Aggregate supply Total national output at a given time and price level

Aggregate demand = C+I+G+X-M

Animal spirits Confidence/pessimism held by consumers and businesses.

Budget deficit When annual government spending is higher than tax revenue

Deflation Persistent fall in prices shown by a negative rate of inflation.

Depression Severe recession where real GDP falls at least 10 per cent.

Disposable income Gross income less direct taxes plus welfare benefits

Economic cycle Variations in growth of real national output (GDP) over time.

Economic growth Long-run increase in a nation's productive capacity

Shocks Unpredictable events such as volatile global oil prices or a trade war

Expectations How we expect the future to unfold

Full capacity Level of GDP where all factor inputs are employed.

Under-employment When people are in part-time work but prefer full-time jobs

Wealth Monetary value of assets - including property and shares

Inflation Sustained increase in the general price level

Investment Spending on new capital goods including plant & machinery

Marginal propensity to save Change in savings after a small change in disposable income

Productivity Output per unit of input e.g. output per person employed

Real income Money income adjusted inflation (measured at constant prices)

Slowdown Fall in the rate of growth of real GDP but not a recession.

Stagflation Combination of slow real GDP growth and rising inflation

Stimulus Government policy aimed at encouraging faster growth

TroughLow point of the economic cycle beyond which a recovery starts.

Trend growth Long run growth rate - mainly determined by improvements in labour
productivity