Studied by 0 peopleaggregate
the sum or total
aggregate demand
the total of all demands or expenditures in the economy at any given price
domestic economy
the economy of a single country
aggregate demand curve
shows the relationship between the price level and equilibrium national income; as the price level rises the equilibrium level of national income falls
consumption
total expenditure by households on goods and services over a period of time
consumption function
the relationship between the consumption of households and the factors which determine it
disposable income
household income over a period of time including state benefits, less direct taxes
marginal propensity to consume (MPC)
the proportion of a change in income which is spent; calculation = change in consumption / change in income
average propensity to consume (APC)
the proportion of total income spent; calculation = total consumption / total income
saving (personal)
the portion of households’ disposable income which is not spent over a period of time
savings function
the relationship between the saving of households and the factors which determine it
marginal propensity to save (MPS)
the proportion of a change in income which is saved; calculation = change in savings / change in income
average propensity to save (APS)
the proportion of a total income which is saved; calculation = total savings / total income
wealth effect
the change in consumption following a change in wealth
investment
the addition to the capital stock of the economy
gross investment
the addition to capital stock, both to replace the existing capital stock which has been used up (depreciation) and the creation of additional capital
net investment
gross investment minus depreciation
depreciation (of the capital stock) or capital consumption
the value of the capital stock which has been used up or worn out
accelerator theory
the theory that the level of investment is related to past changes in income
accelerator coefficient
the capital-output ratio
capital-output ratio
the ratio between the amount of capital needed to produce a given quantity of goods and the level of output
animal spirits
business confidence: the mood of managers and owners of firms about the future of their industry and wider economy
retained profit
profit kept back by a firm for its own use which is not distributed to shareholders or used to pay taxation
net exports or the net trade balance
exports minus imports
strong pound
when the pound is worth a lot in comparison to other countries
protectionism
an attempt to prevent domestic producers suffering from competition abroad
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