economics edexcel a level (a)

Treasury

The funds of a state or institution or a place where treasure is stored

Chancellor of the exchequer

A member if parliament who manages the countries national budget and the allocation of funds nationwide as well as monitoring the amount of money the government has

George osborn

Chancellor from 2010 - 2016

Phillip Hammond

Chancellor from 2016 - 2019

Sajid Javid

Chancellor from 2019 - 2020

Base rate

The minimum interest rate set by the central bank for lending to other banks or institutions which serves as a benchmark for loaning to individuals

Interest rate

The rate of money growth in relation to the initial amount deposited or loaned which is set by the commercial bank

Inflation

an increase in the cost of living as the price of goods and services rise

Economics goods

Rescources

Scarcity

Means that the economic agents such as individuals, firms, governments and international agencies can only obtain a limited amount of rescources

Free goods

Goods that are not scarce

Capital

A good used to produce another good (e.g tools machines and equipment)

Enterprise or Entrepreneurship

The seeking out of profitable opportunities and ideas and tak8ng the risks to support this

Land

The Land itself and all natural rescources in the area

Labour

The workforce of that economy and their vaoue (human captial) this is increased by education and training

Opportunity cost

The cost of the next best alternative that you leave behind when you make a decision

Positive statements

A statement that can be proven with a true or false and is objective

Normative statements

Opinion statements that cannot be proved true or false

Hidden economy

Parts of the economy that are not accounted for in the national gdp

Capital goods

Goods that are made to be made into other products

Consumer goods

Goods used by the people

Production possibility front

An economic model that considers the maximum possible production a country can produce using all its factors of production efficiently to make 2 goods

Law of diminishing returns

The marginal output of consumer goods diminishes as more factor rescources are allocated to it

Factor mobility

Occurs when factors of production can easily be moved from one use to another

Geographical mobility

Rescources can move easily between areas/regions/countries

Occupational mobility

Rescources can move easily between different types of work

Specialisation

The concentration of individuals/firms/countries on producing a limited amount of rescources

Division of labour

A form of specialisation in which the tasks needed to make something are split up among the workers

GDP

measures the value of real output of the economy over a period of time

nominal gdp

The monetary value of all goods and services produced in the economy (GDP at current prices)

Real GDP

the nominal value of GDP adjusted for inflation

Real GDP per capita

national income per person often used as a proxy measure for the standard of living

value v volume

the value of goods and services shows what they are worth; the volume shows the number that are produced

GNI

GDP + net income from abroad compensation of employees and property income

Purchasing power parities

used to assess the relative living standards between countries, PPP compares the price of a basket of comparable goods between countries.

standard of living

a measure of economic welfare and well-being. Income typically increases the standard of living; the relationship is not exact

subjective happiness

‘self reported’ levels of happiness with ones life

Easterlin paradox

life satisfa; satisfaction raises with average incomes but only to the point that the marginal gain in happiness declines

inflation

a sustained increase in the general price level

deflation

a sustained decrease in the general price level

disinflation

a reduction in the rate of inflation

Cost-of-living

a measure of changes in the average cost for a household of buying a basket of different goods and services

inflation target

a target set by the government which the central bank should aim to achieve (in the UK it is CPI inflation = 2% ± 1% point)

CPI

tracks changes in the prices of a basket of goods and services purchased by an average family

formula for calculating CPI

CPI inflation rate = [(current CPI - previous CPI)]* 100

CPIH

similar to cpi but also monitors owner occupier housing costs in its basket (costs around owning maintaining and living in ones home)

RPI

the basket of goods/ services includes some items not in the cpi such as council tac & mortgage interest payments and is used to calculate increases in welfare benefits, pensions etc

‘core’ inflation

sustained increase in prices of goods in the basket excluding goods such as energy food alcohol and tobacco which can have volatile prices

demand - pull inflation

inflation caused by excess aggregate demand in the economy

cost - push inflation

inflation caused by increases in the costs of production in the economy

stagflation

when the economy stagnates as the price level rises

deflation caused by fall in aggregate demand

inflation caused by a lack of AD in the economy, producers have to reduce their prices and their profits fall