Definitions

• Economic growth

  Growth in GDP over time
• Gross domestic product

  The total value of goods and services produced in a country in a year
• GDP per capita

  GDP divided by population
• Boom

  A period of high economic growth
• Recession

  Two or more consecutive quarters of negative economic growth
• Labour force

  The number of people who work in a country
• Employment

  The use of labour in an economy to produce goods and services
• Unemployment

  Measures the number of people who are able to work, but do not have a job during a period of time.
• Claimant count

  A measure of unemployment that includes those receiving unemployment-related benefits
• Level of unemployment

  The number of people in the working population who are unemployed.
• Rate of unemployment

  The percentage of the country's workforce that is unemployed
• Frictional unemployment

  Unemployment caused by time lags when workers move between jobs
• Seasonal unemployment

  Unemployment caused by a fall in demand during a particular season
• Structural unemployment

  Unemployment caused by a permanent decline in industry
• Cyclical unemployment

  Unemployment caused by a lack of demand in the economy
• Distribution of income

  How incomes are shared out between individuals and households
• Income


  The reward for the service provided a factor of production, including labour
• Wealth


  The market value of all the assets owned by a particular person, group or country at a specific point in time.
• Gross income


  Income before any taxes are taken or benefits given
• Net income


  Income available after the effect of direct taxes and benefits
• Distribution of wealth


  How wealth is shared out between individuals and households
• Cost of living


  The price level of goods and services bought by the average family
• Inflation


  A sustained rise in the general price level over time
• Price stability


  When the general price level stays constant over a period of time, or grows at an acceptably low rate
• Rate of inflation


  The percentage rise in the general price level over time
• Consumer Price Index


  The key measure of inflation- the change in the cost of buying a fixed basket of goods and services
• Government spending


  The total amount of money that the government spends in a given period of time
• Government revenue


  The source of finance for government spending, from direct and indirect taxes
• Direct tax


  A tax that must be paid by the person on whom it is levied
• Indirect tax


  A tax levied on one party but passed on to another for payment
• Balanced government budget


  When tax revenue is equal to government spending
• Budget defecit


  When government spending is greater than tax revenue
• Budget surplus


  When government spending is less than tax revenue
• Fiscal policy


  Government policy that attempts to manage the economy by controlling taxing and spending.
• Income and wealth redistribution

  Government action, using mainly taxation and benefits, to reduce inequalities of income and wealth
• Progressive tax


  A tax which takes a higher percentage of tax for a higher income
• Proportional tax


  A tax which takes the same rate of tax for all incomes
• Regressive tax


  A tax which takes a lower percentage of tax for higher income
• Monetary policy


  Government policy that attempts to manage the economy by controlling the money supply and thus interest rates.
• Supply-side policy


  Policy that increases the productive potential, which is the ability of the economy to supply more goods and services