What is Aggregate Demand?
The total demand for goods and services produced in the economy at any given price level.
What are durable goods?
Purchased by households for final consumption & designed to last a long time.
What are non-durable goods?
Consumed quick and in single use.
What are services?
Intangible act that provides value to a consumer for which they are willing to pay.
What is disposable income?
Personal income after tax.
What is GDP?
Total value of goods & services produced by an economy.
What is GNP?
Total output of factors of production owned by an economy irrespective of where they are based.
What is Real National Income?
Statistics which have been adjusted for inflation.
What is Nominal Wealth?
Wealth referring to stock of assets.
What is national income?
Total income earned in the economy.
What is National Output?
Total output of all goods and services in an economy.
National Expenditure?
Total level of spending in an economy.
Aggregate Supply?
Total level of planned production of goods and services produced in the economy over a period of time.
What is Fiscal Policy?
Range of policy measures that affect govt. expenditure & revenues through the decisions made by govt.
What is economic growth?
A measure of an increase in real GDP.
Difference between real and nominal GDP?
Nominal is value of goods and services in 1 yr.
Real is nominal GDP but adjusted for inflation.
What are Purchasing Power Parities?
Used to compare GDP in different countries.
What is inflation?
Sustained rise in general price level.
What is Deflation?
Sustained fall in the general price level.
What are the 7 Macroeconomic Objectives?
1) Reduce the current account deficit on the Balance of Payments.
2) Increase economic growth.
3) Low and stable inflation.
4) Reduce unemployment.
5) Reduce the government budget deficit.
6) Reduce inequality.
7) . Improve sustainability of the environment.
Fomrula for Average Propensity to Consume?
consumption/disposabl income x 100
ormula for
Net investment?
Gross investment - depreciation.
MPC formula?
Change in consumption / Change in income
Multiplier formula?
1/1-MPC
