDP at constant prices
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market value of all final goods and services produced within a country adjusted for inflation
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Real GDP per capita
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market value of all final goods and services produced within a country adjusted for inflation per person
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Annual real GDP growth
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an increase in the market value of all final goods and services produced within a country adjusted for inflation measured from one year to another
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Economic growth
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an increase in real GDP/ potential GDP
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Sustainable growth
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the maximum increase in potential capacity within an economy that will not lead to a fall in the potential capacity for future generations
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Sustainable development |
development which meets the needs of the present generation without compromising the needs of future generations
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Output/ GDP gap
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difference between potential GDP and actual GDP
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Potential GDP
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maximum output that can be produced within a country if all economic resources are fully employed (AS)
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Actual GDP
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the amount spent on consumption, investment, government expenditure and net exports (AD)
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Negative output gap
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happens when actual GDP is below potential GDP
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Positive output gap
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happens when actual GDP is above potential GDP
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Recession
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is when a country experiences fall in real GDP for two successive quarters
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Depression |
a sustained, long-term downturn in economic activities/ recession that lasts longer and hence has a larger decline in economic activities
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GNP
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market value of all final goods and services produced by a country’s citizens regardless of where they are
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Injections
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inflow of money into the circular flow of income that does not come from households such as investment, government spending and exports
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Withdrawals/ leakages
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outflow of money from the circular flow of income since households may save, pay tax and buy imports
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Purchasing power parities
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a theory that argues that in the long run, identical goods and services in different countries should cost the same due to the adjustment of exchange rate
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Transfer payments
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income for which there is no corresponding output such as unemployment benefits or pension payments
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Cyclical/ demand-deficient/ Keynesian unemployment
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unemployment that is due to negative economic growth/ recession/ lack of aggregate demand for goods and services
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Frictional unemployment
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transitional unemployment when people are moving in between jobs/ short term joblessness whilst involved in job search
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Seasonal unemployment
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an unemployment that is caused by seasonal variation of the jobs offered
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Structural unemployment
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unemployment due to mismatch of skills of the unemployed and the requirement of new jobs
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Unemployment rate
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percentage of the total labour force that is unemployed BUT actively seeking employment and willing to work
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RPI
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a measurement of inflation that includes mortgage interest payments and other housing related costs
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Inflation
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sustained increase in price level/ fall in the purchasing power of £1
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Disinflation
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a slowdown in the rate of increase in general price level/ prices of goods and services
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Deflation
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a decrease in the general price level/ increase in the purchasing power of £1
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Hyperinflation
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a large/ rapid increase in the price level
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Balance of payments
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an account that summarises the financial transactions between one country and the rests of the world
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Current account
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one of the two components under balance of payments that is largely made up of net trade in goods and services
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Current account deficit
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when the total imports of goods and services are greater than the country’s total exports of goods and services
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Balance of trade
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difference between a country’s imports and its exports
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Wealth effect
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an increase in spending when people ‘feel richer’ associated with an increase in value of assets like stocks and properties
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Disposable income
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income after tax
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Aggregate demand
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total amount of goods and services demanded at any given price level
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Aggregate supply
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total supply of goods and services produced within an economy at any given price level
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Multiplier effect
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an initial increase in spending (consumption, investment, government spending and net exports) which will eventually lead to a larger secondary increase in AD
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Full capacity
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when all economic resources like land, labour and capital are fully utilised
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Spare capacity/ excess capacity
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when economic resources like land, labour and capital are not fully utilised
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Demand side/ management policies
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policies that are meant to influence the AD such as fiscal and monetary policy
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Exchange rate
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the value of a currency express in terms of another
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Indirect tax |
a tax levied on goods and services rather than on income or profits. |
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Direct tax |
a tax, such as income tax, which is levied on the income or profits of the person who pays it, rather than on goods or services. |
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GNI |
the sum of value added by all producers who are residents in a nation, plus any product taxes (minus subsidies) not included in output, plus income received the sum of value added by all producers who are residents in a nation, plus any product taxes (minus subsidies) not included in output, plus income received from abroad such as employee compensation and property income. |
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Supply side policy |
Any action by government that enables businesses to lower costs, thus boosting efficiency and competitiveness of firms. |
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Market-based supply-side policy |
Policies implemented by government aimed at encouraging production and consumption by the free market and thus stimulating increased economic activity without increased government intervention. |
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Interventionalist supply-side policy |
Policies that involve a greater role of government but lead to greater productivity or lower costs, encouraging a higher level of production, economic growth and employment. |