IGCSE Econ terms

absolute poverty

absolute poverty

where people do not have enough resources to meet all of their basic human needs

administration

activities involved with managing in and organising work the work of a company or organisation

aggregate demand

total demand in the economy including consumption, investment, government expenditure and exports mins imports

aggregate supply

total amount of goods and services produced in a country at a given price level in a given price

anti-competitive practices

attempts by firms to prevent or restrict competition

appreciation

where the value of a currency rises due to market forces

assembly plants

factory where parts are put together to make a final product

assets

things or resources belonging to an individual or a business that has value or the power to earn money

austerity

official action taken by a government in order to reduce the amount of money that it spends or the amount that people spend

balance of payments

record of all transactions relating to international trade

balance of trade / visible balance

difference between visible exports and visible imports

barriers to entry

obstacles that might discourage a firm from entering a market

base rate

rate of interest set by government or regional central banks for lending to other banks, which in turn influences other rates in the economy

basic economic problem

allocation of a nation’s scarce resources between competing uses that represent infinite wants

bi-lateral trade agreement

trade deal between only two countries

boom

peak of the economic cycle where GDP is growing at its fastest; time when business activity increases rapidly, so that the demand for goods increases, prices and wages go up, an unemployment falls

boom and bust

when an economy regularly becomes more active and successful and then suddenly falls

budget

government’s spending and revenue plans for the next year

budget deficit

amount by which government spending is greater than government revenue

bulk buying

buying goods in large quantities, which is usually cheaper than buying in small quantities

capital and financial account

that part of balance of payments where flows of savings, investment and currencies are recorded

capital goods

those purchased by firms and used to produce other goods such as factories machinery, tools and equipment

capital intensive

production that relies more heavily on machinery relative to labour

cartel

where a group of firms or countries join together and agree on pricing or output levels in the market

closed shop

company or factory where all the workers must belong to a particular trade union

commodities

product that can be sold to make a profit

competition

rivalry that exists between firms when trying to sell goods to the same group of customers

complementary goods

goods purchased together because they are consumed together

consumer goods

those purchased by households, such as food, confectionery, cars, tablets and furniture

consumer price index

measure of the general price level (excluding housing costs)

consumption

amount of goods, services, energy or natural materials used in a particular period of time

contractionary fiscal policy

fiscal measures designed to reduce demand in the economy

cost-push inflation

inflation caused by rising business costs

costs

expenses that must be met when setting up and running a business

current account

parts of balance of payments where all exports and imports are recorded

current account deficit

when value of imports exceeds the value of exports

current account surplus

when value of exports exceeds the value of imports

current balance

difference between total exports and total imports

cyclical / demand deficient unemployment

unemployment caused by falling demand as a result of a downturn in the economic cycle

de-industrialisation

decline in manufacturing

deflation

period where the level of aggregate demand is falling

demand curve

line drawn on a graph that shows how much of a good will be bought at different prices

demand schedule

table of the quantity demanded of a good at different price levels - can be used to calculate the expected quantity demand

demand-pull inflation

inflation caused by too much demand in the economy relative to supply

depreciation

where the value of a currency falls due to market force

depression

bottom of the economic cycle where GDP starts to fall with significant increases in unemployment

derived demand

demand that arises because there is demand for another good

devaluation

when a government fixes a new lower exchange rate

direct taxes

taxes levied on the income earned by firms and individuals

discretionary expenditure

non-essential spending or spending that is not automatic

diseconomies of scale

rising average costs when a firm becomes too big

disposable income

income that is available to someone over a period of time to spend

diversified

if a company or economy diversifies, it increases the range of goods and services it produces

dividend

part of a company's profit that is divided among the people with shares in the company

division of labour

breaking down of the production process into small parts with each worker allocated to a specific task

downturn

period in the economic cycle where GDP grows, but more slowly

dumping

where an overseas firm sells large quantities of a product below cost in the domestic market

economic growth

increase in the level output by a nation

economies of scale

falling average costs due to expansion

economy

system that attempts to solve the basic economic problem

effective demand

amount of a good people are willing to buy at given prices over a given period of time supported by the ability to pay

elastic demand

change in price results in a greater change in the quantity demanded

elastic supply

change in price results in a proportionately greater change in the quantity supplied

embargo

official order to stop trade with another country

enterprises

companies, organisations or businesses

entrepreneurs

individuals who organise the other factors of production and risk their own money in a business venture

equilibrium price

price at which supply and demand are equal

excess demand

where demand is greater than supply and there are shortages in the market

excess supply

where supply is greater than demand and there are unsold goods in the market

exchange rate

price of one currency in terms of another

excise duty

government tax on certain goods, such as cigarettes, alcoholic drinks and petrol that are sold in the country

expansionary fiscal policy

fiscal measures designed to stimulate demand in the economy

expenditure

spending by a government, usually a national government

exports

goods and services sold overseas

external benefits

positive spillover effects of consumption or production - they bring benefits to third parties

external costs

negative spillover effects of consumption or production - they affect third parties in a negative way

external economies of scale

cost benefits that all firms in an industry can enjoy when the industry expands

factors of production

resources used to produce goods and services, which include land, labour, capital and enterprise

fast-moving consumer good

goods, especially food, that sell very quickly and in large amounts

finite

having an end or a limit

fiscal deficit

amount by which government spending exceeds government revenue

fiscal policy

decisions about government spending, taxation and levels of borrowing that affect aggregate demand in the economy

fiscal surplus

amount by which government revenue exceeds government spending

fit for purpose

usable (by a consumer) for the purpose for which it was intended

fixed capital

stock of 'man-made' resources, such as machines and tools, used to help make goods and services

fixed costs

costs that do not vary with the level of output

foreign exchange market

market where foreign currencies can be bought and sold

free rider

individual who enjoys the benefit of a good but allows others to pay for it

free trade

situation in which the goods coming into or going out of a country are not controlled or taxed

frictional unemployment

when workers are unemployed for a short period of time as they move from one job to another

globalisation

growing interconnection of the world's economies

goods

things that are produced in order to be sold

gross domestic product

market value of all final goods and services produced in a period (usually yearly), an internationally recognised measure of national income

hostile takeover

takeover that the company being taken over does not want or agree to

human capital

value of the workforce or an individual worker

hyperinflation

very high levels of inflation; rising prices get out of control

imports

goods and services bought from overseas

income elasticity of demand

responsiveness of demand to a change in income

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

indirect taxes

taxes levied on spending inelastic demand, such as VAT