A Brief Intro To Economics!

Since a lot of my blog posts may contain a bit of economics jargon, I've compiled a list of key terms briefly explained below, let me know if you have questions or have suggestions to add!

GDP - A monetary value of all goods and services produced in a country in a year.

Economic Growth - We measure economic growth in terms of GDP. A rise in GDP between Q1 and Q2 constitutes economic growth. Some economists think we should look at things differently and use metrics such as wellbeing to determine economic success. The following books examine this well!

Diane Coyle - GDP: a Brief But Affectionate History

Kate Raworth - Doughnut Economics

Inflation - A Inflation is a sustained rise of price levels within an economy. This means that, on average, the prices of goods and services are going up over time. For example a 6% inflation rate essentially means that goods and services are on average 6% more expensive than the same month last year. As the price level rises each pound or dollar buys fewer products. This means the real value or purchasing power of money falls and the value of money is eroded.

When we describe something as 'real' we mean adjusted for inflation! E.g, Nurses wages are set to rise by 3% this year. However in 'real' terms (remember adjusted for inflation), nurses wages will be falling by 3.2%, as inflation is currently at 6.2%.

Interest Rates - The rate at which money is lent, generally refers to the bank rate, which is the rate at which the Bank of England lends to banks.

Government Deficit - Sometimes referred to as just 'the deficit', a budget deficit occurs when government spending is greater than tax revenues. Reducing the deficit can be achieved by tax increases or cuts in government spending or a period of GDP growth which brings about a rise in direct and indirect tax revenues.

Austerity - Adjustment of public spending, best achieved by reducing the state’s budget, debt and deficits, or more simply - deficit reduction policies.

Government Debt - The total stock of debt held by the government owed to creditors.