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AS Economics Key Terms
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- 1Accelerator ProcessWhere any change in demand for goods/services beyond current capacity leads to a greater % increase in demand for capital goods needed by firms to produce extra goods/services
- 2Actual Economic GrowthA measure of economic growth, adjusted for inflation
- 3Aggregate DemandThe total demand/spending in an economy at different price levels over a given time period
C+I+G+(X-M) - 4Aggregate SupplyThe total amount of goods & services which can be supplied in an economy at different price levels over a given time period
- 5Allocative EfficiencyWhen the price of a good is = to price that consumers are willing to pay for it, which happens when all resources are allocated efficiently
- 6Asymmetric InformationWhen buyers have more information than sellers (or opposite) in a market
- 7Balance of PaymentsA country's international transactions, i.e. a record of the flows of money into and out of a country
- 8Budget DeficitWhen government spending is greater than it's revenue
- 9Budget SurplusWhen government spending is less than its revenue
- 10CartelA group of producers that agree to limit production in order to control the price of goods and services
- 11Circular Flow of IncomeThe flow of national output, income & expenditure between households and firms
national output=national income=national expenditure - 12Complementary GoodA good that is often used with another good-these goods are in joint supply
- 13Composite demandWhen a good is demanded for two or more different uses e.g. milk can be used in production of ice-cream & chocolate
- 14Consumer SurplusWhen a consumer pays less for a good than they were prepared to, this amount of money is the consumer surplus
- 15Cost-Push InflationInflation caused by the rising cost of the inputs to production
- 16Cross Elasticity of Demand (XED)A measure of how the quantity of demanded of one good/service responds to a change in the price of another good/service
- 17Current Account on the Balance of PaymentsA record of a country's international flows of money. Consists of: trade in goods, trade in services, international flows of income (salaries, interest, profit & dividends) & transfers
- 18Cyclical UnemploymentUnemployment caused by a shortage in demand in an economy e.g. when there's a slump
- 19Demand-Pull InflationInflation caused by excessive growth in aggregate demand compared to aggregate supply
- 20Demerit GoodA good/service which has greater social costs when it's consumed than private costs. Demerit goods tend to be overconsumed
- 21DeregulationRemoving rules imposed by the government that can restrict the level of competition in a market
- 22Derived DemandThe demand for a good/factor of production due to its use in making another good/service
- 23Disposable IncomeIncome, including welfare benefits, that is available for households to spend after income tax has been paid
- 24DividendA share in a firm's profits that is given to the firm's shareholders
- 25Economic CycleThe economic cycle (or the business/trade cycle) is the fluctuation in actual growth a time period (several years/decades)
- 26Economic GrowthAn increase in an economy's productive potential. Measured as the rate of change of the GDP/GDP per capita
- 27Economies of ScaleThe cost advantages of production on a large scale
- 28EquilibriumWhen the quantity supplied is equal to the quantity demanded (market clearing price)
- 29EquityFairness
- 30Exchange RatePrice at which one currency buys another
- 31ExternalitiesExternal costs/benefits to a 3rd party that isn't involved in the making, buying/selling & consumption of a specific good/service
- 32Factors of ProductionThe four inputs needed to make the things people want: land, labour, capital & enterprise
- 33Fiscal PolicyGovernment policy that determines the levels of government spending & taxation. Often used to increase/decrease AD in an economy
- 34Free MarketA market with no government intervention. Competition between different suppliers affects supply & demand, resulting in determining prices in a free market
- 35Free TradeInternational trade without any restrictions from things such as trade barriers
- 36Frictional UnemploymentThe unemployment experienced by workers between leaving one job and starting another
- 37Government FailureOccurs when government intervention into a market causes a misallocation of resources
- 38Gross Domestic Product (GDP)The total value of all the goods and services produced in a country in a year
- 39Imperfect InformationA situation where buyers &/or sellers don't have full knowledge regarding price, costs, benefits & availability of a good/service
- 40Income Elasticity of Demand (YED)A measure of how the demand for a good/service responds to a change in real income
- 41Inferior GoodA good for which demand decreases as income rises e.g. low quality food
- 42InflationThe sustained rise in the average price of goods & services over a period of time
- 43InterestMoney paid to the lender by someone who borrows capital. Often be a fixed %rate-known as interest rate
- 44InvestmentThe purchase of capital (e.g. new machinery) in the hope that this will help generate an increased level of output. Can also mean buying shares from the stock market- done in hope of making a future profit/receiving dividend payments
- 45Joint DemandWhen two complementary goods are consumed together
- 46Joint SupplyWhen the production of one good involves the production of another
- 47Long RunA time period in which all factors of production are variable so a firm can expand its capacity
- 48Long Run Aggregate Supply (LRAS)In the long run it's assumed that, because factors & costs of production can change, an economy will run at full capacity-so LRAS is the productive potential of an economy
- 49MacroeconomicsThis is the part of economics that looks at the economy as a whole e.g. trends in unemployment & economic growth
- 50Marginal Propensity to ConsumeThe proportion of an increase in income that people will spend (¬ save)
- 51MarketWhere buyers & sellers exchange goods/services
- 52Market FailureWhere the price mechanism fails to allocate resources efficiently
- 53Merit GoodA good/service which provides greater social benefits when it's consumed than private benefits. Merit goods tend to be underconsumed
- 54MicroeconomicsThe part of economics concerned with individual people, individual firms & individual markets e.g. covers things like how changes in demand affects the price of a good in a market
- 55Monetary PolicyGovernment policy that involves controlling the total amount of 'money' in an economy (the money supply), & how expensive it is to borrow that money. It involves manipulating interest rates, exchange rates & restrictions on the supply of money
- 56MonopolyA pure monopoly is a market with only one supplier. Some markets will be reffered to as a monopoly if there's more than one supplier, but one supplier dominates the market
- 57Monopoly PowerThe ability of a firm to be a 'price maker' & influence the price of a particular good in a market
- 58MortgageA loan taken out to contribute to the cost of buying a house/other property
- 59Multiplier EffectThe process by which an injection into the circular flow of income creates a change in the size of national income that's greater than the injection's size
- 60National OutputAll the goods & services produced in a country in a year
- 61Normal GoodA good for which demand increases as income rises e.g. clothing
- 62Normative StatementA subjective statement which contains some kind of value judgement (opinion)
- 63Opportunity CostThe benefit that's given up in order to do something else-it's the cost of the choice that's made
- 64Output GapThe gap between the trend rate of economic growth & actual economic growth. Output gaps can be positive or negative
- 65Perfect InformationWhen buyers & sellers have full knowledge of prices, costs & availability of products
- 66Positive StatementAn objective statement that can be tested by reffering to the available evidence
- 67Price Elasticity of Demand (PED)A measure of how quantitiy demanded of a good/service responds to a change in its price
- 68Price Elasticity of Supply (PES)A measure of how the quantity supplied of a good/service responds to a change in its price
- 69Price InstabilityWhen a small increase/decrease in the quantity supplied of a good/service can have a large impact on the price. Price instability us a feature of many markets for agricultural products
- 70Price MechanismWhen the changes in demand/supply of a good/service lead to changes in its price & the quantity bought/sold
- 71PrivitisationWhen a firm/whole industry changes from being run by the public sector to the private sector. It's an example of a supply-side policy
- 72Producer SurplusWhen a producer receives more for a good than they were prepared to accept, this amount of money is the producer surplus
- 73Production Possibility Frontier (PPF)A curve which shows all the maximum possible outputs of two goods/services using a fixed amount of inputs
- 74Productive EfficiencyOutputting the desired amounnt of good/services for the lowest average cost of production (this occurs on the PPF)
- 75ProductivityA measure of how efficiently a company/economy is producing its outputs
- 76ProtectionismWhen a government uses policies to control the level of international trade & protect its own economy, industries & firms
- 77Public GoodA good which people cannot be stopped from consuming, even if they've not paid for it, and the consumption of which doesn't prevent others from benefiting from it (e.g. national defence)
- 78Purchasing Power Parity (PPP)An adjustment of an exchange rate to reflect the real purchasing power of the two currencies
- 79Real IncomeA measure of the amount of goods/services that a consumer can afford to purchase with their income-adjusted for inflation
- 80RecessionA period where economic growth becomes negative. Typically there are falling demand, low levels of investment & rising unemployment during a recession
- 81RevenueThe total value of sales within a time period. It can be calculated using:
price per unit x quantity sold - 82Seasonal UnemploymentUnemployment due to uneven economic activity during the year
- 83ShareholdersIndividuals (or firms) that owns shares in a company
- 84ShareA share represents a portion of a company's value-giving the share's owner a right to a portion of the company's profits
- 85Short RunA time period in which a firm's capacity is fixed & at least one factor of production is fixed
- 86Short Run Aggregate Supply (SRAS)This is aggregate supply when the factors of production are fixed
- 87SpeculationWhen things are bought (e.g. shares) in the hope that they will increase in value and can be sold for a profit at a later date
- 88Structural UnemploymentUnemployment usually caused by the decline of major industry, which is made worse by labour immobility (geographical/occupational)
- 89SubsidyAn amount of money paid by a government to the producer of a good/service to lower the price & increase demand for the good/service
- 90Substitute GoodA good that can be used as an alternative to another good e.g. soya milk & cow's milk
- 91Supply-Side PolicyGovernment policy that aims to increase AS in an economy e.g. a policy to increase the productive capacity of the economy
- 92Trade UnionAn organisation of workers that acts to represent their interests e.g. to improve their pay
- 93TaxAn amount of money paid to a government. It's paid directly e.g. income tax, or indirectly e.g. excise duty
- 94UnemploymentThe level of unemployment is the number of people who are looking for a job but cannot find one The rate of unemployment is the number of people out of work as a % of the labour force
- 95Wage RateThe price of labour, i.e. the rate of pay to employ a worker
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- Beschreibung
- Key terms for AS AQA Economics
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- Fred Clayton
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