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Mock Revision > Economics - Key Terms > Flashcards

Economics - Key Terms Flashcards

1
Q

Inflation

A

a general increase in prices and the fall in the purchasing value of money

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2
Q

Interest Rate

A

the rate of saving and borrowing

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3
Q

Gross National Income GNI

A

measures the final value of incomes in the UKs owned factors of production whether they are located in the UK or overseas

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4
Q

Gross Domestic Products GDP

A

total value of national output of goods and services produced in a given time period

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5
Q

Activity Rate

A

the amount of people employed and unemployed as a percentage of the total population

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6
Q

Multiplier Effect

A

the proportion or amount of increase/ decrease in final income because of an increase or decrease in spending

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7
Q

Ad Valorem Tax

A

a tax on a good or asset depending on its value

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8
Q

Aggregate Demand AD

A

the total demand for goods and services within a particular market

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9
Q

Aggregate Supply AS

A

the total supply of goods and services avaliable to a perticular market from producers

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10
Q

Balance of Payments BOP

A

a record of all the monetary transactions made between the residents of the UK and other countries over a period of time. BOP indicates that a countries imports are more than its exports

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11
Q

Carbon Offsetting

A

where firms invest in green technology to offset their carbon footprint

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12
Q

Carbon Tax

A

a tax on carbon emissions produced by a company - an incentive to switch to cleaner energy

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13
Q

Circular Flow

A

how money moves through a society. producers-workers as wages then back to producers through consumption/payment of products

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14
Q

Classical Unemployment

A

unemployment resulting form an increase in wages above the free market equilibrium wage rate

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15
Q

Consumer Surplus

A

the extra benefit a consumer gains when the price they actually pay in the market is less than they would usually be prepared to pay (graph)

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16
Q

Consumer Price Index CPI

A

tracks the changes in the price in a number of goods and services consumed by a typical household - basket of goods

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17
Q

Current Account

A

records the payments of goods and services also investment income and transfers between an economy and the rest of the world

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18
Q

Credits

A

payment coming into an economy

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19
Q

Debits

A

payments leaving an economy

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20
Q

Cyclical Unemployment

A

unemployment that results from a general decline in economic activity - a recession (demand deficient unemployment)

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21
Q

Deflation

A

a fall in the average level of prices over time

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22
Q

Demand

A

the willingness and ability of consumers to purchase a given quantity of a good or service at a given point over a period of time

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23
Q

Demerit Goods

A

a good or service whose consumption is considered unhealthy, degrading or perceived to have negative effects on the consumers themselves - cigarettes

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24
Q

Direct Taxes

A

taxes imposed on factor incomes i.e. income and corporation tax, VAT. Paid by the individual directly to the government.

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25
Q

Division of Labour

A

the separation of a work process into a number of tasks which performed by different individuals to be more efficient

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26
Q

Economic Growth

A

refers to a rise in real national income. An increase in aggregate production in an economy - increased productivity of labour (output)

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27
Q

Economic Welfare

A

consumer + producer surplus (graph)

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28
Q

Equilibrium

A

a state of balance in an economy

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29
Q

Exchange Rate

A

the value of a country’s currency vs another country’s.

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30
Q

Expansionary Policy

A

undertaken when monetary or fiscal policy is used to inject extra demand in the circular flow of income to achieve economic growth. boosts demand through monetary and fiscal

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31
Q

Exports

A

the value of goods and services produced by a countries firms in a given period of time and are sold abroad

32
Q

Imports

A

goods produced outside of one country which are purchased by another country

33
Q

External Benefit

A

the benefit gained by an individual or firm as a result of an economic transaction, but they are not directly involved in the transaction

34
Q

External Cost

A

also called third party costs

-the cost incurred by an individual, firm as a result of an economic transaction which they are not directly involved in

35
Q

Factors in Production

A

the resources people use to produce goods and services

  1. land
  2. labour
  3. capital
  4. entrepreneurship
36
Q

Fiscal Boost

A

as incomes fall in a recession the impact of falling gets softened as income earners pay lower taxes to retain more post-tax income

37
Q

Fiscal Drag

A

when rising incomes push prices higher meaning that tax payers get pushed into a higher tax bracket

38
Q

Fiscal Policy

A

government spending and taxation policies intended to maintain economic stability. Indicated through the levels of unemployment, interest rates, prices and economic growth

39
Q

Government Failure

A

economic inefficiency and scarce resources

the government have to intervene in the market to correct market failure

40
Q

Human Development Index HDI

A
  • a measure of economic development and welfare in a country
  • uses life expectancy, education and income levels
  • produced as a score between 0-1
41
Q

Inactivity Rate

A

the proportion of the population of working age who are not active in the labour market
-unemployed and not seeing employment

42
Q

Incidence of Tax

A

the division of a tax burden between producers and consumers

who has to bear the tax - demand is more elastic than supply - producers will bear the cost of the tax

43
Q

Income Effect

A

how the change in the price of a good can change the quantity that consumers will demand of that good and related goods, based on how the price change affects their real income

44
Q

Indirect Tax

A

collected by one entity in the supply chain and paid t the government. This cost is passed onto the consumers as part of the purchase price of a good or service

45
Q

Inferior Good

A

a good whose demand drops when peoples incomes rise

-consumers start buying costly substitutes instead

46
Q

Injections

A

variables in an economy that add to the circular flow of incomes
include investments, gov. spending and exports

47
Q

Investment

A

an asset or item acquired with the goal of generating income or appreciation.

48
Q

Liquidity

A

the ease of which an asset or security can be converted into ready cash without affecting tis market price
i.e. Cash

49
Q

Liquidity Trap

A

when monetary policy becomes ineffective due to very low interest rates combined with consumers who prefer to save rather than investing in higher-yielding bonds/ investments

50
Q

Long Run Aggregate Supply

LRAS

A

when the output that an economy can produce when using all its factors in production, and operating at full employment

51
Q

Long Tail

A

a business strategy that allows companies to sell low volumes of hard-to-find items to many customers rather than only selling large volumes of a reduced number of popular items

52
Q

Market

A

an exchange of goods and services that takes place as a result of buyers and sellers being in contact with one another either directly or through agents

53
Q

Marginal Cost

A

the change in the total cost when the quantity produced changes by one unit
-the cost of producing one more unit of a good

54
Q

Marginal Propensity to Consume MPC

A

the proportion of an aggregate rise in pay that a consumer spends on the consumption of good and services as opposed to saving it
MPC = change in consumption/change in come

55
Q

Market Failure

A

the insufficient distribution of goods and services in the free market.

56
Q

Free Market

A

an economic system based on supply and demand with little or no gov. control

57
Q

Maximum Price

A

a limit or cap on a price set by a gov. or organisation

-the highest price which can be set by the producer

58
Q

Merit Good

A

when consumed provides external benefits

i.e. education and healthcare

59
Q

Minimum Price

A

the lowest price that can legally be set

i.e. alcohol, minimum wage

60
Q

Monetary Policy

A

the actions taken by a nations central bank to control money supply and achieve sustainable economic growth

61
Q

Monetary Policy Committee MPC

A

a group of 9 individuals who set short term interest rates based on how the economy is working

62
Q

Monopoly

A

a firm or company who have full market control and power

  • they can be a result of free markets
  • happen when they are the sole seller of a product
    i. e. Microsoft
63
Q

Moral Hazard

A

the risk that a party has not entered into a contract in good faith or has provided misleading information about its assets etc.

64
Q

Movements

A

a change along a curve

65
Q

Shifts

A

in demand or supply curve occurs when a goods quantity demanded or supplied changes even though price remains the same

66
Q

Non-Accelterating Inflation Rate of Unemployment NAIRU

A

specific level of unemployment that is evident in an economy that does not cause inflation to increase

67
Q

National Income

A

total value of a country’s final output of all new goods and services produced in one year

68
Q

National Minimum Wage

A

lowest level of pay that is legally allowable

-amount employers can legally pay employees

69
Q

Net Welfare Gain

A

the impact of a gov. policy or decision by firms on total economic welfare taking into account the gains and losses

70
Q

Net Welfare Loss

A

loss of economic efficiency in terms of utility for consumers/producers such that the optimal efficiency is not achieved

71
Q

Nominal Wages

A

wages expressed in a monetary form, do not take into account changes in price

72
Q

Normal Good

A

a good that experiences an increase in its demand due to a rise in consumers’ income
i.e. food, clothing, household appliances

73
Q

Normative Statement

A

cannot be tested or verified and is based on a value judgement
i.e.stating the price of housing is too expensive

74
Q

Oligopoly

A

a market characterised by a small no. of firms who realise they are interdependent in their pricing and output policies.
small enough to give each firm some market power

75
Q

Opportunity Cost

A

the potential benefits an individual/business misses out on when choosing one alternative over another

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