Studied by 2 people
Exports
The sale of goods or services to another country
Fiscal surplus
When government revenue if greater than government expenditureRecover
Recover
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 servicesLowest legal amount paid to employees
Minumum wageI
Lowest legal amount paid to employees
Inferior Product
Goods for which demand will increase (1) as incomes decrease
Supply
The quantity of goods or services producers are willing and able to sell (1) at a given price/at a given time (1)
Trade Union
An organisation for employees (1) that aims to protect the interests of its members (1)
Unique product
A good/service for which there is no substitute
Economics of scale
Falling average costs (1) due to expansion of the firm (1)
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)
Pollution pemit
They give firms the legal right (1) to discharge a certain amount of polluting material (1)
Normal Good
Goods for which demand will increase (1) as incomes increase (1)
Niche market
A specialised market for a particular product
Takeover
One firm buying out another firm
Obtaining control of a firm by buying over 50% of its shares
Division of labour
When a firm breaks up the production process (1) so that employees perform only one task (1)
Barrier to entry
These are obstacles (1) that make it difficult for a new firm to enter a market (1)
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)
Economies of Scale
Average costs of production fall (1) as the level of output rises (1)
Monopoly
One dominant seller in a market
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
Productivity
The amount of output produced (1) in relation to the resources used (1)
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)
Demand
The quantity of goods/services consumers are willing and able to buy (1) at a given price (1)
Wants
The desire for goods and services
External costs
A negative effect (1) imposed on a third party (1
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
Supply
The quantity of goods or services producers are willing and able to sell (1) at a given price/at a given time (1)
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).
Substitute good
Goods which are used as an alternative to another good
Free Rider
A person who takes advantage of a common resource without paying for it
Luxury Good
A good for which income elasticity of demand is greater than 1 (1) the proportionate change in demand is greater than the proportionate change in income (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)
Opportunity Cost
Cost of the next best alternative given up
Consumer
an individual or business that purchases another company's goods or services
Market Equilibrium
a market state where the supply in the market is equal to the demand in the market
PED
Responsiveness of demand to a change in price
PES
responsiveness of supply to a change in price
YED
responsiveness of demand to a change in income
complimentary goods
goods purchased together because they are consumed together
Factors of production
resources used to produce goods and services, which include land, labour, capital and enterprise
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
Diseconomies of scale
rising average costs when a firm becomes too big
scarcity
unlimited wants, limited resources
compeition
rivalry that exists between firms when trying to sell goods to the same group of customers
oligopoly
market dominated by a few large firms
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
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
Note
Flashcard