economic definitions - paper 2

growth in GDP (value of output) over time

the total value added of goods and services produced in a country in a year

GDP divided by the population

a period of high economic activity and high levels of employment

a period when the country’s GDP falls for two (or more) consecutive quarters

The number of people who work in a country

the use of labour in the economy to produce goods and services

occurs when workers able and willing to work at the current wage rates are unable to find employment

the method of measuring unemployment according to the number of people claiming benefits (JSA)

the number of people in the working population who are unemployed

the percentage of the country’s workforce that is unemployed

unemployment caused by time lags when workers move between job

unemployment caused by a fall in demand during a particular season

unemployment caused by a permanent decline in an industry or industries

unemployment caused by a lack of demand in the economy

how incomes are shared out between individuals and households

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

the market value of all assets owned by a person, group or country at a specific point in time. Wealth is a stock of assets

the reward for labour

the reward for letting others live or work in your land or property

the reward for saving and the reward for lending

the reward for enterprise and risk taking. total revenue - total costs

given to those who may have no job at all. This can include job seekers allowance, state pension, housing benefits, disability living allowance. These are called transfer payments

income received before any taxes are taken ir benefits are given

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

how wealth is shared out between individuals and households

the price level of goods and services bought (by the average family)

a sustained rise in the general price level over time

when the general level of prices stays constant over time, or grows at an acceptably low rate. In the UK 2% + / - 1%

the percentage rise in the general price level over time

method used to calculate the rate of inflation. Basket of goods

someone who owes money

someone who is owed money

the costs incurred by firms when they have to adjust their price lists and menus

the additional cost of having to shop around looking for the lower price

takes into account and adjusts for inflation

the total amount of money spent by the government in a given period of time

a tax on income

the source of finance for government spending

a tax on spending, often defined as a tax on goods and services

when tax revenue is equal to government spending

when government spending is greater than tax revenue

when tax revenue is greater than government spending

a policy that uses government spending and taxation to affect the economy as a whole

a tax which takes greater percentage of tax the higher the income

a tax that takes a higher percentage of tax revenue from those on low incomes

a policy that aims to control the total supply of money in the economy to try and achieve the governments objectives, particularly price stability

a policy that increases the productive potential, which is the ability of an economy to supply more goods and services

harmful effect of an economic activity on third parties, also known as an external cost

an effect of the economic activity on a third party

beneficial effects of an economic activity on third parties, also known as external benefit

goods and services provided directly by the government

laws to control the way people and organisations behave

rules, directives or government orders to control the way people and organisations behave

the government provides information to encourage people (especially consumers) and organisations to change their behaviour

goods and services sold abroad

goods and services bought from abroad

the exchange of goods and services between countries

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

free movement of goods and services between countries without any restrictions

the record of all transactions between one country and the rest of the world

the record of trade in goods and services, income flows and transfers between one country and the rest of the world