NCEA Level 2 Economics - Growth, Trade & Inflation Vocabulary

Vocabulary flashcards reviewing core economic concepts, formulas, and definitions from NCEA Level 2 Economics on Growth, Trade, and Inflation.

Economic Growth

An increase in the real output of goods and services produced in an economy over time.

Gross Domestic Product (GDP)

The total value of final goods and services produced within a country during a period of time.

Real GDP

GDP adjusted for inflation, showing changes in actual production.

GDP per capita

Real GDP divided by the population, showing average output per person.

Productivity

The amount of output produced per unit of input, such as output per worker.

Productive Capacity

The maximum amount an economy can produce using its available resources.

Sustainable Economic Growth

Economic growth that can continue over time without causing serious environmental or economic problems.

Inflation

A sustained increase in the general price level of goods and services.

Consumer Price Index (CPI)

An index that measures changes in the prices of a basket of goods and services commonly purchased by households.

Inflation Rate

The percentage change in the general price level over a period of time.

Demand-pull Inflation

Inflation that occurs when aggregate demand increases faster than aggregate supply.

Cost-push Inflation

Inflation that occurs when production costs increase, causing firms to increase prices.

Purchasing Power

The amount of goods and services that can be bought with a given amount of money.

International Trade

The exchange of goods and services between countries.

Exports

Goods and services produced domestically and sold to other countries.

Imports

Goods and services produced overseas and purchased by domestic consumers or businesses.

Balance of Trade

The difference between the value of exports and imports of goods.

Trade Surplus

When the value of exports is greater than the value of imports.

Trade Deficit

When the value of imports is greater than the value of exports.

Specialisation

When a country focuses on producing goods and services it can produce relatively efficiently.

Comparative Advantage

The ability of a country to produce a good or service at a lower opportunity cost than another country.

Aggregate Demand (AD)

The total spending on domestically produced goods and services in an economy.

Aggregate Demand Formula

$AD = C + I + G + (X - M)$, where $C$ is Consumption, $I$ is Investment, $G$ is Government spending, $X$ is Exports, and $M$ is Imports.

Aggregate Supply (AS)

The total amount of goods and services that firms are willing and able to produce at different price levels.