The total demand for goods and services within an economy at a certain time. This can be influenced by the government either through monetary policy(controlling the amount of money in the economy) and/or fiscal policy(increasing/decreasing the amount of government expenditure).
The theoretical value of which a product or service can be traded--as opposed to the actual value for which it is traded, which is its price. Exchange value can be described as the quantitative value of a commodity, as opposed to use value, which is its qualitative value.
The way in which government uses public spending and taxation to influence a country’s economic performance. Thus, a government may choose to tax more and invest in social security and public works, such as roads and hospitals, to create employment, and to increase salaries. It may also choose to reduce public spending in order to reduce taxation, so that people have more money to spend in the first place. It’s swings and roundabouts.
A school of thought created by the British economist John Maynard Keynes in the 1930s. Unlike most economists of the day, who believed that the market mechanism produces the most efficient outcome. Keynes believed that the market needed to be tempered by government intervention. He advocated the use of countercyclical fiscal policies, whereby the government pumps money into the economy when times are hard, but reduces spending when times are good.
An economic approach that advocates minimum government intervention. Proponents of this approach believe that the market will achieve the most efficient outcome and that government regulations distort the reality of the market, leading to inefficiency.
The way in which government uses the supply of money--or more specifically, interest rates--to influence a country’s economic performance. Generally, low interest rates tend to increase the amount of money in circulation, which can help stimulate an economy during a recession, high interest rates tend to reduce the supply of money and can be used to reduce inflation.
the assumption used in many economic models, that people or companies make decisions by rationally evaluating the likelihood of possible future outcomes and the benefits or costs of those outcomes. This theory is useful, but can be misleading since people are not always rational or forward-looking when they make decisions.
the use of government policy to reinvigorate a flagging economy. This typically takes the form of spending on public works and/or tax breaks. Critics argue that this distorts the market and disadvantages private enterprise.
This is the fundamental model of a market economy. It stipulates that the greater the demand for a product, the higher its price will be, until supply outstrips demand. At this point, the price will fall until an equilibrium is achieved between quantity and price.
The utility of a commodity within society. This is measured by the need or desire for that object. A classic example is a demand, which, as an object, is of little real use, and yet its use value in most modern societies is nevertheless very high. Use value can be described as the qualitative value of a commodity, as opposed to exchange value, which is its quantitative value.
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