Read definitions first, follow the mechanism, then use the diagram and judgement. The rapid recap gives the essential relationship; the reference indexes locate the fuller explanation.
Real and nominal: Real values adjust for price changes; nominal values use current prices.
Level and rate of change: A level is the amount at a point or over a period; a growth rate is its proportional change.
Percentage points: The arithmetic difference between two percentages. A move from 4% to 6% is 2 percentage points, or a 50% increase in the rate.
Flow and stock: A flow is measured over a period; a stock at a date. Income is a flow and wealth a stock.
Per capita: Per person: divide the relevant total by population. An average does not show distribution.
Productive capacity: The output an economy can sustainably produce with available resources and technology.
Transmission mechanism: The sequence through which a policy changes spending, output or prices.
Leakage or withdrawal: Income not spent on domestically produced consumption goods in the next round: saving, tax and imports in the circular-flow model.
How to use an economic claim
Identity: true by definition, such as TR = P × Q. It organises quantities but does not explain what caused them to change.
Model prediction: follows from stated assumptions. Identify the market structure, time horizon and what is held constant.
Contextual judgement: apply the mechanism to evidence, explain a condition that changes its strength, then reach a conclusion tied to the question.