theme 2

• actual growth

  Economic growth measured by changes in real GDP
• Aggregate Demand

  the total level of demand in an economy at any given price level at any given moment in time
• Aggregate Supply

  the total amount of output in an economy at any given price at any given moment in time
• balance of payments

  a record of all financial dealings over a period of time between economic agents of one country and all other countries
• base year

  A year chosen as a good comparison in series of data when building an index; it is automatically given an index figure of 100
• boom

  The peak of the business cycle, when growth is high
• budget


  where the government lays out their spending and taxation plans
• budget deficit

  When the government spends more money than it receives
• budget surplus

  When the government receives more money than it spends
• circular flow of income


  A model of the economy which shows the flow of goods and services, the factors of production and money around the economy
• Claimant count


  a measure of unemployment; the number of people receiving benefits for being unemployed
• consumer price index (CPI)

  official measure used to calculate the rate of inflation using a weighted basket of goods
• consumption

  consumer spending on goods and services
• cost-push inflation

  Inflation caused by a decrease in AS
• current account


  a record of the payments for the payments for the purchase and sale of goods and services as well as income and transfers
• current account deficit

  when more money leaves the country than enters, so the current account is negative
• current account surplus


  when more money enters the country than leaves so the current account is positive
• cyclical unemployment

  Unemployment caused by a lack of AD
• Deflation

  a persistent fall in prices of goods and services
• Deflationary/contractionary policy


  Fiscal or monetary policy which is aimed at reducing AD
• demand-pull inflation

  Inflation caused by an increase in AD
• Depreciation

  A decrease or loss in value
• direct tax

  Taxes paid straight to the government by the individual taxpayer
• Disinflation

  a reduction in the inflation rate
• disposable income

  the money consumers have left to spend, after taxes have been taken away and benefits added
• economic growth

  an increase in the long term productive potential of the economy; an increase in the amount of goods and services which are produced measured by an increase in real GDP
• employed

  someone who does more than 1 hour of paid work a week or is temporarily away from work, on government supported training scheme or does a minimum of 15 hours of unpaid work for their family business (ILO definition)
• expansionary policy

  Fiscal or monetary policy which is aimed at increasing AD
• Exports

  goods and services sold to foreigners that bring income into the country
• export-led growth

  economic growth arising from an increase in exports
• fiscal policy


  government policies on government expenditure and taxation
• frictional unemployment


  unemployment caused when people move between jobs and enter the job market
• Gross Domestic Product (GDP)

  the value of goods and services produced in a country over a given period of time
• GDP per capita

  Total GDP divided by the population
• gross investment

  investment both to replace old machinery that has depreciated and to create/buy new ones
• Gross National Income (GNI)


  the value of goods and services produced by a country over a period of time plus net overseas interest payments and dividends
• Gross National Product (GNP)

  the value of goods and services produced by citizens of a country whether they live in the country or not
• Government Spending

  spending by the government on the provision of goods and services
• Imports

  goods and services brought from foreigners that takes income out of the country
• economically inactive

  Those neither employed nor unemployed; those not participating in the job market