Economics, 3rd Edition

crowding-out effect 

the offset in aggregate demand that 

results when expansionary fiscal policy raises the interest rate 

and thereby reduces investment spending

currency 

the paper banknotes and coins in the hands of the 

public

cyclical deficit 

a situation when government spending and 

income is disrupted by the deviations in the ‘normal’ economic 

cycle

cyclical unemployment 

the deviation of unemployment from 

its natural rate

deadweight loss 

the fall in total surplus that results from a 

market distortion, such as a tax

deflationary gap or output gap 

the difference between full 

employment output and expenditure when expenditure is less 

than full employment output

demand curve 

a graph of the relationship between the price of 

a good and the quantity demanded