A-Level Edexcel Economics Unit 2 Key Words

With the Economics Unit 2 exam this Tuesday, and along with advice from some friends, I've decided to compile all the key words in Unit 2.

Try and write these down using colours, print it off, or use flashcards to ensure you remember them.

Absolute poverty - A situation describing a household if its income is insufficient to allow it to purchase the minimum bundle of goods and services needed for survival.

Actual economic growth - The rate of growth of GDP in a period

Aggregate Demand Curve - The relationship between the level of aggregate(total) demand and the overall price level; it shows planned expenditure at any given price level

Automatic stabilisers - Effects by which government expenditure adjusts to offset the effects of recession and boom without the need for active intervention

Average propensity to consume - The proportion of income that households devote to consumption

Balance of payments - A set of accounts showing the transactions conducted between residents of a country and the rest of the world

Bank rate - The interest rate that is set by the Monetary Policy Commitee of the Bank Of England in order to influence inflation

Business cycle - A phenomenon whereby GDP fluctuates around its underlying trend

Capital productivity - A measure of output per unit of capital

Circular flow of income - A model of the economy which shows the movement of goods and services between households and firms and their corresponding payments in money terms

Claimant count of unemployment - The number of people claiming the Jobseeker's Allowance each month

Consumer Price Index - A measure of the general level of prices in the UK, the rate of change which has been used as the government's inflation target since 2005

Consumption - Total planned household spending

Cost-push inflation - Increase in the general level of prices initiated by an increase in the costs faced by firms, arising from the supply side

Crowding out - A process by which an increase in government expenditure crowds out private sector activity by raising the cost of borrowing

Demand-deficient unemployment - Unemployment that arises because of a deficiency of aggregate demand in the economy, so that the equilibrium level of output is below full employment

Demand-pull inflation - Increase in price level by initiated by an increase in aggregate deman

Depreciation - The fall in value of physical capital equipment over time as it is subject to wear and tear

Disposable income - The income that households have to devote to consumption and saving, taking into account payments of direct taxes and transfer payments

Exchange rate - The price of one currency in terms of another

Fiscal policy - Decisions made by the government on its expenditure, taxation and borrowing to influence the economy

Frictional unemployment - Unemployment associated with job search: that is, people who are between jobs (in between losing and starting a job)

GDP per capita - The average level of GDP per person

GNI per capita - The average level of GNI per person

Government budget deficit - The balance between government expenditure and revenue

Gross Domestic Product - A measure of the value of output of goods and services produced in an economy over a given period

Gross National Income - GDP plus net income from abroad

Human capital - The stock of skills and expertise that contribute to a worker's productivity; it can be increased through education and training

Human Development Index - A composite indicator of the country's development, reflecting resources measured by GDP per capita in $PPP terms, education levels measured by mean and expected years of schooling, and longevity measured by life expectancy at birth

ILO unemployment rate - A measure of the percentage of the workforce who are without jobs, want a job, have actively sought work over the past 4 weeks and are able to start work within 2 weeks

Income - The amount of money gained over a period

Index number - A device for comparing the value of a variable in one period or location with a base observation

Inflation - The rate of change of the average price level in an economy

Injections - Where money flows into the circular flow in the form of investment, government spending and exports

Investment - Expenditure undertaken by firms to add to the capital stock

Involuntary unemployment - Situation arising when an individual who would like to accept a job at the going wage rate is unable to find unemployment

Labour productivity - A measure of output per worker

Macroeconomics - The study of interrelationships between economic variable at an aggregate level

Marginal propensity to consume - The proportion of additional income devoted to consumption

Monetary policy - The decisions made by government regarding monetary variables such as the money supply or the interest rate to manage the economy

Multiplier - The ratio of a change in equilibrium real income to the autonomous change that brought it about

Output gap - The difference between actual real GDP and potential real GDP

Potential economic growth - An expansion in the productive capacity of the economy over a period of time

Productivity - A measure of the efficiency of a factor of production

Relative poverty - Situation applying to households whose income falls below 60% of median adjusted household disposable income

Retail Price Index - A measure of the average level of prices in the UK

Seasonal unemployment - Unemployment arising from fluctuations in some activities of some period during the year

Short run aggregate supply - How much output firms would be prepared to supply in the short run at any given overall price level

Stagflation - A situation describing an economy in which both unemployment are high at the same time

Structural unemployment - Unemployment arising because of changes in the pattern of economic activity

Supply-side policies - A range of measures to intended to have a direct impact on aggregate supply - and specifically the potential capacity output of the economy

Sustainable development - Development that meets the needs of the present without compromising the ability of future generations to meet their own needs

Voluntary unemployment - Situation arising when an individual chooses not to accept a job at the going wage rate

Wealth - The accumulation of assests, such as property or shares

Withdrawals - Where money flows out of the circular flow of income in the form of savings, taxation and imports.