Studied by 2 people
allocation of resources
How scarce resources are distributed among producers, and how scarce goods and services are allocated among consumers
asset
something that is expected to provide a benefit to the owner in the future
average cost
the cost of producing a unit
average revenue
the revenue per unit sold
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 once 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 government 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
capital
the factor of production that relates to the human made aids to production
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 employers
Competeition
where different firms are trying to sell a consumer a similar product
competition policy
a government policy to promote cometition
complement
a good or service that may be purchased along with another
consumer
A person or household that purchases goods or services.
consumer price index
method used to calculate the rate of inflation
consumer sovereignty
Through their purchase of goods and services consumers are able to influence what producers supply and thus how resources are allocated
contraction of supply
the movement inwards along the supply curve, leading to a decrease in in both price and quantity
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 sum of imports plus the outflow of income and transfers
current account surplus
where the sum of exports plus the inflow of income and transfers is greater than the sum of imports plus the outflow of income and transfers
cyclical unemployment
unemployment caused by the lack of demand in the economy
demand
The willingness and ability to purchase a quantity of a good or service at a certain price over a given time period.
derived demand
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
determination of price
Interaction of the free market forces of demand and supply to establish the general level of price for a good or service.
developed country
a country with a high GDP per capita and developed industry and service sectors
development
the process of increasing peoples standard of living and wellbeing over time
direct tax
a tax on income or wealth
diseconomies of scale
when the average cost of production begin to increase as a firm grows in size
Disequilibrium
where the quantity demanded does not equal the quantity supplied
disposible income
income available after the effect of direct taxes and benefits often called net income
distribution of income
How incomes are shared out between individuals and households
Distribution of wealth
How wealth is shared out between individuals and households.
division of labour
Where workers specialise in, or concentrate on, one area of the production process
economic choice
An option for the use of selected scarce resources
economic growth
growth in GDP over time
economic problem
How to best use limited resources to satisfy the unlimited wants of people
Economic sustainability
the best use of resources in order to create responsible development or growth, now and for the future
economies of scale
the cost advantages a firm can gain by increasing the scale of production leading to a fall in average costs
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
efficiency
concerned with the optimal production and distribution of scarce resources
elastic demand
when the percentage change in quantity demanded is greater than the percentage change in price
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
enterprise
the factor of production that takes a risk in organising the other three factors of production. the individual that takes the risk is known as an entrepreneur
environmental sustainability
The impact of development or growth where the effect on the environment is small and possible to manage, now and into the future
equilibrium price and quantity
Where the quantity supplied exactly matches the quantity demanded
European Union (EU)
an economic and political group of countries in europe that have free trade with each other
excess demand
where, at the current price, demand is greater than the amount of sellers are willing to supply
excess supply
where, at the current price, the amount supplied is greater than the amount of buyers that are willing to purchase
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
exports
goods and services sold abroad
expansion of supply
the movement outwards along the supply curve, leading to an increase in both price and quantity
external benefit
beneficial effect of an economic activity on third parties
external cost
harmful effect of an economic activity on third parties
external economies of scale
the cost advantages a firm can gain by increasing the scale of production, leading to a fall in average cost
externality
an effect of an economic activity on a third party
factor market
market in which the services of the factors of production are bought and sold
factors of production
the resources in an economy that can be used to make goods and services
financial sector
Consists of financial organisations and their products, and involves the flow of capital
fiscal policy
a policy that uses government spending and taxation to affect the economy as a whole
fixed cost
all the costs of the firm that have to be paid even if productions are zero, the cost will not vary with output
Free Trade Agreement
Free movement of goods and services between countries without any restrictions
Frictional unemployment
Unemployment caused by time lags when workers move between jobs
GDP per capita
GDP divided by population
Globilization
The expansion of world trade in goods and services, together with capital flows, leading to greater international interdependence
Good
Tangible product
Government
A political authority that decides how a country is run and manages its operation
Government revenue
The source of finance for government spending
GDP
The total value added of goods and services produced in the country in a year
Gross income
Income received before any taxes are taken or benefits given
Gross pay
The amount of money that an employee earns before any destructions are made
Imports
Goods and services bought from abroad
Income
The reward for the service provided by a factor of production
Income and wealth distribution
Government action, using mainly taxation and benefits to reduce inequalities of income and wealth
Income tax
A tax levied directly on personal income
Indirect tax
A tax on spending
Individual demand
The demand for a good or service by an individual consumer
Individual supply
The supply of a good or service by an individual producer
Inelastic demand
When the percentage change in quantity demanded is less than the percentage change in price
Inelastic supply
When the percentage change in the quantity supplied is less than the percentage change in price.
Inflation
A sustained rise in the general price level over time
Insurance company
Financial institution that guarantees compensation for specified loss, damage, illness or death in return for an agreed premium
Interest rate
The price of borrowing money and the reward for saving money
International trade
The exchange of goods and services between countries
Investment
The purchase of capital goods that are used to produce future goods and services, also an asset purchased to purchased to provide an income in the future and or to be sold at a profit
invisible hand
Unobservable market forces assist demand and supply of goods and services in a free market to move automatically to an equilibrium position
Labour
The factor of production that is concerned with the workforce of an economy in terms of both the physical and mental effort involved in production
Labour force
The number of people who work in the country
Labour market
Where workers sell their labour and employers buy the labour
Land
The factor of production that is concerned with the natural resources of an economy
Law of demand
For most products the quantity demanded varies inversely with its price
Note 
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