Cambridge IGCSE & O Level Economics Vocabulary Flashcards

This set of vocabulary flashcards covers the fundamental economic concepts from Chapters 1 to 39 of the IGCSE and O Level Economics syllabus, including microeconomics, macroeconomics, and international trade.

Basic Economic Problem

The problem of how best to allocate scarce resources in order to satisfy people's unlimited needs and wants.

Factors of Production

The resources required to produce a good or service, categorized as Land, Labour, Capital, and Enterprise (CELL).

Opportunity Cost

The cost of the next best opportunity forgone (given up) when making an economic decision.

Production Possibility Curve (PPC)

A graphical representation showing the maximum combination of goods and services that can be produced in an economy at a given time.

Microeconomics

The study of particular markets and sections of the economy, focusing on the behavior of individuals, households, and firms.

Macroeconomics

The study of economic behavior and decision-making in the whole economy, looking at aggregate variables like national output and inflation.

Price Mechanism

The system of relying on the market forces of demand and supply to allocate resources without government interference.

Demand

The willingness and ability of customers to pay a given price to buy a good or service (effective demand).

Supply

The ability and willingness of firms to provide goods and services at given price levels.

Market Equilibrium

The market state where demand for a product matches the supply, resulting in no excess demand (shortage) or excess supply (surplus).

Price Elasticity of Demand (PED)

A measure of the degree of responsiveness of the quantity demanded of a product following a change in its price.

Market Failure

Occurs when the market forces of demand and supply fail to allocate resources efficiently, leading to external costs or benefits.

Public Goods

Goods and services that are non-excludable and non-rivalrous in consumption, such as street lighting and national defense.

Mixed Economy

An economic system combining the planned and market systems, with resources owned by both private individuals and the government.

Commercial Bank

A retail bank that provides financial services to customers, such as savings accounts, bank loans, and mortgages.

Central Bank

The monetary authority of a country that manages the money supply, issues banknotes, and acts as a banker to the government and other banks.

Disposable Income

The amount of income a person has left to spend or save after compulsory deductions like income tax.

Trade Union

An organization that exists to protect the rights of workers and bargain for better pay and working conditions.

Economies of Scale

The cost-saving benefits of large-scale operations that reduce average costs of production as output increases.

Productivity

A measure of efficiency found by calculating the amount of output per unit of a factor input, such as output per worker.

Fiscal Policy

The use of taxation and government expenditure strategies to influence the level of economic activity.

Monetary Policy

The manipulation of interest rates, exchange rates, and the money supply to control spending and investment in an economy.

Gross Domestic Product (GDP)

The total monetary value of goods and services produced within a country during a given period of time.

Inflation

A sustained rise in the general price level in an economy over time, measured by a consumer price index (CPI).

Human Development Index (HDI)

A composite indicator of living standards combining health (life expectancy), education (schooling years), and income levels.

Absolute Poverty

Extreme poverty where individuals lack the income (usually less than $1.25 a day) to meet basic human needs for survival.

Globalisation

The process by which the world's economies become increasingly interdependent and interconnected through trade and cultural exchange.

Protectionism

The use of trade barriers like tariffs and quotas to restrain foreign trade and limit overseas competition to protect domestic jobs.

Exchange Rate

The price of one currency measured in terms of other currencies.

Current Account of the Balance of Payments

A financial record of all exports and imports of goods and services, plus net income transfers from abroad.