Economic Terms

Term

Definition

Definition Source

Gross Domestic Product (GDP)

Often the most commonly used measurement in economics, the gross domestic product measures the market value of all fo the products, goods and/or services that are made over the course of a year within an economy.

Colander, D. C. (2013). Economics (9th ed.). Boston, MA: McGraw-Hill/Irwin.

Real GDP

Real gross domestic product figures are arrived at by taking into account inflation, deflation or any price changes that occur during the year.  Because the real GDP includes the price variances, the figures are more accurate.

http://www.investopedia.com/terms/r/realgdp.asp

Nominal GDP

Nominal GDP is the GDP before inflation, deflation or variances have been taken into account. The Nominal GDP can show the growth or decrease in an economy form year to year without accounting for any variances.

http://financial-dictionary.thefreedictionary.com/Nominal+GDP

Unemployment rate

Anyone within an ecomony that is able to work and is looking for work but has not yet found a job makes up the unemployment rate. The unemployment rate is usually shown as a percentage. The unemployment rates reflects the growth or decline of an economy. When an economy is growing, unemployment rates usually go down. When an economy is declining, unemployment rates usually increase.

Colander, D. C. (2013). Economics (9th ed.). Boston, MA: McGraw-Hill/Irwin.

Inflation rate

In simple terms, inflation shows how much of one product a consumer’s dollar can buy today compared to how much a dollar could buy in the past.  Inflation numbers reflects the rate at which prices rise over a period of time. Inflation is often dependant on the supply and demand of products or services.

http://financial-dictionary.thefreedictionary.com/Inflation+rate

Fiscal Policy

Fiscal policy is used to either trigger or impede economic growth.  This is achieved through calculated changes in spending or taxes by the government.

Colander, D. C. (2013). Economics (9th ed.). Boston, MA: McGraw-Hill/Irwin.

Monetary Policy

Monetary policy uses changes in the supply of money and interest rates to make an impact on the economy.  In the US, the Federal Reserve is responsible for levels of credit and money in the US economy.

Colander, D. C. (2013). Economics (9th ed.). Boston, MA: McGraw-Hill/Irwin.

https://www.federalreserveeducation.org/about-the-fed/structure-and-functions/monetary-policy

Aggregate Demand (AD) Curve

The aggregate demand curve is one of three curves which make up the AS/AD Model. (Aggregate Supply/Aggregate Demand Model)  This aggregate demand curve depicts the demand in the economy.  The aggregate demand curve shows the direct relation between the change in pricing and the spending for goods and services within an economy.

Colander, D. C. (2013). Economics (9th ed.). Boston, MA: McGraw-Hill/Irwin.

Macroeconomics

The study of the economy in its entirety is macroeconomics. This includes topics that affect the economy such as inflation, deflation, growth, unemployment rates, and business cycles.

Colander, D. C. (2013). Economics (9th ed.). Boston, MA: McGraw-Hill/Irwin.

Microeconomics

In contrast to macroeconomics, microeconomics starts with the actions and behaviors of the smallest components of the economy. From individual consumers to small businesses and firms, microeconomics analyzes the relationships between individual buyers and sellers and the factors which influence their decisions and how supply and demand affects a specific market.

http://www.investopedia.com/terms/m/microeconomics.asp

Circular Flow Model

The circular flow model shows the flow of money –  representing goods and services and the representing what pays for these good and services. Collectively, the flow shows how money is spent within an economy. Below is an example of a circle flow model.

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https://www.boundless.com/economics/textbooks/boundless-economics-textbook/the-market-system-2/introducing-the-market-system-45/the-circular-flow-model-168-12266/

Supply Curve

A supply curve is a physical depiction of the law of supply – the relationship between the quantity supply of a product or service and the product or service’s price.

Colander, D. C. (2013). Economics (9th ed.). Boston, MA: McGraw-Hill/Irwin.

Demand Curve

Like the supply curve, the demand curve is a physical depiction of the law of demand. The demand curve represents the relationship between the prices of products and services and the quantity demand of the products and services.

Colander, D. C. (2013). Economics (9th ed.). Boston, MA: McGraw-Hill/Irwin.