Fiscal, Monetary and Supply-side
Those with higher ability to pay are charged a higher rate of tax.
Progressive tax
The monetary value of goods and services produced within a country during a given period, usually a year
GDP / Nominal GDP
People of working age are both willing and able to work but cannot find employment
Unemployment
A sustained rise in the general price level in an economy over time
Inflation
The act of swapping items in exchange for other items through a process of bargaining and negotiation
Bartering / Barter
This policy is used to stimulate the economy, by increasing government spending and lowering taxes.
Expansionary fiscal policy
The GDP of a country divided by its population size (a key measure of standard of living)
GDP per head (per capita)
The ideal situation when everyone in a country who is willing and able to work has a job
Full employment
An inflation that is caused by higher costs of production which makes firms raise their prices in order to maintain their profit margins
Cost-push inflation
Money is a unit of account as it measures the market value of different goods and services
Measure of value
This policy is used to boost economic activity by expanding the money supply and lowering interest rates
Expansionary monetary policy
A fall in GDP for two consecutive quarters
Recession
Type of unemployment that is temporary and arises where people are in-between jobs
Frictional unemployment
A fall in the rate of inflation, means that prices are still rising, only at a slower rate
Disinflation
Money is widely recognized and accepted as a medium of payment for goods and services
Acceptability
Selling state-owned assets to the private sector so they can be run more efficiently
Privatization
A stage in business cycle that occurs when the level of economic activity rises caused by any combination of an increase in consumption, investment, government spending and net exports
Boom
People are out of work due to the introduction of labor-saving technique (capital)
Technological unempmloyment / Structural unemployment
This type of deflation is caused by lower level of aggregate demand in the economy, driving down the general price level of goods and services due to excess capacity in the economy
Malign deflation
A bank that provides financial services to its customers such as accepting savings and approving bank loans
Commercial bank
Reduction or removal of barriers to entry in order to make markets more competitive
Deregulation
This policy is used to increase the economy's productive capacity and promote economic growth in the long-run by increasing competition, productivity and innovation.
Supply-side policy
A pattern of employment indicated by more people study to the tertiary education level; the average of employees entering the workforce rises but it limits the potential size of the economy's workforce
Delayed entry to workforce
A consequence of inflation: an opportunity for customers to search for the best deals by visiting different firms to find the cheapest supplier or searching online
Shoe leather costs
Central bank is given an authority to keep a certain percentage of the commercial banks' cash balances as deposits, and use it during financial emergencies
The lender of last resort