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A HL Economics 2024/2025 > Definitions > Flashcards

Definitions Flashcards

1
Q

Interventionist supply side policies

A

Policies based on the idea that the government has an important role to encourage growth

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2
Q

Supply side policies

A

Policies that are designed to increase the long-run aggregate supply in the economy by increasing the quantity or quality of factors of production

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3
Q

Fiscal policy

A

The government’s policy for revenue and expentidure

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4
Q

Monetary policy

A

Policies around the supply of money and interest rate levels in an economy

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5
Q

Interest

A

Price of money/opportunity cost of spending or holding money

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6
Q

Nominal interest rate

A

Rate of interest avaliable excluding any adjustment for inflation

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7
Q

Real interest rate

A

Rate of interest adjusted for inflation

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8
Q

Aggregate supply

A

Total amount of goods and services that all industries in an economy will produce at every given price level

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9
Q

Short run aggregate supply

A

Time period where prices of factors of production do not change - the wage rate is fixed

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10
Q

Aggregate demand

A

Total spending on goods and services in an economy at a given price level

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11
Q

GDP

A

Total value of goods and services produced within a country over a given time period

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12
Q

GNI

A

Total value of goods and services produced by a nations citizens over a given time period (regardless of location)

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13
Q

Recession

A

Two consecutive quarters of negative economic growth

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14
Q

Monopoly

A

Where there is only 1 firm in the market, there are high barriers to entry and they make abnormal profit in the long run

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15
Q

Oligopoly

A

Where a few large firms dominate the industry, produce identical products, distinct barriers to entry, interdependence and stable prices

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16
Q

Collusion

A

When firms charge the same price on purpose to act as a monopoly

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17
Q

Market power

A

The ability of a firm to raise the market price of a good/service above its marginal cost by restricting output

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18
Q

Perfect competition

A

Where there is a large number of small firms, with no control over the price, identical products, no barriers

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19
Q

Productive efficiency

A

When a firm produces where AC is at its minimum

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20
Q

Allocative efficiency

A

When a firm produces where supply=demand

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21
Q

Monopolistic competition

A

A large number of small firms, no major barriers, similar but differentiated products, small control over price/output

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22
Q

Revenue

A

Income earnt by the firm from it’s business

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23
Q

Short run

A

Time period where one factor of production is fixed and the others are variable

24
Q

Long run

A

All factors of production are variable

25
Q

Economies of scale

A

The decrease in average costs of production as it increases the output due to gains in efficiency

26
Q

Market failure

A

When consumer and producer surplus is not maximised

27
Q

Externalities

A

Unintended side effects that occur on a third party

28
Q

Marginal private benefit

A

Private benefit gained by consumer due to consumption

29
Q

Marginal social benefit

A

MPB +/- any external benefit or cost on others as a result of an individual consuming the product

30
Q

Marginal private costs

A

Private cost to a firm that occurs as a result of production

31
Q

Marginal social cost

A

MPC +/- any external benefit or cost as a result of production

32
Q

Public goods

A

Goods that would not be provided at all by the free market but are of benefit to society

33
Q

Adverse selection

A

When one party has more information than the other

34
Q

Indirect tax

A

Tax imposed on expenditure and paid on your behalf by producer

35
Q

Dead weight loss

A

Loss of consumer and producer surplus that arises in the market due to government intervention causing supply and demand to no longer be in equilibrium

36
Q

Subsidy

A

The amount of money paid by the government to a producer per unit output

37
Q

Maximum price

A

Price limit imposed by the govt when they believe price is too high

38
Q

Minimum price

A

Price minimum imposed by the govt when they believe price is too low

39
Q

Price mechaism

A

The force of supply and demand

40
Q

Consumer surplus

A

The extra satisfaction gained by a consumer when the price they pay is below what they were prepared to pay

41
Q

Producer surplus

A

The excess in earnings (revenue) that the producers receive above what they were willing to sell it for

42
Q

Price elasticity of supply

A

The responsiveness of a firms willingness and ability to change the quantity supplied due to a change in price

43
Q

Supply

A

The quantity of goods/services a producer is willing and able to supply at each price

44
Q

Law of Supply

A

As price decreases, Qs decreases

45
Q

Elasticity

A

How much something changes when there is a change in another determinant

46
Q

Normal good

A

A good that is positively related to income - as income increases, Qd increases

47
Q

Inferior goods

A

A good that is negatively related to income - as income rises, Qd decreases

48
Q

Market

A

A place where buyers and sellers come together to carry out an economic transaction

49
Q

Demand

A

Quantity of goods and services that a consumer is willing and able to consume at different prices

50
Q

Scarcity

A

Conflict between finite resources and infinite wants

51
Q

Economics

A

Study of choices people make in overcoming problems that occur due to limited resources and unlimited needs/wants

52
Q

Opportunity cost

A

Next best thing forgone when an economic decision is made

53
Q

Capital

A

Anything made by humans that can be used to produce a good or service

54
Q

Positive economics

A

Factual and objective claims

55
Q

Normative economics

A

Subjective and opinion based judgements

A HL Economics 2024/2025 (18 decks)

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