A-Level Economics Definitions
Definitions
Economic Growth – an increase in either actual or potential GDP/output
GDP – Gross Domestic Product – measures all expenditure in the economy.
Real (constant prices) – this removes the effects of inflation
Nominal (current prices) – this includes the effects of inflation
Unemployment – people who are willing and able to work but who do not have a job.
Frictional unemployment – people who are in-between jobs
Structural unemployment – a permanent decrease in the demand for a certain type of labour, this could be due to changes in consumer tastes, declining industry or new technologies.
Cyclical unemployment/ demand-deficient unemployment/ Keynesian unemployment – this is due to cyclical downturns in the economy.
Seasonal unemployment – jobs which are seasonal in nature e.g. ski instructors, this leads to increases in unemployment during the “off” season.
Classical unemployment – unemployment due to trade unions and minimum wages.
Inflation – a sustained increase in the average price level in the economy.
Demand-pull inflation – inflation due to excess demand in the economy.
Cost-push inflation – inflation due to increases in costs of production
Aggregate demand – this measures all of the demand in the economy and can be calculated as consumption (C) + inflation (I) + government spending (G) + (Exports (X) – Imports (M))
Aggregate supply – measures all supply in the economy – remember there are two different theories for long run aggregate supply
Demand-side policies – these are policies which manipulate aggregate demand.
Fiscal policy – this is concerned with government spending and taxation
Monetary policy – this is concerned with interest rates
Supply-side polices – these are polices which attempt to increase aggregate supply
Withdrawals – this is money which leaves the circular flow – for example taxation, savings and exports
Injections – this is money which enters the circular flow – for example, government spending, investment
Economic Growth – an increase in either actual or potential GDP/output
GDP – Gross Domestic Product – measures all expenditure in the economy.
Real (constant prices) – this removes the effects of inflation
Nominal (current prices) – this includes the effects of inflation
Unemployment – people who are willing and able to work but who do not have a job.
Frictional unemployment – people who are in-between jobs
Structural unemployment – a permanent decrease in the demand for a certain type of labour, this could be due to changes in consumer tastes, declining industry or new technologies.
Cyclical unemployment/ demand-deficient unemployment/ Keynesian unemployment – this is due to cyclical downturns in the economy.
Seasonal unemployment – jobs which are seasonal in nature e.g. ski instructors, this leads to increases in unemployment during the “off” season.
Classical unemployment – unemployment due to trade unions and minimum wages.
Inflation – a sustained increase in the average price level in the economy.
Demand-pull inflation – inflation due to excess demand in the economy.
Cost-push inflation – inflation due to increases in costs of production
Aggregate demand – this measures all of the demand in the economy and can be calculated as consumption (C) + inflation (I) + government spending (G) + (Exports (X) – Imports (M))
Aggregate supply – measures all supply in the economy – remember there are two different theories for long run aggregate supply
Demand-side policies – these are policies which manipulate aggregate demand.
Fiscal policy – this is concerned with government spending and taxation
Monetary policy – this is concerned with interest rates
Supply-side polices – these are polices which attempt to increase aggregate supply
Withdrawals – this is money which leaves the circular flow – for example taxation, savings and exports
Injections – this is money which enters the circular flow – for example, government spending, investment