all key terms

absolute advantage is

when a country can produce more of a good than other countries form the same amount of resources

aggregate demand is

total planned spending on the goods and services produced within an economy in a particular time period

aggregate supply is

the aggregate level of real output that all the firms in the economy plan to produce at different average price levels

aid is

money, goods and services and ‘soft’ loans given by the government of one country or a multilateral institution such at the world bank to help another country. non-government organisations such as oxfam also provide aid

balance of payments is

the record of all money flows or transactions between the residents of a country and the rest of the world in a particular period, usually monthly, quarterly or annually

balancing the budget is

setting the government spending equal to government revenue

bank rate is

the interest rate set by the bank of england which it uses as a benchmark for setting th interest rates that it charges when lending to commercial banks and other financial institutions

bonds are

financial securities sold by companies or by governments which are a form of long term borrowing, they usually have a maturity date on which they are redeemed, with the borrower usually making a fixed interest payment each year until the bond matures (coupons)

broad money is

the part of the stock of money made of cash, other liquid assets such as bank and building society deposits and other less liquid assets. the measure of broad money used by the boe is M4

budget deficit is

the amount by which the government spending exceeds government revenues in a particular period of time

budget surplus is

the amount by which government spending exceeds government revenue in a particular time period

capital markets is

where securities such as shares and bonds are issues to raise medium to long term financing, where shares and bonds are then traded on the second hand part of the market e.g london stock exchange

capital ratio is

the amount of capital on a banks balance sheet as a proportion of its loans

central bank is

a national bank that provides financial and banking services for its country’s government and banking system, as well as implementing the governments monetary policy and issuing currency

circular flow of income is

the income received by household from selling labour and other factor services to firms and how it circulates back to the firms when spend by households on goods and services produces. there can be withdrawals in the forms of savings, imports, or taxes. there can also be injections in form of investment, government spending, exports.

commercial bank is

a financial institution which aims to make profits by selling baking services to its customers, also known as a retail bank and a high street bank

comparative advantage is

measure in terms of opportunity cost, the country with the least opportunity cost when producing a goods possesses a comparative advantage in that good

corporate bonds are

debt security issued by a company and sold as new issued to people who lend long term to the company, they can usually be resold second hand on the stock exchange

corruption is

a barrier holding back economic growth and development, especially in less developed economies

cost-push inflation is

a rising price level caused by an increase in the costs of production, shown by a shift of the SRAS curve to the left, also known as cost inflation

coupon is

the guaranteed fixed annual interest payment, often divided into two 6-month payments, paid by the issuer of a bond to the owner of a bond

credit is

created when a bank creates a loan, which creates an advance which is an asset on the banks balance sheet, and a deposit which is a liability of the bank

currency union is

an agreement between a group of countries to share a common currency, and usually to have a single monetary and foreign exchange rate policy

current account

measures all the currency flows into and out of a country in a particular time droid in payments for exports and imports of goods and services, together with primary and secondary income flows

customs union is

a trading bloc in which member countries enjoy internal free trad in goods and possibly services, with all the member countries protected by a common external tariff barrier

cyclical budget deficit

the part of the budget deficit which rises in the downswing of the economic cycle and falls in the upswings of the cycle

cyclical unemployment is

unemployment occurring in the downswing of the economic cycle or business cycle, caused by a lack of aggregate demand in the economy, also known as keynesian or demand deficient unemployment

debt is

money people owe

deflation is

a persistent tendency for the price level to fall and for the value of money to rise

demand pull inflation is

a rising price level caused by an increase in ad, shown by a shift of the AD curve to the right

disinflation is

a fall in the rate of inflation, but inflation remains positive

economic growth is

the rate of increase in the potential output of an economy

education and training