economics key words (all)

allocation of resources

how scarce resources are distributed among producers, and how scarce goods are and services are allocated among consumers

asset

something that is expected to provide a benefit to the owner in the future

average cost (AC)

the cost of producing a unit (unit cost of production)

average revenue (AR)

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 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

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 employer/s

competition

where different firms are trying to sell to a consumer a similar product

competition policy

a government policy to promote competition

complement

good or service that goes together with another, such as cars and fuel

consumer

a person or organisation that directly uses a good or service

consumer price index (CPI)

method used to calculate the rate of inflation

consumer sovereignity

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 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 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

demand

the willingness and ability to purchase a good or service at the given price in a given time period

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

determination of price

the 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 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

desequilibrium

where the quantity demanded does not equal the quantity supplied

disposable income

income available after the effect of direct taxes and benefits, often called net income

distribution ofincome

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 are of the production process

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

economic sustainability

the best use of resources in order to create responsible development or growth, now and for the future

economies of scale

he 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 who takes this risk is known as an entrepreneur

environmental sustainability

the impact of development of growth where the effect on the environment is small and possible to manage, currently 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 supply

Where, at the current price, the amount supplied is greater than the amount buyers are prepared to purchase.

excess demand

Where, at the current price, the amount demanded is greater than the amount sellers are willing to supply.

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

expansion of supply

The movement outwards along the supply curve, leading to an increase in both price and quantity.

external benefit

\[positive externality\]

external cost

\[negative externality\]

external economies of scale

The cost advantages a firm can gain by increasing the scale of production, leading to a fall in average costs.

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, e.g. land, labour, capital and enterprise.

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 (FC)

All the costs of the firm that have to be paid even if production is zero. The costs do 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 the population.

globalisation

The expansion of world trade in goods and services, together with capital flows, leading to greater international interdependence.

good

A tangible product, i.e. that can be seen or touched.

government

A political authority that decides how a country is run and manages its operation.

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

gross income

income received before any taxes are taken of benefits given

gross pay

the amount of money that an employee earns before any deduction are made

imports

goods and services bought from abroad

income

The reward for the service provided by a factor of production, including labour.

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.

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 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.

internal economies of scale

A result of the growth of the firm itself, leading to a fall in average costs

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. It is also an asset 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 (or workforce)

the number of people who work in the country

labour market

where workers sell their labour and employers buy the labour: it consists of households’ supply of labour and firms’ demand for labour

land

the factor of production concerned with the natural resources of an economy, such as farmland and mineral deposits