economics key words (all) (copy)

asset

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

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

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

consumer price index (CPI)

method used to calculate the rate of inflation

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

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

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

diseconomies of scale

when the average cost of production begin to increase as a firm grows in size

distribution of income

how incomes are shared out between individuals and households

distribution of wealth

how wealth is shared out between individuals and households

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

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

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

European union (EU)

an economic and political group of countries in Europe that have free trade with each other

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

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.

free trade agreement

Free movement of goods and services between countries, without any restrictions.

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.

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

imports

goods and services bought from abroad

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.

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.

interest rate

The price of borrowing money, and the reward for saving money.

international trade

The exchange of goods and services between countries.

invisible hand

Unobservable market forces assist demand and supply of goods and services in a free market to move automatically to an equilibrium position.

less developed country

a country with a developing economy that has lower GDP per capita, lower levels of industrialisation and weaker indicators of wellbeing

market economy

an economy in which scarce resources are allocated by the market forces of supply and demand

medium of exchange

anything that sets the standard of value of goods and services acceptable to all parties involved in a transaction

monetary policy

a policy which aims to control the total supply of money in the economy to try to achieve the government’s economic objectives, particularly price stability

money

Anything that is generally accepted as a means of payment for goods and services.

multinational corporation (MNC)

A firm that has its head office in one country, but has operations in a number of other countries.

price

The sum of money you have to pay for a good or service. It is determined by the interaction of supply and demand.

price stability

When the general level of prices stays constant over time, or grows at an acceptably low rate.

private sector (private enterprise)

Part of the economy that is run by individuals, firms and organisations and not by the government. Private sector organisations are called private enterprises.

privatisation

The transfer of assets such as businesses from the public sector to the private sector.

rate of inflation

The percentage rise in the general price level over time.

rate of interest/ interest rate

the cost of borrowing money, i.e. that which is paid to the lender. it is also the reward for saving

recession

A period when the country's GDP falls for two (or more) consecutive quarters.

salary

A yearly wage divided equally into 12 (monthly) parts.

specialisation

The process by which individuals, firms, regions and whole economies concentrate on producing those products that they are best at producing.

standard of living

The social and economic wellbeing of residents in a country.

subsidy

An amount of money the government gives directly to firms to encourage production and consumption.

supply-side policy

Policy that increases the productive potential, which is the ability of the economy to supply more goods and services.

tax

a compulsory payment to the government

wealth

The market value of all the assets owned by a person, group or country at a specific point in time. Wealth is a stock of assets, e.g. money, houses and land, whereas income is a flow over time.

fiscal policy

Fiscal policy involves the government changing the levels of taxation and government spending in order to influence aggregate demand (AD) and the level of economic activity