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Macroeconomic
All the definitions of macroeconomic activity booklet
| Term | Definition |
|---|---|
| Aggregate Supply | Refers to the total spending in the economy by groups such as consumer, businesses, government and overseas markets |
| Aggregate Demand | Refers to the value of goods and services a country can produce |
| Circular flow of income | shows the flow of resources, goods and services and income between parts of the economy |
| Leakages | Represent the reduction in flow of money and/or goods between households and firms |
| Injections | Represent the increase in money flow and/or goods between households and firms |
| Households | Are owners of the productive resources |
| Firms | Are the employers of resources and producers of goods and services |
| Income (Y) | Is defined as the wages, rent, interest, dividends and profit from the resources they supply the firms |
| Resources | Are the land, labour, capital and enterprise owned by the households and provided to firms for income |
| Goods and Services | The products purchased from firms to satisfy household's need and wants |
| Consumption (C) | Is the spending on goods and services by households |
| Savings (S) | Is the portion of house income not spent on goods and services or tax for current consumption |
| Investment (I) | Is defined as the expenditure on goods and services which are not intended for current consumption |
| Taxation | Is a form of revenue raised from the private sector by the government |
| Current Expenditure | Government spending on wages, salaries and transfer payments |
| Capital Expenditure | Is government spending on capital or investment on goods such as schools |
| Open Economy | An economy that includes an external sector that accounts for for exports and imports |
| Imports (M) | Is when the money flows from the Australia to overseas by buying goods and services from international markets |
| Exports (X) | Is when the money flows from overseas into Australia by selling goods and services to international markets |
| Net Exports (X-M) | Are the total value of exports minus the total value of imports |
| Interdependence | |
| Multiplier Effect | An increase in an injection produces and increase in income and consumption is greater than the initial amount spent |
| National Income | Is the total income generated from the sales of goods and services produced in the economy |
| Aggregate Expenditure (AE) | Is define as the total amount that firms, households and government plan to spend on goods and services at each level of income |
| Gross Domestic Product | Is the final of all good and services produced in a country during a year |
| Exchange Rate | Is a currency expressed in terms on another countries currency |
| Terms of Trade (T.O.T) | Is the ratio of export prices to import prices |
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