Monday, 25 February 2013

Key Definitions

Balance Of Payments: Exports minus Imports- a deficit means that there are more imports than exports. A surplus means that there are more exports than imports.

Balance Of Trade: Visible Exports minus Visible Imports

Visible: Exports or Imports that are tangible, that you can see and touch as they cross international boundaries (goods, not services)

Balanced Budget: where government receipts equal government spending in a financial year

Buffer Stock: an intervention system that aims to limit the fluctuation of prices within an economy.

Capital Spending: government spending to improve the productive capacity of a nation, including infrastructure, schools and hospitals.

Cost Push Inflation: an increase in the cost to produce a good or service results in an increase in the cost of sale and then a knock on effect of an increase in the general price level.

Credit Crunch: where borrowing becomes more expensive or unavailable.

Total Planned Expenditure in the economy (C+I+G+X-M)

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