Definitions

absolute poverty

absolute poverty

where people do not have enough resources to meet all of their basic human needs

administration activities

involved with managing and organising the work of a company or organisation

aggregate supply

total amount of goods and services produced in a country at a given price level in a given time period

anti-competitive practices (or restrictive trade practices)

attempts by firms to prevent or restrict competition

appreciate (of a currency)

where the value of a currency rises due to market forces - the exchange rate increases as a result

assembly plants

factory where parts are put together to make a final product

assets

things or resources belonging to an individual or a business that has value or the power to earn money

austerity

official action taken by a government in order to reduce the amount of money that it spends or the amount that people spend

balance of payments

record of all transactions relating to international trade

balance of trade or visible balance

difference between visible exports and visible imports

barriers to entry

obstacles that might discourage a firm from entering a market

aggregate demand

total demand in the economy including consumption, investment, government expenditure and exports minus imports

base rate

rate of interest set by government or regional central banks for lending to other banks, which in turn influences all other rates in the economy

basic economic problem

allocation of a nation's scarce resources between competing uses that represent infinite wants

bi-lateral trade agreement

trade deal between only two countries

boom

peak of the economic cycle where GDP is growing at its fastest; time when business activity increases rapidly, so that the demand for goods increases, prices and wages go up, and unemployment falls

boom and bust

when an economy regularly becomes more active and successful and then suddenly fails

budget

government's spending and revenue plans for the next year

budget deficit

amount by which government spending is greater than government revenue

bulk buying

buying goods in large quantities, which is usually cheaper than buying in small quantities capital and financial account that part of the balance of payments where flows of savings, investment and currencies are recorded

capital goods

those purchased by firms and used to produce other goods such as factories machinery, tools and equipment

capital intensive

production that relies more heavily on machinery relative to labour

cartel

where a group of firms or countries join together and agree on pricing or output levels in the market

closed shop

company or factory where all the workers must belong to a particular trade union

commodities

product that can be sold to make a profit, especially one in its basic form before it has been used or changed in an industrial process; examples of commodities are farm products and metals

competition

rivalry that exists between firms when trying to sell goods to the same group of customers

complementary goods

goods purchased together because they are consumed together

consumer goods

cyclical or demand deficient unemployment unemployment caused by falling demand as a result of a downturn in the economic cycle

de-industrialisation decline in manufacturing deflation period where the level of aggregate demand is falling

those purchased by households such as food, confectionery, cars, tablets and furniture consumer price index (CPI) measure of the general price level (excluding housing costs)

consumption

amount of goods, services, energy or natural materials used in a particular period of time

contractionary fiscal policy

fiscal measures designed to reduce demand in the economy cost-push inflation inflation caused by rising business costs

costs

expenses that must be met when setting up and running a business

current account

part of the balance of payments where all exports and imports are recorded

current account deficit

when value of imports exceeds the value of exports

current account surplus

when value of exports exceeds the value of imports

current balance

difference between total exports and total imports (visible and invisible)

demand curve

line drawn on a graph that shows how much of a good will be bought at different prices

demand schedule

table of the quantity demanded of a good at different price levels - can be used to calculate the expected quantity demanded

demand-pull inflation i

inflation caused by too much demand in the economy relative to supply

depreciate (of a currency)

where the value of a currency falls due to market forces - the exchange rate falls as a result

effective demand

amount of a good people are willing to buy at given prices over a given period of time supported by the ability to pay

elastic demand

change in price results in a greater change in the quantity demanded (alternative term: price elastic)

elastic supply

change in price results in a proportionately greater change in the quantity supplied (alternative term:

price elastic)

depression or slump

bottom of the economic cycle where GDP starts to fall with significant increases in unemployment

derived demand

demand that arises because there is demand for another good

devalued (of a currency)

when a government fixes a new

lower exchange rate

direct taxes

taxes levied on the income earned by firms and individuals

discretionary expenditure

nonessential spending or spending that is not automatic

embargo

official order to stop trade with another country

enterprises

companies, organisations or businesses

entrepreneurs

individuals who organise the other factors of production and risk their own money in a business

interdependence

demanded when price goes up, the quantity demanded falls and when the price goes down the quantity

who does a particular job

labour intensive

where the actions of one country or large firm will have a direct effect on others

interest rate

price paid to lenders for borrowed money; it is the price of money

labour intensive

production that relies more heavily on labour

globalisation

growing interconnection of the world's

economies

internal economies of scale

cost benefits that an individual firm can enjoy when it expands

equilibrium price

price at which supply and demand are equal

excess demand

where demand is greater than supply and there are shortages in the market

excess supply

where supply is greater than demand and there are unsold goods in the market

exchange rate

price of one currency in terms of another

expansionary fiscal policy

fiscal measures designed to stimulate demand in the economy

diseconomies of scale

rising average costs when a firm expenditure spending by a government, usually a becomes too big

disposable income

income that is available to someone over a period of time to spend; it includes state benefits but excludes direct taxes

exports goods and services sold overseas

diversified

if a company or economy diversifies, it

external benefits

positive soilover effects of consumption or production - they bring benefits to third parties

external costs

negative spillover etfects on consumption or production - they affect third parties in a negative way

dividend

part of a company's profit that is divided among shareholders

excise duty

government tax on certain goods, such as cigarettes, alcoholic drinks and petrol that are sold in the country

free trade

situation in which the goods coming into or demanded rises going out of a country are not controlled or taxed

invisible trade

trade in services

frictional unemployment

when workers are unemployed job rotation practice of regularly changing the person for a short period of time as they move from one job to another

labour mobility

ease with which workers can move