Download Glossary of Terms 1 Inflation A general and sustained increase in

Glossary of Terms
Inflation
A general and sustained increase in prices. As prices rise,
consumers find that their money buys smaller quantities of
the same items.
Consumer Price Index (CPI)
The consumer price index measures the change in the
prices of goods and services purchased by the average
working class family. It reflects the cost of purchasing
the same set of items over time.
The CPI” market basket” includes items that people buy
for living: food, clothing, rent, furniture, fuel, medicines,
transportation, education and entertainment.
Gross Domestic Product (GDP)
The total value of all goods and services produced in an
economy during a given period of time, usually one year.
When the value of real GDP( that is the volume of goods
and services produced) increases, the economy is
expanding. Incomes rise, employment increases and
people have more money to spend.
If real GDP declines over consecutive periods, the
economy is likely to go into recession. The number of
people without jobs increases as businesses lay off
workers, and consumers have less money to spend.
Economic Growth
Measurement of the change in real GDP from one period to the
next, usually over one year.
A growth rate of 5 per cent in one year means that the value of
all goods and services produced was 5 per cent above the total in
the previous year.
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Glossary of Terms
Monetary Liabilities
Money in circulation plus private sector deposits held at
commercial banks; deposits include:
(i)
Demand deposits – cash, and
money
in
savings and
chequing accounts , and
(ii)
Time deposits – fixed
deposits.
Per Capita Income
The total value of goods and services (GDP) produced in
a country divided by the mid-year population.
The GDP includes salaries and wages of employed
persons, the incomes of the self-employed, investment
income, rental of land.
The per capita income for the ECCU economy is obtained
by adding the GDP for the eight member countries and
dividing the amount by the total population of the
countries. In 2003 Antigua and Barbuda had the highest
per capita income of $26,100, and St Vincent and the
Grenadines the lowest at $9,500.
Fiscal Deficit
The difference between a government’s revenue and
expenses. A deficit arises when the government spends
more than it earns.
A government raises revenue from taxes, fees, licences
and property income. When revenue is insufficient to pay
the expenses, the governments borrow money in order to
honour their commitments.
Human Development Index (HDI) The HDI measures the extent to which people are able to
lead long and healthy lives, are knowledgeable, have
access to the resources needed for a decent standard of
living and are able to participate in the life of the
community.
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