how the macroeconomy works

accelerator

a change in aggregate demand brings a a change in the level of investment

actual output

the level of output produced by an economy in a year

aggregate demand

total planned spending on real output produced by the economy

aggregate supply

total real national output

gross domestic product

the sum of all goods and services produced in a economy over a period of time

injections

investment, government spending and exports

Keynesian economics

they believe that the government should run the economy

long run aggregate supply

aggregate supply when the economy produces at its productive potential

multiplier effect

when a change in the economy causes more and more change

national capital stock

stock of capital ina na economy

national income/national output/national product

the flow of new output by the economy

nominal GDP

GDP measured at current market prices without adjusting to inflation

pro-free market economics

the markets will solve everything by themselves and we should leave the markets alone

real GDP

GDP measured and adjusted for inflation

real wage

the purchasing power of the nominal wage adjusted for inflation

real wage unemployment

unemployment caused by real wages being stuck above the equilibrium wage rate

savings

unspent income from disposable income

short run aggregate supply (SRAS)

aggregate supply when the level of apacity is fixed

short run economic growth

an increase in output by taking up spare capacity

technological progress

when technological change causes an increase in output for the same input

trend growth rate

the level of economic growth which is sustainable without increasing inflationary pressure

withdrawal

things exiting the circular flow of income in terms of tax, savings and imports