Economic 2 Flashcards
Deregulation
The process of removing government controls from free markets
Derived demand
When the demand for one good or service comes from the demand for another good or service. The demand for cars stimulates the demand for steel therefore the demand for steel is derived demand
Discouraged workers
Workers who leave the labour market because despite numerous attempts they are unable to find a job
Discretionary fiscal policy
The deliberate manipulation of government spending in taxation to influence the economy
Diseconomies of scale
Where any increase in the scale of production leads to increase is an average total cost for firms
Disequilibrium
The situation within the market where supply does not equal demand
Disposable income
Income available to households after the payment of income tax and national insurance contribution
Division of labour
Breaking the production process down into a sequence of tasks with workers assigned to particular tasks
Economic goods
Goods that are scarce and therefore have an opportunity cost
Economic growth
The capacity of the economy to produce more goods and services over time
Economic indicators
Economic statistics that provide information about the expansions and contractions of business cycles
Economic models
These are used to show the essential characteristics of complicated economic conditions in order to analyse them and predict the result of changes of variables
Economic welfare
Refers to the benefit all satisfaction and individual or society gets from the allocation of resources. we can attempt to measure the welfare of individuals but we really want to understand the overall effects on society as a whole. this will include how well off people feel, how much they have but also might consider other factors such as their environment and standard of living their physical well-being although this is hard to define
Economies of scale
Where an increase in the scale of production leads to reduction in average total cost for firms
Effective demand
Demand supported by the ability to pay for a good or service
Employment
Where labour is actively engaged in a productive activity usually in exchange for payments such as wages
Equilibrium
The price at which demand is equal to supply and there is no tendency for change
Ex ante
A term that refers to future events
Ex post
A term that refers to after the event
Excess demand
When demand is greater than supply at a given price
Excess supply
When supply at a particular price is greater than demand this should signal to producers to lower prices
Exchange rate
The price at which one currency e.g. the pound exchanges for another e.g. the US dollar
Expansionary fiscal policy
Increasing levels of government spending relative to text revenue appropriate to stimulating I can get them on during a downturn in economic activity
Exporting
The sale of goods or services to a foreign country generates income for the home country
Exports
Goods or services sold abroad
Extension in supply
When there is an increase in supply because the market price has risen
Extensions in demand
Increases in demand caused by changes (falls)in price
Externalities
Course open to fit set spill over to 3rd parties external to a market transaction
Factor market
The market for the factors of production that make other goods and services such as labour or raw materials
Failure of information
Or information failure where economic agents do not properly perceive the benefits or disadvantages of the transaction
Fiscal policy
The policy of the government regarding taxation and government expenditure
Fixed costs
Costs of production that do not vary as output changes
Flow
Measured over a specified period of time
Free goods
Goods that have no opportunity cost, for example air
Free market economy
One in which there is very limited government involvement in providing goods and services. Its main role is to ensure that the rules of the market are fair so that for example, people cannot steal each other’s property
Free rider problem
Where some consumers benefit from other consumers purchasing a good, particularly in the case of public goods
Fictional search unemployment
People between jobs
Geographical immobility
Where workers find it difficult to move to wear employment opportunities may be due to family ties and differences in housing costs
Globalisation
The ability to produce goods anywhere in the world and sell them in any country
Goods and services
Goods are considered to be tangible products that we can touch such as CDs or a car. These are distinct from services which are not tangible such as a trip to the cinema or train journey. We do not buy the train or the cinema but do receive intangible benefits from watching the film or travelling
Government failure
When government intervention to correct market failure does not improve the allocation of resources or leads to a worsening of the situation. The costs of government intervention may therefore exceed the benefits
Gross domestic product
The total value of goods and services produced in the country
Demerit good
A good that would be over consumed in a free market as it brings less overall benefit to consumers than they realise
Market demand
Total demand in the market for a good sum of all individuals demand at each given price
Market failure
Where the market fails to produce work of consumers require at the lowest possible cost
Indices
Have no idea what they are
