Economics - Key terms

Injection is a concept that illustrates firms investing to increase production thus causing real GDP to increase

Injection in an economy is when money goes in to the main flow between households and firms, increasing GDP

injection accounts for households that borrow money for personal investment.

Injection accounts for money that goes out from the main flow, decreasing GDP

Injection in an econmy is money that has been allocated in to savings

Net social welfare is a concept that focuses on economic factors, output of goods and services, and non economic factors measured by the HDI (Human Development Index), which shows the standard of which individuals are living in.

Net social welfare shows the value of goods and services, therefore indicating any economic growth.

Net social welfare is a concept relative to Real GDP to show economic growth (increase in production - increase in the material living standards)

Net social welfare is an idea that shows the maximum that can be produced with current resources and technology.

Real GDP is the total market value of all goods and services produced in an economy, with prices from a base year, which will indicate economic growth in real terms

Real GDP illustrates the economic concept of the total output of goods and services in relation to scarcity, choice, opportunity cost and growth, in assumption of two goods, fixed resources and a given level of technology. (shows the potential output)

Real GDP is the value of output at current market prices

Real GDP focuses on economic and non economic factors through the HDI index to measure socio-economic progress which has three components - longevity, knowledge, and income.

A withdrawal in an econmy is an import made to overseas

A withdrawal in an economy is an export

A withdrawal accounts for government spending that reduces GDP and overall size of the economy

A withdrawal in an econmy is money taken out of the main flow

Withdrawal accounts for taxes

More labour available, therefore more production

Higher demand for goods and services

Creates additional skills available in the economy

Nominal GDP is a form of measurement that refers to the value of the output, that indicates economic growth and standard of living, at a given base year price accounting any changes in inflation or deflation. So as price increases and assuming the output is the same, there will be no increase in Nominal GDP and vice versa.

Nominal GDP is a form of measurement that refers to the value of output at current market prices (current dollars) giving an estimate of economic growth, so as price increases nominal GDP increases and vice versa.

Nominal GDP measures the economic potential, rather than looking at the actual output of the economy for an example decrease in employment it will show economic growth.

Nominal GDP focuses on economic factors (output of goods and services) as well as non-economic factors such as quality of life factors.

Real income is the value of output at current market prices

Real income measures economic potential, rather than looking at the actual output of an economy

Real income is the value of output relative to some base year.

Real income refers to actual economic output, i.e the total number of goods and services produced by an economy

The value of goods and services bought

Real GDP

Nominal GDP

The potential GDP of goods and services

The amount of goods and services bought

Real income