Course glossary

During lectures you will learn new words. Using this link you are welcome to add them to our "course glossary", so that other students will be able to see them and learn. Let's make our own useful glossary and help each other to learn new words! By the way, there are already some worlds which should be familiar for you till the end of the course, try to cover them when you mill have free time.

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C

Capital account

This account shows the flow of investment on real or financial assets between a nation and foreigners.

Circular flow of economic activity

A model that shows how households and firms circulate resources, goods and incomes though the economy. This basic model is expanded to include the g and foreign sector.

Closed economy

A model that assumes there is no foreign sector (m and x).

Comparative advantage

A producer has comparative advantage if he can produce a good at lower opportunity cost than all other producers.

Consumer price index (CPI).

The price index that measures the average price level of the items in the base year market basket. This is the main measure of consumer inflation.

Consumption and savings schedules

Tables that show the direct relationships between disposable income and consumption and saving.

Consumption function

A linear relationship showing how increases in disposable income cause increases in consumption.

Contraction

The period where real gdp is falling.

Contractionary fiscal policy

Decreases in government spending or higher net taxes meant to shift the aggregate expenditure function downward and shift ad to the left.

Contractionary monetary policy

Designed to avoid inflation by decreasing ad, which lowers the pl and gdpr.