Studied by 2 people
asset
something that is expected to provide a benefit to the owner in the future
balance of payments
the record of all financial transactions between one country and the rest of the world
balance of payments on the current account
the total of net trade in goods and services, income flows and transfers between one country and the rest of the world
balanced current account
where the sum of exports plus the inflow of income and transfers is equal to the sum of imports plus the outflow of income and transfers
balanced government budget
when tax revenue is equal to government spending
bank rate
rate set by the bank of England that influences all other rates of interest in the country
boom
a period of high economic activity and high levels of employment
budget deficit
when government spending is greater than tax revenue
budget surplus
when tax revenue is greater than government spending
building society
a mutual financial institution that is owned by its members. its primary objectives are to receive deposits from its members and to lend money for members to purchase property
claimant count
the method of measuring unemployment according to the number of people who are claiming unemployment-related benefits
collective bargaining
negotiations between a recognised trade union and employer/s
consumer price index (CPI)
method used to calculate the rate of inflation
cost of living
the price level of goods and services bought (by the average family)
currency
the system of money used in a country or group of countries
current account
the record of trade in goods and services, income flows and transfers between one country and the rest of the world
current account deficit
where the sum of exports plus the inflow of income and transfers is less than the sim of imports plus the outflow of income and transfers
current account surplus
where the sum of exports plus the outflow of income and transfers is greater than the sum of imports plus the outflow of income and transfers
cyclical unemployment
unemployment caused by a lack of demand in the economy
derived demand
occurs when a product or factor of production is not demanded for itself, but is dependent on the demand for the product it helps to produce
developed country
a country with high GDP per capita and developed industry and service sectors
development
the process of increasing peoples standard of living and wellbeing over time
diseconomies of scale
when the average cost of production begin to increase as a firm grows in size
distribution of income
how incomes are shared out between individuals and households
distribution of wealth
how wealth is shared out between individuals and households
economic choice
an option for the use of selected scarce resources
economic growth
growth in GDP (value of output) over time
economic problem
how to best use limited resources to satisfy unlimited wants of people
effective demand
the quantity of a good or service that an individual is both willing and able to buy at a range of prices in a given time period
elastic supply
when the percentage change in quantity supplied is greater than the percentage change in price
employment
the use of labour in the economy to produce goods and services
European union (EU)
an economic and political group of countries in Europe that have free trade with each other
exchange
The giving up of something that the individual or firm has, in return for something they wish to have but do not possess.
exchange rate
The price of one currency in terms of another currency.
exports
goods and services sold abroad
factors of production
The resources in an economy that can be used to make goods and services, e.g. land, labour, capital and enterprise.
financial sector
Consists of financial organisations and their products, and involves the flow of capital.
free trade agreement
Free movement of goods and services between countries, without any restrictions.
GDP per capita
GDP divided by the population.
globalisation
The expansion of world trade in goods and services, together with capital flows, leading to greater international interdependence.
government revenue
The source of finance for government spending.
gross domestic product (GDP)
the total value added of goods and services produced in the country in a year
imports
goods and services bought from abroad
income and wealth redistribution
Government action, using mainly taxation and benefits, to reduce inequalities of income and wealth.
income tax
A tax levied directly on personal income, i.e. a tax on a person's wages.
indirect tax
A tax on spending, often defined as a tax on goods and services.
inelastic supply
When the percentage change in quantity supplied is less than the percentage change in price.
inflation
A sustained rise in the general price level over time.
interest rate
The price of borrowing money, and the reward for saving money.
international trade
The exchange of goods and services between countries.
invisible hand
Unobservable market forces assist demand and supply of goods and services in a free market to move automatically to an equilibrium position.
less developed country
a country with a developing economy that has lower GDP per capita, lower levels of industrialisation and weaker indicators of wellbeing
market economy
an economy in which scarce resources are allocated by the market forces of supply and demand
medium of exchange
anything that sets the standard of value of goods and services acceptable to all parties involved in a transaction
monetary policy
a policy which aims to control the total supply of money in the economy to try to achieve the government’s economic objectives, particularly price stability
money
Anything that is generally accepted as a means of payment for goods and services.
multinational corporation (MNC)
A firm that has its head office in one country, but has operations in a number of other countries.
price
The sum of money you have to pay for a good or service. It is determined by the interaction of supply and demand.
price stability
When the general level of prices stays constant over time, or grows at an acceptably low rate.
private sector (private enterprise)
Part of the economy that is run by individuals, firms and organisations and not by the government. Private sector organisations are called private enterprises.
privatisation
The transfer of assets such as businesses from the public sector to the private sector.
rate of inflation
The percentage rise in the general price level over time.
rate of interest/ interest rate
the cost of borrowing money, i.e. that which is paid to the lender. it is also the reward for saving
recession
A period when the country's GDP falls for two (or more) consecutive quarters.
salary
A yearly wage divided equally into 12 (monthly) parts.
specialisation
The process by which individuals, firms, regions and whole economies concentrate on producing those products that they are best at producing.
standard of living
The social and economic wellbeing of residents in a country.
subsidy
An amount of money the government gives directly to firms to encourage production and consumption.
supply-side policy
Policy that increases the productive potential, which is the ability of the economy to supply more goods and services.
tax
a compulsory payment to the government
wealth
The market value of all the assets owned by a person, group or country at a specific point in time. Wealth is a stock of assets, e.g. money, houses and land, whereas income is a flow over time.
fiscal policy
Fiscal policy involves the government changing the levels of taxation and government spending in order to influence aggregate demand (AD) and the level of economic activity
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