AS 91224 Economic Growth Practice Flashcards

This set of vocabulary flashcards covers concepts from AS 91224 regarding the measurement and causes of economic growth, including models like PPC, AD/AS, and the Circular Flow.

Economic Growth

An increase in the output ($GDP$) that an economy produces over a period, the minimum being two consecutive quarters.

Gross Domestic Product (GDP)

The total market value of all final goods and services produced within a country during a specific time period, typically a year or a quarter.

Nominal GDP

The current dollar value of all goods and services produced in the economy in one year, which may increase due to rising production or rising prices.

Real GDP

The constant dollar value of all goods and services produced in the economy in one year, adjusted for changes in the price level by removing the impact of inflation.

Production Possibility Curve (PPC)

Also known as the Production Possibility Frontier (PPF), it is a graphical representation showing the maximum output of two goods or services an economy can produce given fixed resources and technology.

Opportunity Cost

The amount of one good that must be given up when resources are reallocated to produce more of another good.

Productive Capacity

The country's future potential or maximum possible output, illustrated by the outward shift of the Production Possibility Frontier.

Net Social Welfare (NSW)

A measure of growth that includes economic factors and non-economic factors such as environmental impact, pollution, and access to public facilities.

Human Development Index (HDI)

A measure of development that combines indicators of health (life expectancy at birth), education (expected years of schooling), and income levels.

Real GDP per capita

Real $GDP$ divided by the total population, representing the average income per person in the country.

Aggregate Demand (AD)

The total quantity of goods and services demanded in an economy at a given price level, calculated as $AD = C + I + G + (X - M)$.

Aggregate Supply (AS)

The total quantity of goods and services that producers in an economy are willing and able to supply at various price levels in a given period.

Investment

The process of spending money on capital goods or assets, such as machinery and infrastructure, used to produce goods and services in the future.

Real Flow

A flow of goods and services or economic resources, such as raw materials, that circulate within the economy.

Money Flow

The flow of payments within the economy from one sector to the next.

Financial Sector

The sector dealing with the borrowing and saving of funds by households and producers to enable business expansion through investment.

Injections

Additions to the circular flow of income, including investment, government spending, and export receipts.

Leakages (Withdrawals)

Money that leaves the circular flow of income, specifically savings, taxes, and import payments.

Disposable Income

Household income after the payment of taxes and the receipt of transfer payments.

Producer Sector

A sector made up of businesses that make goods and provide services for households and the government to make a profit.