QCAA Economics key terms

The total market value of all final goods and services produced within a country's borders in a given period, usually a year or quarter, regardless of who owns the producing firms.

GDP adjusted to remove the effect of price changes, so it measures changes in the actual volume of output between periods and allows valid comparisons over time.

GDP measured at the prices prevailing in the period when output was produced, so it can rise purely because prices rose rather than because output grew.

An increase in the real value of goods and services produced by an economy over time, typically measured as the annual percentage change in real GDP.

The recurring pattern of expansion and contraction in economic activity over time, moving through upswing, peak, downswing and trough phases rather than growing steadily.

A period of significant decline in economic activity, commonly defined as at least two consecutive quarters of negative growth in real GDP.

The total planned expenditure on final goods and services in an economy at a given price level, made up of consumption, investment, government spending and net exports.

The total volume of goods and services that firms in an economy are willing and able to produce at each price level over a given period.

Spending by households on final goods and services, such as food, housing, transport and entertainment, which is usually the largest component of aggregate demand.

Spending by firms on new capital goods such as machinery, equipment and buildings, and by households on new dwellings, which adds to the economy's productive capacity.

The income households have available to spend or save after direct taxes have been deducted and government transfer payments have been added.

The proportion of each extra dollar of disposable income that households spend on consumption, calculated as the change in consumption divided by the change in income.

The process by which an initial change in spending produces a larger final change in national income, because recipients of the spending spend part of it again.

A sustained increase in the general level of prices in an economy over time, which reduces the purchasing power of money and is usually measured by a consumer price index.

A statistical measure that tracks the price of a fixed basket of goods and services bought by a typical household, expressed relative to a base year.

The situation of people who are willing and able to work, are actively seeking work, but do not currently have a paid job.

The number of unemployed people expressed as a percentage of the labour force, where the labour force includes both employed and unemployed people.

All people aged above the working-age threshold who are either employed or unemployed and actively looking for work, excluding those not seeking work.

The proportion of the working-age population that is in the labour force, either employed or actively seeking work, expressed as a percentage.

Joblessness caused by a lasting mismatch between the skills or location of workers and the requirements of available jobs, often following technological or industrial change.

Joblessness that rises when the economy slows and aggregate demand falls, and falls again as the economy recovers and firms hire more workers.

The use of government spending and taxation to influence the level of economic activity, the distribution of income and the government's budget position.

Action by a central bank to influence interest rates, the money supply and credit conditions in order to manage inflation and economic activity.

The interest rate a central bank sets for lending between financial institutions overnight, which strongly influences other interest rates across the economy.

The price of borrowing money, expressed as a percentage of the amount borrowed per period, which also represents the return on funds saved or lent.

Features of the budget, such as progressive income tax and welfare payments, that automatically reduce spending during booms and support spending during downturns without new policy decisions.

A situation where a government's expenditure exceeds its revenue in a given period, requiring borrowing to fund the shortfall.

The accumulated amount a government owes to lenders as a result of past borrowing, often measured as a proportion of GDP.

The amount of output produced per unit of input, such as output per hour worked, which is a key long-run driver of rising living standards.

Manufactured resources such as machinery, equipment, buildings and infrastructure that are used to produce other goods and services.

The price of one country's currency expressed in terms of another currency, determined by demand and supply in foreign exchange markets or by government policy.

An increase in the value of a currency against another currency, which makes exports dearer and imports cheaper for domestic residents.

A fall in the value of a currency against another currency, which makes exports cheaper and imports dearer for domestic residents.

A record of all economic transactions between residents of one country and the rest of the world over a period, comprising the current account and the capital and financial account.

The part of the balance of payments recording trade in goods and services, income flows and transfers between a country and the rest of the world.

The difference between the value of a country's exports and the value of its imports of goods and services over a period, which may be a surplus or deficit.

The growing integration of national economies through increased trade, investment, migration and the flow of information and technology across borders.

The reduction or removal of barriers to international trade, such as tariffs, quotas and subsidies, intended to increase the volume of trade between countries.

A tax imposed on imported goods, which raises their domestic price, protects local producers and can reduce the volume of imports.

Government policy that restricts imports to shield domestic industries from foreign competition, using tools such as tariffs, quotas and subsidies.

The ability of a country to produce a good at a lower opportunity cost than another country, which forms the basis for mutually beneficial specialisation and trade.

Investment by a firm based in one country in productive assets or businesses located in another country, usually giving the investor a lasting management interest.

The value of the next best alternative forgone when a choice is made, reflecting the trade-off involved in allocating scarce resources.

The condition in which available resources are limited relative to the unlimited wants of people, forcing individuals and societies to make choices.

The way an economy distributes its scarce resources among competing uses, determined in a market system mainly by prices and the decisions of buyers and sellers.

A situation where a free market fails to allocate resources efficiently, producing outcomes that do not maximise community welfare, often due to externalities or market power.

A cost or benefit of an economic activity that falls on third parties who are not involved in the transaction, and so is not reflected in market prices.

A good that is non-rival and non-excludable, meaning one person's use does not reduce availability to others and people cannot easily be prevented from using it.

The way total income in an economy is shared among individuals and households, often described using measures such as the Gini coefficient.

A number between zero and one that summarises inequality in income or wealth, where zero indicates perfect equality and one indicates complete inequality.

A condition in which people lack sufficient income or resources to meet a minimum acceptable standard of living, measured in absolute or relative terms.