Key term | Definition | Accelerator | A change in the level of investment in new capital goods is induced by a change in the rate of growth of national income or AD. | Actual output | Level or real output produced in the economy in a particular year, not to be confused with the trend level of output. The trend level of output is what the economy is capable of producing when working at full capacity. Actual output differs from the trend level of output when there are output gaps. | Aggregate demand (AD) | The total planned spending on real output produced within the economy. | Aggregate supply (AS) | The level of real national output that producers are prepared to supply at different average price levels. | Availability of credit | Funds available for households and firms to borrow. | Balance of payments (BOP) | A record of all the currency flows into and out of a country in a particular time period. | Balance of trade | The difference between the money value of a country’s imports and its exports. Balance of trade is the largest component of a country’s balance of payments on current account. | Balance of trade in goods | The part of the current account measuring payments for exports and imports of goods. The difference between the total value of exports and the total value of imports of goods is sometimes called the ‘balance of visible trade.’ | Balance of trade in services | Is part of the current account and is the difference between the payments for the exports of services and the payments for the imports of services. | Balanced budget | Achieved when government spending equals government revenue. | Bank of England | The central bank in the UK economy which is in charge of monetary policy. | Bank rate | The rate of interest the Bank of England pays to commercial banks on their deposits held at the Bank of England. | Budget deficit |