AQA GCSE Economics Terms And Definitions

• Average revenue

• Average revenue

The total revenue divided by the quantity sold.

• Appreciation

When the value of one currency rises in value relative to another.

• Balance of payments

A record of all financial transactions between a country and the rest of the world.

• Balance of payments (current account) deficit

When a country's expenditure on imports of goods, services, and investment income is greater than its revenue from exports.

• Balance of payments (current account) surplus

When a country's revenue from exports of goods, services, and investment income is greater than its expenditure on imports.

• Balance of trade

The part of the balance of payments that records the value of exports and imports of physical goods.

• Barriers to entry

Circumstances that could prevent a firm from successfully entering a market.

• Base rate

The interest rate set by the central bank that influences market interest rates.

• Budget deficit

When government spending exceeds tax revenue.

• Budget surplus

When government tax revenue exceeds spending.

• Building societies

Financial institutions owned by their members, offering banking and financial services.

• Capital

Physical assets used in production, like machinery or factories, with payment for their use typically being interest.

• Claimant account

Measures unemployment by counting individuals claiming unemployment benefits.

• Commercial banks (also known as high street or retail banks)

Banks that offer financial services to households and businesses for profit.

• Competitive market

A market where many producers compete to supply goods and services.

• Complimentary goods

Two goods often consumed together, like peanut butter and jelly.

• Consumers

Individuals who buy goods and services for personal use.

• Consumer price index (CPI)

Measures changes in the price level of a basket of goods over time.

• Cost push inflation

Inflation caused by increased production costs, like higher wages or raw material costs.

• Current account

The part of the balance of payments recording transactions of goods and services.

• Cyclical unemployment (often called demand deficient unemployment)

Unemployment caused by insufficient demand in the economy.

• Deferred payment

Agreement allowing payment for goods at a later date.

• Demand

The quantity of a good or service consumers are willing and able to buy at a given price.

• Demand curve

A graphical representation of the quantity demanded of a good at different price levels.

• Demand pull inflation

Inflation caused by increased demand for goods and services.

• De-merit goods

Goods overconsumed because consumers underestimate their negative effects, like cigarettes.

• Depreciation

When the value of one currency falls relative to another.

• Deregulation

The removal of regulations or restrictions on business or industry.

• Developed countries

Countries with high economic growth, mature institutions, and infrastructure.

• Direct taxation

Taxes directly levied on income, like income tax.

• Diseconomies of scale

Increasing average costs as a firm's output increases.

• Division of labour

Breaking down production into smaller tasks to increase efficiency.

• Economic activity

Activities related to producing, buying, selling, or consuming goods or services.

• Economic resource

Limited resources necessitating choices.

• Economies of scale

Reductions in average costs as a firm's output increases.

• Enterprise/entrepreneurship

Individuals who create goods or services for profit.

• Equilibrium price

The price where supply equals demand, leading to a stable market price.

• EU single market

The EU's concept of one territory without internal borders for goods and services.

• Excess demand

When demand exceeds supply, leading to shortages and price increases.

• Excess supply

When supply exceeds demand, leading to excess inventory and lower prices.

• Exchange

Where buyers and sellers negotiate prices for goods and services.

• Exchange rates

The value of one currency in terms of another, like the exchange rate.

• Exports

Goods produced domestically and sold abroad.

• Factor markets

The market for factors of production like land, labor, and capital.

• Financial economies of scale

Cost advantages from being large enough to access cheaper financing.

• Fiscal policy

Government use of spending and taxation to manage demand in the economy.

• Fixed costs

Costs that remain constant regardless of production level, like rent.

• Free trade

International trade without tariffs or barriers.

• Frictional unemployment

Unemployment due to job search friction and information gaps.

• Full employment

When all willing and able individuals are employed.

• Geographical immobility

Inability of workers to relocate for work.

• Globalisation

Integration of economies through global trade and investment.

• Goods

Tangible products that satisfy consumer wants and needs.

• Government

Regulatory authority overseeing economic activity.

• Government intervention

Government action to correct market failures.

• Government provision

Government provision of goods or services without charge, like healthcare.

• Gross domestic product

Total value of all goods and services produced in an economy.

• Gross domestic product per capita

GDP divided by the country's population.

• Gross pay

Pay before taxes, including all income sources.

• Imports

Goods produced abroad and purchased domestically.

• Income inequality

Unequal distribution of income across a population.

• Incomes

Money received from various sources, like salaries or investments.

• Indirect taxation

Taxes on spending, like sales tax.

• Inequality

Differences in income or wealth among individuals or groups.

• Inflation

Increase in the general price level over time.

• Interest rates

Cost of borrowing money and reward for saving.

• Interdependence

Mutual dependence of economies due to specialization and trade.

• Labour

Human input into the production process, compensated by wages.

• Labour force survey

Survey measuring unemployment by asking about job search activity.

• Land

Natural resources used in production, like land or minerals.

• Less developed countries

Countries with lower income, weaker institutions, and infrastructure.

• Managerial economies of scale

Cost savings from specialized management functions.

• Markets

Spaces where buyers and sellers trade goods and services.

• Market failure

Market inefficiency leading to resource misallocation.

• Market structures

Organizational frameworks influencing market behavior.

• Medium of exchange

Medium used to facilitate transactions, typically money.

• Merits goods

Goods that benefit society but are under-consumed by individuals.

• Misallocation of resources

Inefficient resource allocation leading to welfare loss.

• Monetary policy

Central bank actions to influence economic activity.

• Money

Medium of exchange and store of value.

• Monopoly

Market domination by a single firm.

• Multinational companies

Companies operating in multiple countries.

• Needs

Essential items for survival, like food and water.

• Negative externality

Cost imposed on third parties in a transaction, not borne by buyers or sellers.

• Net pay

Pay received after taxes are deducted.

• Occupational immobility

Inability or unwillingness to switch occupations.

• Oligopoly

Market dominance by a small number of firms.

• Opportunity cost

Value of the next best alternative forgone in decision making.

• Positive externality

Benefit to third parties in a transaction, not reflected in market prices.

• Price elastic demand

Demand that changes more than proportionally to price changes.

• Price elastic supply (PES)

Supply that changes more than proportionally to price changes.

• Price elasticity of demand (PED):

Responsiveness of quantity demanded to price changes.

• Price elasticity of supply

Responsiveness of quantity supplied to price changes.

• Price inelastic demand

Demand that changes less than proportionally to price changes.

• Price inelastic supply

Supply that changes less than proportionally to price changes.

• Price stability

Maintenance of stable prices within a specified range.

• Primary sector

Sector focused on extracting raw materials.

• Private benefit

Benefit to an individual from using a good.

• Private costs

Costs borne by an individual or firm in production or consumption.