Term
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Definition
| The interaction between buyers and sellers in order to exchange goods or services |
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Term
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Definition
| Willingness and ability to consume a good or service at a given price in a given time period. |
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Term
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Definition
| Willingness and ability to produce a good or service at a given price in a given time period. |
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Term
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Definition
| As the price of a good or service increases, the quantity demanded decreases, ceteris paribus. |
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Term
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Definition
| As the price of a good or service increases, the quantity produced increases, ceteris paribus. |
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Term
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Definition
| The aggregate difference between the ability and the willingness to pay, of consumers. |
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Term
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Definition
| The aggregate difference between the ability and the willingness to produce, of producers. |
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Term
| Price Elasticity of Demand |
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Definition
| The responsiveness of the quantity demanded of a good when there is a change in the price of the good. |
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Term
| Income Elasticity of Demand |
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Definition
| The responsiveness of the quantity demanded of a good when there is a change in income. |
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Term
| Cross Elasticity of Demand |
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Definition
| The responsiveness of the quantity demanded of a good when there is a change in the price of another good. |
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Term
| Price Elasticity of Supply |
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Definition
| The responsiveness of the quantity supplied of a good when there is a change in the price of the good. |
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Term
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Definition
| Occurs when market is not allocatively efficient. MSC =/= MSB at equilibrium. |
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Term
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Definition
| Effect upon a third party not accounted for by the market. |
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Term
| Positive Externality of Consumption |
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Definition
| Positive effect on a third party when good is consumed. MSC =/= MSB at equilibrium. |
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Term
| Positive Externality of Production |
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Definition
| Positive effect on a third party when good is produced. MSC =/= MSB at equilibrium. |
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Term
| Negative Externality of Consumption |
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Definition
| Negative effect on a third party when good is consumed. MSC =/= MSB at equilibrium. |
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Term
| Negative Externality of Production |
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Definition
| Negative effect on a third party when good is produced. MSC =/= MSB at equilibrium. |
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Term
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Definition
| A good that is perceived by the government to be beneficial to society. |
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Term
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Definition
| A good that is perceived by the government to be harmful to society. |
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Term
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Definition
| Payment by government to firms to reduce costs of production. Shifts supply curve right. |
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Term
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Definition
| A tax on expenditure. It is added to the selling price of a good or service. |
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Term
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Definition
| Imposed by the government and is set below the equilibrium price. |
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Term
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Definition
| A lower price limit to which the price charged to the consumer may not fall, imposed by the government and is set above the equilibrium price. |
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Term
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Definition
| These refer to markets in which economic activity is not officially measured or recorded. |
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Term
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Definition
| Property rights give people a legal right to own property/assets. |
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Term
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Definition
| Value of all goods and services produced in an economy in a given time period. |
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Term
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Definition
| A measure of output in the economy in one year per head of the population. |
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Term
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Definition
| The price of something, where the effect of inflation has been eliminated from the nominal value. |
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Term
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Definition
| Growth of real output in an economy over time |
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Term
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Definition
| Total demand of all goods and services produced in an economy over a given period of time. AD comprises of (C+I+G+(XM)) |
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Term
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Definition
| Spending by households on domestic consumer goods and services. (Injection into the economy) |
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Term
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Definition
| The addition of capital stock to the economy or expenditure by firms on capital. (Injection into the economy) |
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Term
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Definition
| the total supply of all goods and services produced in an economy, over a period of time |
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Term
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Definition
| An inflationary gap is present if equilibrium real output exceeds the level corresponding to the full employment level of output. |
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Term
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Definition
| A deflationary gap is present if equilibrium real output falls short of the level corresponding to the full employment level of output as a result of insufficient aggregate demand. |
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Term
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Definition
| Policies aimed at influencing the level of aggregate demand in order to affect growth, employment and inflation. They include monetary and fiscal policy. |
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Term
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Definition
| A demandside policy using changes in government spending and/or direct taxation to shift the AD curve. |
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Term
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Definition
| If government spending exceeds government revenue. |
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Term
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Definition
| A demandside policy using changes in the money supply or interest rates to shift the aggregate demand curve. |
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Term
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Definition
| The price of borrowed or loaned money/The price of capital |
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Term
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Definition
| The idea that a rise in injections will lead to a greater than expected increase of national income. |
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Term
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Definition
| Policies designed to shift the AS curve to the right. |
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Term
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Definition
| People in the labour force, who are without work, willing and able to work and are actively seeking work at the current wage rate. |
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Term
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Definition
| Labour market is in equilibrium |
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Term
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Definition
| When individuals are employed but are working less than they would have wanted to or in positions below their skills. |
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Term
| Labour force/Human Resources |
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Definition
| Total human capital of a country |
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Term
| Labour force participation rate |
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Definition
| Labour Force/(Working Age Population) * 100 |
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Term
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Definition
| The number of unemployed expressed as a percentage of the workforce. |
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Term
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Definition
| Part of the labour force that chooses not to work.) |
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Term
| (Involuntary unemployment |
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Definition
| Part of the labour force that wishes to work but is unable to work.) |
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Term
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Definition
| Longterm unemployment that is caused as a result of a fall in the demand for a particular type of labour. |
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Term
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Definition
| A persistent increase in the average price level in an economy. |
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Term
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Definition
| A persistent decrease in the average price level of an economy. |
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Term
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Definition
| Decrease in the rate of inflation |
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Term
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Definition
| Increase in the rate of inflation and increase in the rate of unemployment |
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Term
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Definition
| Over 10% rate of inflation |
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Term
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Definition
| Over 50% rate of inflation |
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Term
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Definition
| At least two consecutive quarters of negative economic growth. |
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Term
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Definition
| A payment made by the government to individuals (for the purpose of redistributing wealth). Not included in calculating Aggregate Demand. |
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Term
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Definition
| The idea that expansionary fiscal policy is not as effective as Keynesian theory claimed because deficit spending required financing which would lead to increased interest rates, which results in contractionary monetary policy. |
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Term
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Definition
| Present consumption foregone/Income that is not spent. |
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Term
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Definition
| Describes the periodic fluctuations in GDP around the productive potential (long term trend of the economy). Economies tend to move through stages including boom and trough. (Can illustrate through diagram) |
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Term
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Definition
| Taxation where the proportion of income paid in tax increases as the income of the taxpayer rises. |
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Term
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Definition
| Everyone who is of legal working age. |
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