IGCSE Economics Macro, Definitions

Exports

The sale of goods or services to another country

Fiscal surplus

When government revenue if greater than government expenditureRecover

Recovery

A phase in the economic cycle (1) where GDP starts to rise again/when consumers start to regain confidence/economic activity is on the increase (1)

Imports

The purchase of goods or services (1) from another country (1)

Production

Converting resources into goods or services

Minumum wage

Lowest legal amount paid to employees

Unique product

A good/service for which there is no substitute

Pollution pemit

They give firms the legal right (1) to discharge a certain amount of polluting material (1)

Niche market

A specialised market for a particular product

Public sector

Government provision of goods/services

Recession

A fall in GDP (1) for two successive quarters (1).

Dumping

A firm sells goods in another country (1) below the cost of production (1).

Free Trade

Goods/services coming into or going out of a country (1) which are not controlled/taxed (1)

Fine

A financial penalty

Downturn

A period where GDP is still growing (1) but more slowly (1)

Infant industries

New/fledgling industries (1) that have yet to establish themselves (1)

Fiscal Policy

Decisions about government spending, taxation and borrowing (1) that affect (aggregate) demand in the economy (1)p

Producer

A person/company/country that supplies goods and services

Price Maker

A dominant firm sets the price in the market

Central Bank

The monetary authority that manages a country’s money supply (1) and interest rates/banking system (1)

Infrastructure

The systems/structures such as the transport network (1) needed for the operation of an economy (1)

GDP

GDP is the market value of all goods and services (1) produced in a year (1)

Exchange rate

The price of one currency (1) in terms of another currency (1)

External benefit

A benefit to a third party

Total Revenue

The amount of money a firm receives (1) from selling its output (1)

Wants

The desire for goods and services

Mixed Economy

The public and private sectors (1) provide goods and services between them (1)

Labour

The people used in the production of goods and services

Finance

Funding for a firm

Boom

A phase in the economic cycle (1) with the highest levels of economic activity/with the highest levels of employment (1).

Shoe-Leather Costs

The costs to firms and consumers of searching for the lowest prices (1) when inflation is high/prices are rising rapidly (1).

Revaluation

When the price of a currency in a fixed exchange rate system (1) is officially increased against other currencies (1)

Or

When a government fixes (1) new higher exchange rate (1)

Unemployment

People are willing and able to work/actively seeking work (1) but cannot find employment (1).

Trade-Off

The choice between two objectives (1), where for one objective to increase the other must decrease (1).

Relative Poverty

The standard of living is below (1) the typical living standards in that society (1).

Tertiary Sector

The provision of services in the economy

Innovation

An idea which leads to a new product/process

Multinational Corporation

An enterprise/company/firm (1) that produces/sells/operates in more than one country/many countries (1)

Absolute Poverty

A condition where household income is below a necessary level (1) to provide the basic needs for survival (1)

Interest Rate

The cost of borrowing (1) and the reward for lending/saving (1)

Supply Side Policy

Policies designed to increase the productive capacity of the economy (1) by influencing aggregate supply (1)

Consumer

an individual or business that purchases another company's goods or services

capital

capital refers to the assets—physical tools, plants, and equipment—that allow for increased work productivity

Entrepreneurship

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

Capital Good

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

Consumer Good

any good purchased for consumption

Land

Natural resources used during production

Private Sector

provision of goods and services by firms that are owned by individuals or groups of individuals

Primary Sector

production involving the extraction of raw materials from the earth

Secondary sector

production involving the processing of raw materials into finished and semi-finished goods

scarcity

unlimited wants, limited resources

compeition

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

regulation

a form of government intervention in markets that involves rules and their enforcement

Economic Growth

increase in the level output by a nation

Inflation

the rise of the general price level in a country over a certain period of time

Demand-Pull Inflation

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

cost-push inflation

inflation caused by rising business costs costs expenses that must be met when setting up and running a business

Cyclical Unemployment

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

Seasonal Unemployment

unemployment caused when seasonal workers, such as those in the holiday industry, are laid off because the season has ended

Structural Unemployment

unemployment caused by changes in the structure of the economy such as the decline in an industry

Voluntary Unemployment

unemployment resulting from people choosing not to work

Frictional Unepmloyment

when workers are unemployed for a short period of time as they move from one job to another

Current Account

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

Balance of Payments

record of all transactions relating to international trade

Quota

physical limit on the quantity of imports allowed into a country

Tariff

tax on imports to make them more expensive

Trading bloc

 groups of countries situated in the same region that join together and enjoy trade free of tariffs, quotas and other forms of trade barrier

Subsidy

money that is paid by a government or organisation to make prices lower, reduce the cost of producing goods or providing a service, usually to encourage production of a certain good

Monetary Policy

use of interest rates and the money supply to control aggregate demand in the economy

Income inequality

differences in income that exist between the different groups of earners in society, that is, the gap between the rich and the poor

Direct tax

Taxed levied on income

Indirect tax

taxes levied on spending, such as VAT

Globalosation

increased integration and interdependence of economies

Foreign Direct Investment

an ownership stake in a foreign company or project made by an investor, company, or government from another country

Appreciation

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

Depreciation

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

Deflation

decrease in the general prive level in a country or economy over a certain period of time

Consumer Price Index (CPI)

a basket of 700 different goods and services the prices of which are used to track rate of inflation

Tax

money paid to the government so that it can function and produce public goods and services

Fiscal Deficit

when the government’s tax revenue is less than expenditure

Privatisation

The act of selling a company/activity controlled by the government (1) to private investors (1)

Deregulation

The removal (1) of government controls (1)

World Trade Organization

An international organization responsible for promoting free trade and settling trade disputes

Currency spectator

people who speculate whether a currency will appreciate or depreciate in the future

Devaluation

the deliberate downward adjustment of the value of a country's money relative to another currency or standard