Economics

What's the definition for opportunity cost?

The loss of potential gain from other alternatives when one alternative is chose

What is the definition for taxation?

A mandatory financial charge made by a government on individuals, consumers and businesses.

What is GDP?

The total monetary value of final goods and services produced in a country.

What is GDP per capita?

the total value of a country's income (or GDP divided by its population)

What is government spending?

money spent by the public sector on goods and services, such as healthcare (NHS), education, and defence.

What is unemployment?

those who are actively seeking employment but are unable to find work.

What are the causes of unemployment?

Some people have to leave their jobs because they are: • people whose last job ended because there was no more work available or no further need for their role. • people whose last job ended because they broke their contract of employment, eg by engaging in misconduct. • a school, college or university leaver – people who have completed full

What is inflation?

refers to a general and sustained increase in prices over time.

What is the impact of inflation on consumers?

• Inflation reduces the purchasing power of money since more money is now needed to buy the same items. • High rates of inflation mean that unless income increases at the same rate, people are worse off. • leads to lower levels of consumer spending and a fall in sales for businesses.

What is the impact of inflation on businesses?

• To compensate for inflation, staff may ask for pay rises above the rate of inflation. • higher costs for businesses • could result in prices being increased further, adding to inflation. • If inflation is higher in the UK than it is elsewhere, then the UK’s goods become less competitive.

What are the two main causes of inflation? • Demand Pull If there is a shortage of certain product and lots of people want it can lead to demand pull inflation. • Cost

push When the cost of producing goods and services rise.