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economic models |
these are used to show the essential characteristics of complicated economic conditions in order to analyse them and predict the result of changes of variables |
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recession |
when an economy is growing at less than its long-term trend rate growth |
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balance of payments |
exports minus imports - a deficit means more is imported than exports |
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flow |
measured over a specified period of time |
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stock |
a quantity measured at a particular point in time |
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injections |
money that originates outside the circular flow and so will increase national income/output/expenditure |
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withdrawals |
any money not passed on in the circular flow and has the effect of reducing national income/output/expenditure |
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investment |
spending by firms on buildings, machinery and improving the skills of the labour force |
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savings |
a withdrawal from the circular flow |
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income induced |
will increase as income increases and decrease as income decreases |
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multiplier effect |
where an increase or decrease in spending leads to a larger than proporionate change in the national income |
