year 10 economics - key terms and definitions

Vocabulary flashcards covering core macroeconomic terms and definitions, including measures of output, business cycles, employment, inflation, and income inequality.

Gross Domestic Product (GDP)

The market value of final goods and services produced within a country in a given period.

Real GDP

GDP adjusted for changes in prices, to measure changes in output.

Economic growth

An increase in the production of goods and services over time.

GDP per capita

GDP divided by the population; average output per person.

Living standards

People's material and non-material quality of life.

Business cycle

Fluctuations in economic activity over time.

Expansion

A period in which real economic output increases.

Contraction

A period in which real economic output falls.

Recession

A sustained economic downturn; two consecutive quarters of falling real GDP is a commonly used technical measure.

Depression

An exceptionally severe, prolonged economic downturn.

Inflation

A sustained increase in the general price level.

Consumer Price Index (CPI)

An index tracking price changes in a representative basket of household goods and services.

Unemployment

Being without work, actively seeking work and available to work.

Labour force

All employed and unemployed people.

Unemployment rate

Unemployed people as a percentage of the labour force.

Frictional unemployment

Short-term unemployment when changing or seeking jobs.

Structural unemployment

Unemployment due to a mismatch between workers' skills and available jobs, often following industry or technological change.

Cyclical unemployment

Unemployment caused by weak spending and output during a downturn.

Seasonal unemployment

Unemployment linked to predictable seasonal changes in demand for workers.

Income

Money earned over a period, such as wages, rent and interest.

Wealth

The value of assets owned minus debts owed at a point in time.

Lorenz curve

A graph showing the cumulative distribution of income or wealth among a population.

Line of perfect equality

A diagonal reference line showing an equal distribution.

Gini coefficient

A measure of inequality from $0$ (perfect equality) to $1$ (perfect inequality).

Economic wellbeing

People's overall economic welfare, which is broader than the value of output.

What is the formula for aggregate demand

AD = C + I + G + (X - M)

What does C stand for in the circular flow

Consumption

What does I stand for in the circular flow

Investment

What does G stand for in the circular flow

Government spending

What does X stand for in the circular flow

Exports

What does M stand for in the circular flow

Imports

Consumer confidence

A measure of consumer optimism or pessimism regarding their finances and spending

Investment

Allocating money or resources into assets or capital to generate future income or growth

Material living standards

Tangible things that affect quality of life

Non-material living standards

Intangible things that affect quality of life

Two things not included in GDP

Second-hand goods, illegal activities

Two things included in GDP

Formula for inflation rate (%)

((New CPI - old CPI) / old CPI) x 100

Formula for labour force (%)

Employed + unemployed

Formula for unemployment rate (%)

(unemployed / labour force) x 100

Change in economic growth (%)

((new value - old value) / old value) x 100