Economics - A level - Edexcel A - Theme 2 - Key words with 100% correct answers

Actual economic growth The rate growth of GDP in a period Aggregate demand The total amount of spending on goods and services produced in an economy during a period of time Aggregate demand curve The relationship between the AD and the overall price level; it shoes planned expenditure at any given possible overall price level Automatic stabilisers Effects by which government expenditure adjusts to offset the effects of recession and boom without the need for active intervention Average propensity to consume The proportion of income that households devote to consumption Balance of payments Set of accounts showing transactions conducted between residence of a country and the rest of the world Bank rate The interest rate that is set by the monetary policy committee of the BoE in order to influence inflation Business cycle A phenomenon whereby GDP fluctuates around its underlying trend, following a regular pattern Capital productivity A measure of output per unit of capital Circular flow of income, expenditure and output A model of the economy which shows the movement of goods and services between households and firms and their corresponding payments in money terms Claimant count of unemployment The number of people claiming the Jobseekers allowance each month Consumer price index (CPI) A measure of the general level of prices in the UK, the rate of change of which has been used as the government's inflation target since January 2004 Consumption Total planned household spending Consumption function The relationship between consumption and disposable income; its position depends on the other factors that affect how much households spend on consumption Cost-push inflation Inflation initiated by an increase in the costs faced by firms, arising on the supply side Crowding out A process whereby government expenditure crowds out private sector activity by raising the cost of borrowing Cyclical unemployment Unemployment that arises during the downturn of an economic cycle, such as a recession Deflation A fall in the average level of prices (negative inflation) Demand-deficient unemployment Unemployment that arises because of a deficiency of aggregate demand in the economy, so that the equilibrium level of output is below full employment Demand-pull inflation Inflation initiated by an increase in AD Depreciation The fall in value of physical capital equipment over time as it is subject to wear and tear Discouraged workers People who have been unable to find employment and who are no longer looking for work Disinflation A fall in the rate of inflation Disposable income The income that households have to devote to consumption and saving, taking into account payments of direct taxes and transfer payments Economically inactive Those people of working age who are not looking for work Exchange rate The price of one currency in the terms of another export-led growth A strategy for achieving rapid economic growth through the promotion of export activity Fiscal policy Decisions made by the government on its expenditure, taxation and borrowing Frictional unemployment Unemployment associated with job search, ie people in between jobs Full employment A situation where people who are economically active in the workforce and are willing and able to work (at the going wage rate) are able to find employment GNI per capita The average level of GNI per head of population Government budget deficit (Surplus) The balance between government expenditure and revenue Gross Domestic Product (GDP) A measure of the economic activity carried out in the domestic economy over a period Gross National Income (GNI) GDP plus net income from aboard Human capital The stock of skills and expertise that contribute to a worker's productivity, it can be increased through education and training ILO Unemployment rate A measure of the percentage of the workforce who are without jobs, but available to work, willing to work and looking for work In Employment People who are either working for firms or other organisations, or self-employed Income A flow concept - the amount of income that is earned during a period Index number A device for comparing the value of a variable in one period or location with a base variable (ie, the consumer price index measured the average level of prices relative to a base period) Inflation The rate of increase in the average price level in an economy