Purchases of capital goods are called investment

GDP equals the total value of wages received by households

In a simple economy with just households and firms, the value of investment equals the value of saving

In a simple economy with just households and firms, the value of investment plus consumers’ expenditure equals GDP

GDP measures the value of all the goods and services produced in the economy

GDP stands for gross domestic product

GDP excludes intermediate goods and services

GDP equals wages plus trading profits

Microeconomics is concerned chiefly with the economy as a whole

Macroeconomics is concerned chiefly with individual markets

Governments have no influence over market prices

When economists study the price in a market, their chief aims are to understand why the price is what it is and why it may change

An economic model is a theory based on key variables and expressed in formal terms

An economic model is tested by seeing how accurate its predictions are

Testing economic models is rarely tricky

The words ’ceteris paribus’ mean other things remaining the same

Full employment of labour

All producers using the latest technology

Stable prices

All producers having productive efficiency