Revision Guide - Economic Glossary Flashcards
Aggregate demand
total demand in an economy: consumption, investment, government expenditure, and exports minus imports
Anti-competitive or restrictive trade practices
attempts by firms to restrict or prevent competition
Average costs
the cost per unit of output; it is equal to total cost divided by the number of units of output
Balance of payments
record of all of the transactions resulting from international trade
Barriers to entry
obstacles that migh discourage a firm from entering a market
Capital intensive
where production relies more heavily on machinery relative to labour
Cartel
a group of firms or countries join together to agree on pricing or output levels in an industry;
collusion
is where informal agreeements between firms restrict competition
Complementary goods
goods purchased together because they are consumed together
Consumer price index
used in United Kingdom and the Eurozone, it is a measure of the general price level excluding housing costs
Demand deficient (cyclical) unemployment
unemployment caused by falling demand in the economic cycle
Demand
the amount of a good bought at given prices over a period of time; a Demand Curve is a line on a graph which shows how much of a good will be bought at different prices; Derived demand is the demand that arises because there is demand for another good
Depression or slump
the bottom of an economic cycle, when GDP falls with significant increases in unemployment; Recession a less severe form of depression
Diseconomies of scale
rising average costs when output rises
Division of labour
the breaking down of the production process into small parts with each worker allocated a part of the process
Dumping
where an overseas firm sells large quantities of a product below cost in the domestic market
Economic policy instruments
economic variables such as interest rates, taxation rates and government expenditure that governments can adjust in managing the economy
Economies of scale
falling average costs due to expansion
Effective demand
the amount of a good people can afford to buy, and would buy, at any given price over a period of time
Efficiency
minimising costs and the use of resources
Entrepreneur
an individual who organises the other factors of producion and risks their own money in a business venture
Equilibrium price
the price where supply and demand are equal
Excess demand
where demand is greater than supply and there are shortages in the market
Excess supply
where supply is greater than demand and there are unsold goods in the market
Exchange rate
the price of one currency in terms of the currency of another country; a devaluation is the fall in the value of a currency; an appreciation is when the exchange rate rises
Exports
are goods and services sold overseas; imports are goods and services bought from overseas
Externalities
the spillover effects of consumption or production; they affect others and may be positive or negative
Factors of production
the resources used to produce goods and services. They include land, labour, capital and enterprise
Fixed capital
the stock of ‘man-made’ resources such as machines and tools used to hlep make goods and services
Fixed costs
costs that do not vary with the level of output
Foreign direct investment
business investment undertaken by a firm in another country, such as building a factory
Frictional unemployment
workers are unemployed briefly while they move from one job to another
