Economics Year 12 - Glossary

Aggregate Demand

The total demand for goods and services within the economy. Components of aggregate demand are consumption (C); investment (I); government (G); and net exports (X-M).

Aggregate Supply

The total productive capacity of an economy, i.e. The potential output when all factors of production are fully utilised.

Globalisation

The integration between different countries and economies leading to the increased impact of international influences on all aspects of life and economic activity.

Gross World Product

Refers to the sum of total output of goods and services by all economies in the world over a period of time.

Appreciation

Is an increase in the value of an economy's currency in terms of another currency.

Depreciation

Is a decrease in the value of an economy's currency in terms of another currency.

Average Propensity to Consume

Is the proportion of all total income that is spent on consumption.

Average Propensity to Save

Is the proportion of all total income that is not spent, but is saved for future consumption.

Awards

Establish the minimum wage and working conditions for employees depending on their industry, occupation or workplace.

Balance of Payments

The record of the transactions between Australia and the rest of the world during a given period, consisting of the current account and the capital financial account.

Bilateral Free Trade Agreement

An agreement between two economies to lower tariff levels and other trade barriers in order to encourage increased trade flows.

Budget

The tool a government uses for the exercise of fiscal policy. It show's the government's planned expenditure and revenue for the next financial year.

Budget Deficit

A budget outcome where government spending is greater than revenue.

Budget Surplus

A budget outcome where government spending is less than revenue.

Business Cycle

Refers to fluctuations in the level of economic growth due to either domestic or international factors.