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Economics Theme 1 Flashcards

1
Q

Central bank

A

The governments financial authority responsible for managing money regulating banks and controlling interest rates to maintain economic stability

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2
Q

Demand

A

The quantity of a good or service that consumers are able and willing to buy at a given price during a given period of time

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3
Q

Utility

A

The usefulness or enjoyment a consumer can get from a service or good

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4
Q

Merit good

A

Provided by the state and private sector, eg healthcare

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5
Q

Exchange rate

A

The value of one currency for another

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6
Q

Change formula

A

Change/original x 100

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7
Q

Factors of production

A

The resources people use to produce goods and services

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8
Q

positive data

A

A positive statement is a statement that can be verified true or false

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9
Q

Normative data

A

A statement that is an opinion

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10
Q

Aggregate demand

A

All demand added up in the economy

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11
Q

Progressive tax system

A

Increase the tax rate as individuals increase their income

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12
Q

Indirect tax

A

Taxes paid via as 3rd party to the government, excise duty on fags

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13
Q

Unemployment

A

Willing to work but cannot get a job

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14
Q

British money into foreign money

A

British money x exchange rate

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15
Q

Local government

A

Responsible for delivering government services on a town/regional basis

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16
Q

Appreciation

A

An increase in the external value of one currency in relation to another

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17
Q

Depreciation

A

A decrease in the external value of one currency in relation to another

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18
Q

Balance of trade

A

Value of exports - imports (x-m)

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19
Q

Opportunity cost

A

The cost of missing out on the next best alternative

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20
Q

Economy

A

The environment in which business entrepreneurs employees governments and individuals operate

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21
Q

Fiscal policy

A

The manipulation of government spending taxation and the budget balance

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22
Q

Economic cycle

A

The overall state of the economy as it goes through alternating stages of expansion and contractions (recessions)

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23
Q

Demand pull

A

The upward pressure on prices follows a shortage in supply

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24
Q

Cost push inflation

A

When prices increase due to increases in production costs

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25
Deflation
A sustained period when the general price level for goods and services is falling
26
Inflation
A general and sustained increase in prices over time
27
Monetary policy
The control of the quantity of money available in an economy
28
Vacancies/skill shortages
Unfilled jobs in the labour market
29
Supply side policies
Measures that are intended to improvise the long term growth of the economy
30
Austerity
The name used for the government fiscal policy which is aimed at reducing a government deficit (or borrowing)
31
Budget deficit
Occurs when government spending is greater than tax revenues
32
Monetary inflation
The rise in prices caused by an increase in the supply of money
33
RPI (retail price index)
Tracks the changes in the cost of a fixed basket of goods over time
34
CPI (consumer price index)
Designed to be representative of the purchases made by the average household
35
MPC (marginal prosperity to consume)
The proportion of aggregate raise in pay that a consumer spendings on the consumption of goods and services as opposed to saving it
36
Interest rates
The amount of a lender charges a borrower and is a percentage of the principal to the amount loaned
37
Base rate
The rate of interest that is set by a central bank and which is the lowest rate at which it lends money to other banks
38
Foreign money into British money
Foreign money/exchange rate
39
Scarcity
The demand for a good or service is greater than the availability of the good or service
40
Consumer sovereignty
Idea that it is consumers who influence production decisions
41
Disinflation
A slow down in the annual rate of price inflation
42
Hyped inflation
Rapid and excessive and out of control general price increase in an economy
43
Transition economics
An economy that is changing from a planned economy to a free economy
44
Problems of inflation
Money can buy less Uncertain investments Fixed income people may struggle
45
Benefits of inflation
Debt relief, erodes the real value of debt Encourages spending Can lead to nominal wage increases
46
Zero hours contracts
When the employee has no set or guaranteed hours of work
47
Direct tax
Taxes directly paid to the government, eg income
48
Public good
Only provided by the state, eg street lights
49
Underemployment
Those in work but working part time who want to be full time, whose with high skill levels working low skilled jobs
50
Free market
A system of buying and selling goods and services that is not under government control
51
Trade off
Any situation where making once choice means loosing out on somethings else usually forgoing a benefit or opportunity
52
Signalling
Prices give signals to producers and consumers
53
Rationing
Only those willing and able to pay the price get the products or resources
54
Incentives
Profitably motivates firms value for money motivates consumers
55
Homogenous
Products are uniform identical whatever their origin; all bananas look the same
56
Differentaited
Products are distinctive with different design features or branding
57
Mass markets
Products are supplied in significant quantities to all or most types of consumers
58
Oligopoly
Markets where few large firms dominate the (usually) mass markets where there are often smaller firms competing as well
59
Niche market
A small segment of a market with distinctive specialised requirements, they may be associated with subcultures
60
Market research
The process of gathering data in order to understand the current and future customer needs, reduces risk when developing a new idea
61
Primary market research
Obtained first hand involves fieldwork and can be directly related to the businesses needs
62
Secondary market research
Uses data that has been gathered previously by someone else
63
Quantitive market research
Markets research conducted where the results and numerical
64
Qualitative market rearch
Market research that analyses opinions and feelings
65
Sampling
Involves collecting data from a number of people to represent a larger demographic
66
Bias
When information collected from a sample doesn’t represent the total population
67
Quota sample
Dividing the the target market into groups according to their consumer characteristics
68
Stratified samples
Select participants within the target groups or random bias more accurate
69
Market segmentation
Identifying different groups of consumers in a market with different preferences
70
Market repositioning
Refers to the way a product is seen in comparison with rival product so that businesses can match customer preferences or appeal to different market segments
71
Repositioning
Means targeting a different market segment one with more potential sales revenue or profit
72
Market map
A took that plots brands in the market according to how they meet customers needs
73
Product differentiation
Unique features which distinguish a product from its rivals
74
Adding value
When factors of production are used to make material inputs more valuable to potential customers
75
Competitive pricing
Takes account of prices charged for similar products competing in the same market
76
Break even formula
Fixed costs / contribution
77
Contribution
Selling price (per item) - Variable costs (per item)
78
Excess supply
When the quantity supplied is greater than the quantity demanded
79
Excess demand
When the quantity demanded outweighs the quantity supplied
80
Equilibrium price
Price at which quantity supplied and quantity demanded are equal
81
Market clearing
A balance between quantity supplied and quantity demanded
82
Price signalling mechanism
Refers to the way potential profits will attract entrepreneurs to a growing market
83
Ceteris paribus
The affect of one economic variable on another provided all other variables are the same
84
Signalling
Prices give signals to producers or consumers
85
Rationing
Only those willing and able to pay the price get the products or service
86
Incentives
Profitably motivates firms value for money motivates consumers
87
Social costs
The total of private costs and any external costs
88
Overproduction/overconsumption
When prices reflect only the private costs of production ignoring external costs
89
Market failure
When markets allocate resources inefficiently often because market prices are distorted
90
Command economy
Relies predominantly on public sector provision of goods and services
91
PROFIT calculation
Sales revenue - cost
92
SALES REVENUE calculation
Sales volume x selling price
93
Contribution
The amount each sale raises towards fixed costs or profits
94
Contribution calculation
Selling price - variable costs
95
Break even formula
Fixed costs / contribution
96
Barriers to entry
Obstacles to new entrants which affect some industries particularly where competing businesses are very large
97
Gross profit
Sales revenue less the immediate variable costs of producing the goods sold
98
Gross profit margin calculation
Gross profit x 100 / sales revenue
99
Operating profit margin
Operating profit x 100 / sales revenue
100
Net profit margin
Net profit x 100 / sales revenue

Economics (2 decks)

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