1. Accelerator Effect - Ans-The relation between the change in new investment and the rate of
change of national income.
2. Actual Supply - Ans-The
... [Show More] amount that producers in fact produce. This may differ from planned
supply for a variety of reasons such as breakdowns in production, staff absences, etc.
3. Aggregate Demand - Ans-Total planned expenditure in the economy. Known by the identity C + I
+ G + (X - M)
4. Aggregate Supply - Ans-The total value of goods and services supplied in the economy.
5. Allocative Efficiency - Ans-This is achieved in an economy when it is not possible to make anyone
better off without making someone worth off, or you cannot produce more of one good without
making less of another.
6. Balance of Payments - Ans-Exports minus imports - a deficit means more is imported than
exported.
7. Balance of Trade - Ans-Visible exports minus visible imports.
8. Balanced Budget - Ans-Where government receipts equal government spending in a financial
year.
9. Boom/bust Policy - Ans-The government using macroeconomic tools to stimulate and then
contract the economy.
10. Broad Money - Ans-Money that is held in banks and building societies but that is not
immediately accessible.
11. Budget Deficit - Ans-Where government spending exceeds government receipts in a financial
year (PSNCR).
12. Budget Surplus - Ans-Where government receipts exceed government spending in a financial
year (PSDR).
13. Buffer Stock - Ans-An intervention system that aims to limit the fluctuations of the price of a
commodity.
14. Capital Spending - Ans-Government spending to improve the productive capacity of the nation,
including infrastructure, schools and hospitals.
15. Central Bank - Ans-The financial institution in a country or group of countries typically
responsible for issuing notes and coins and setting short-term interest rates.
16. Classical View - Ans-Economists who believed that recessions and slumps would cure
themselves.
17. Commodity - Ans-A good that is traded, but usually refers to raw materials or semimanufactured goods that are traded in bulk such as tea, iron ore, oil or wheat. Often they are
unbranded goods (homogeneous) where all firms' products are very similar and
indistinguishable from each other.
18. Competition - Ans-A market situation in which there a re a large number of buyers and sellers.
19. Complementary Goods - Ans-Goods that are consumed together, for example bread and butter,
or DVDs and DVD players.
20. Complete Market Failure - Ans-Where the free market fails to provide a product at all, i.e the
case of public goods.
21. Composite Demand - Ans-A good that is demanded for more than one purpose so that an
increase in demand for one purpose reduces the available supply for the other purpose, typically
leading to higher prices, eg. milk used in butter and cheese.
22. Contraction in Supply - Ans-When the amount offered for sale is reduced because the price level
has fallen.
23. Contractionary Fiscal Policy - Ans-Increasing levels of tax revenue relative to government
spending, appropriate during a boom in economic activity.
24. Cost Push Inflation - Ans-Where increased costs of production result in firms increasing their
prices leading to an increase in the general price level.
25. CPI (Consumer Price Index) - Ans-A measure of the price level similar to the HICP (Harmonised
Index of Consumer Prices) used widely in the Eurozone. Used since 2004 as the target measure
of inflation by the government and the MPC.
26. Credit Crunch - Ans-Where borrowing becomes more expensive or unavailable.
27. Current Account Equilibrium - Ans-Where the current account exercises no effect on the
domestic macroeconomy.
28. Current Spending - Ans-Government spending on the day-to-day running of the public sector,
including raw materials and wages of public sector workers.
29. Cyclical Unemployment - Ans-Demand deficient unemployment that occurs as a result of the
economic cycle.
30. Deflation - Ans-A situation where prices consistently fall.
31. Deindustrialisation - Ans-A fall in the proportion of national output accounted for by the
manufacturing sector of the economy. [Show Less]