Studied by 4 peopleabsolute 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
Note
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