Theme 2

A change in general average price levels

Expenditure undertaken by firms to add to the capital stock

Difference between the value of exports and imports

The income that households have to devote to consumption and spending

C + I + G + (X - M)

Consumption + Investment + Government Spending + (Exports - Imports)

Public Sector Expenditure on defence, roads, healthcare, education etc

Relationship between the level of aggregate demand and the overall price level

The way a rise in prices affects the consumers ability to pay for goods and services

Compares the purchasing power of one country to another to see what a typical basket of goods costs

The total market value of all finished goods and services produced by a country within a year

Strong Pound Imports Cheaper Exports Dearer

1. Real GDP

2. Inflation

3. Unemployment

4. Current Accounts

The value of goods and services produced by a country over a period of time plus net overseas income

GNI = GDP (UK) + Income earned from abroad, which flows black to the UK

The value of all the goods and services produced by citizens of a country, whether they live in the country or not

Average price of consumer goods and services purchased by households.