GLOSSARY

selection
a
Basket of goods - normally
the
(AFC)
-

services
costs and
situation in Average fixed of goods
ADsOlute advantage -a
a typical (ordinary)
tixed costs per unit
purchased by
which a country is able to produce in the
the which is used
(AR)
-

household
service at a revenue
a particular good or Average c o n s u m e r prices
or the
lower cost (using fewer resources) unit sod
revenue per ccuidtion intlation
the index to
measure

(AVC)
-

relative to other countries variable costs

Average number of live
the
per unt Birth rate
-

Absolute poverty
-

a situation in variable costs in a

1000 p e o p l e
which an individual does not nave Bailout loan - a loan provided births for every

enough income to satisty their prevent payment

detdurt
country in a year
order to
market
most basic needs of food, clean an illegal
o Black market
education
5alance of payments -à recora and s e r v i c e s are
ciothing. shelter, and out
in which goods
water, the flows of money into
government
and healthcare of a country traded without àny

Age distribution -

the proportion see Trade in controls

of trade
-

Balance
within a population who of high and rising
ot people
fall into certain age groups, for goods Boom a period time
the economy over
Balance of trade in services
-

see real GDP in

example, young (0-14 years), of
Trade in services Borrowing
-

being lent money

working age (15-65 years) and old requirement to pay it
revenue =
with the
(65 years ànd above) Balanced
budget agreed period
of time,
back in an
the increase spending
Ageing population with interest
which very often
in the median age of the Barriers toentry ways in
from Budget deficit
-

spending
population of a country over time new firms are prevented

Aggregate demand (AD)

-

the total entering a particular industry revenue

Budget surplus revenue>
services trade restrictions
goods and in Barriers to
-

demand for all

that
an economy from consumption (C). imposed by a government spending
investment (0, government spending prevent the free trade of exports Business confidence
-

the extent

(G) and net exports (X - M)

and imports between countries to which businesses feel optimistic

goods about the future: if business

Aggregate supply (AS)- the total
Barter the act of trading
two or more confidence is high, producers are
supply of goods and services in an orservices between
parties without the use of money to invest more in capital
economy likely
the equipment to expand output
Allocation of resources the Base rate (or bank rate)
-

allocated to interest rate that a central bank Business cycle - see Economic cycle
way resources are
the production of the goods and will charge to lend money to
Capital-includes all man-made
services most wanted by consumers commercial banks and on which resources

in the value other financial organisations base

Appreciation -

a rise
Capital account (also called the
their interest rates
of a currency due to market forces financial account) - a record of the
Base year-a year which is
Assets items of value, such as into and out of
allocated a value of 100 index money flowing a
property and land
country from investments, savings
points against which other years
Austerity -a situation in which and foreign currency transactions
are compared
is cut and to stabilise the exchange rate
government spending Basic needs - what is needed for
taxes are increased in a country
Capital goods - equipment and
to meet debt repayment
survival, such as food, shelter,
usually
obligations
water and clothing machinery purchased and used by
firms for the purpose of increasing
cost (AC) the cost of Basic pay- the amount of money
Average production of goods and services
received before any additional
producinga unit (unit cost of payments are added or any
Capital intensive production -
production). It is calculated by
deductions, such as income tax, where a high level of investment
or
dividing total cost by output IS required, such as in machinery,
are made
quantity

380 Glossary
 venices,
uipment, ct compared
Conglomerate merger
to the other factors o
proouction with unrelated business
two firms
Cost-push intiaton
activities the
entrail b a n k - f e s p o n s i b l e t o its
join together
in
genera p to a n increase in
economy due
government tor controlling the
firms' production costs
country's money supply as the onsumer confidence the extent
o which consumers feel optimistic Creditor - the lender o Oy
Ssuer of notes and coins and the
about the
ievel of reserves a commercial future: if consumer
Current account
a component of
Contidence is high, consumers are a country's balance ot
bank must hold it also sets the
IKely to spend less
payme
more and save in which inflows and outtioWs
rate of interest. O
Ceteris paribus - all other things
LOnsumer goods -final goods and money from international trade
services purchased and used and income flows are recorded
remaining the same by
consumers C u r r e n t a c c o u n t deficit - the
Claimant cOunt - a measure of
Consumer prices index (CPI) money flowing out ot the
unemployment that is calculated a country from trade in goods,
measure of the changes in the
by counting all individuals who trade in services, and primary ànd
prices of a selection of goods and
receive unemployment benetit
an
services normally purchased by a income is greater than
Secondary
as being unemployed typical (ordinary) household the money flowing in

Collective bargaining -a process Current account surplus - the

of negotiation over pay and Consumer sovereignty-the

conditions Deween a trade union, power ofallocates
market
consumers over how the
resources through
money flowing into the country
from trade in goods, trade
representing a group of workers, determining what is produced and in services, and primary dnd

and employers for whom secondary income is greater than

Commercial bank - financial the money flowing out
Consumer spending -see
institution in which individuals and Consumption (C)
irms can save their money and
Consumption (C) the purchase of
Current transter-a sum or
money that is voluntarily given
also obtain loans to another individual, business or

Comparative advantage -a
goods and services by households;

situation in which a country i5

also referred to as consumer
government for which nothing
of economic value is received in
spending
able to produce a particular return. This is different from a
or service at a lower
goo0 Contraction in demand-a
transfer payment, which refers
opportunity decrease in quantity demanded as
cOST (giving up fewer resources) to a transter of income, usually
a result of a rise in price
relative to other countries provided by the government to an
Contraction in supply - a decrease
individualor firm. The
Competition -where different in the quantity supplied in payment
firms are trying to sell a similar of unemployment benefits
response to a decrease in price
product toa customer and subsidies to producers are
Contractionary fiscal policy examples of transfer payments.
Competitive market-where a a reduction in government
arge number of firms compete spending and/or an increase in
Cyclical unemployment (also called
with each other to satisty the
income tax rates in order to reauce demand-deficient unemployment)-
wants and needs of a large
aggregate demand in the economy
unemployment that exists due
umiber of consumers
to falling aggregate demand,
Contractionary monetary policy - which occurs when an
Complementary good-a good the decrease in the money supply economyy
enters a recessionary
that is consumed together with
by the government, leading to a
period in its
economic cycle
another good fall in aggregate demand
Death rate-the number of
Conditions deaths
of
demand -factors Corporation tax -

a tax levied on a for every 1000

people
in a
other than the price of the good
firm's profits country
nay e a r
or
service that lead to à cnange m
Corruption the dishonest Debt
pOSition of the demand curve
behaviour ofpeople in power tor
repayments fixed amounts
Conditions of supply- factors their own personal gain
(consisting of principal and
other than the price of the interest) paid to a creditor at
goodd Cost of living the
of
service that lead to a change n day-to-day
-

regular intervals on a loan

living expenses incurred by an
00Sition oft the supply curve
individual Declining industry (or sunset
that
Industry)- an industry is

Glossary 381
 economy over time through
experiencing falling sales due to Depreciation a fall in the value
a change in the structure of the forces periods or o o o , recession, slump
of a currency due to market
and recovery
economy Deregulation the removal
Economic development- an
Decrease in demand -a leftward of laws, rules and regulations,
improvement in the living
shift in the demand curve making it easier for a business to
standards and quality of life of
that a smaller quantity is operate in an industry
showing
demanded at each price than was
enter or
Derived demand when a
the population of a country as it

transitions from being reliant on

previously product or factor of production
the primary sector for employment
Decrease in supply a leftward is not demanded for itself, but is
towards the secondary
shift in the supply curve
showing9 dependent on the demand for the and output
and tertiary sectors
that a smaller quantity is supplied product it helps to produce.
at each price than was previously Devaluation - a decrease in Economic goods goods which are
scarce relative to the demand for
the value of a currency due to
Defaut- failure to repay funds to
a creditor (ender) government intervention
them
Deflation- the sustained fall Economic growth- the change in
Developed country -a country
the value of the goods and services
in
the general level of prices of
goods and services in an economy
that has high income and living
standards with most of its produced within a country over
over time time
economic activity based in the
Demand-the quantity of a good tertiary sector Economic growth rate the
orservice that consumers are percentage increase in the value of
Developing country-a country
willing and able to buy at a given that has a low income and goods and services produced in an
price in
particular time period
a
is generally reliant on the economy over time (usually a year)
Demand curve a graph agricultural industry for its Economic resources- land, labour,
plotting
-

the quantities of a product employment and output capital and enterprise

demanded at a range of
prices Direct tax-a tax on income or Economies of scale where an
Demand-deficient wealth increase in the level of production
unemployment see Cyclical Diseconomies of scale - where an results in a fall in the average costs
unemployment increase in the level of production of production
Demand-pull inflation - an results in rise a
in the average costs Effective demand
of production
consumers'
increase in the general price desire to buy a good, backed up
evel in an
economy caused by an Disposable income -the incomne by the ability to pay
increase in aggregate demand available spend and
to save after
direct taxes have been
Efficiency- how effective the firm
Demand schedule- a table that deducted is in using factors of
gives the quantities demanded at and any state benefits added production to
generate its output
à range of prices Dividends (PDS) -

the portion
Demerit goods a lack of of a firm's profit that is paid to
Embargo-a complete ban on the
import ofa certain product or all
information as to how harmful shareholders, the owners of the
these products are for the business products from a particular country
Emigration - the movement of
consumer leads them to be Division of
labour the process -

which workers specialise in, or people out of a country to reside

overconsumed by
Dependent population - the concentrate on, one
particular task
permanently elsewhere
dependent population of a Dumping-the sale of imported Employment the state of having
paid work
country consists of people who goods at a price below what it cost
not earn an income themselves to produce them Enterprise brings all the other
-

and rely on others to provide them factors together

Earnings -

the total amount

g0od or service
to
produce a
with the goods and services they received including additional
need. It includes young children, payments Equal opportunities the
the elderly, people who cannot and policies
-

Economic cycle (also called the practices in employment that

work due to illness or prevent discrimination against
as disabiliy, business cycle or trade cycle) -

someone on the
well as those in full-time eaucaion changes in the real GDP of an grounds
of race,
age, gender, religion, disability

382 Glossary
 any other
individual r
group Factors of production - land, Foreign currency reserves -a
of held at a

characteristic unrelated to ability labour, capital and enterprise store of foreign currency
performance and qualification country's central bank
Fertility rate the average
price at
Foreign direct investmentri n t o
-

Equilibrium pice tne umber of children per woman of

d

which the quantity that buye childbearing age in a country money (capital) that
tlows
purpose of setting
want to
te buy is equal to
the quantity Final cOuntry tor the
prepared to sell
goods and services goods up business operations
sellers a r e
that and services that are ready to be
demand
-
see surplus Foreign exchange market -the
Excess
Excess suppiy ~ see Shortage
used by the end consumer (both
households and firms) when they place where buyers
and selers

currencies
Excise duty - a tax levied on dre purchased, such as televisions, meet to trade foreign

cars. pizza, etc. Foreign exchange rate (or

goods that are manufactured in a
-the of
country Financial account- see Capital exchange rate) priceanother
in terms of
currency
Expansionary fiscal policy a n account one

increase in government spending Finite resources non-renewable currency

Formal economy - the officia
and/or a reduction in income tax
rates in order to increase aggregate
resources that will eventually run
out economy that
is controlled by
subject to
demand in the economy the government and
Fiscal policy -the use of
taxation
Expansionary monetary policy- vernment spending and income
the increase in the money supply tax rates to achieve certain Free goods -
resources that are

by the government, leading to a Supplied at zero cost because there

macroeconomic objectives
rise in aggregate demand available to

Export subsidy - a financial xed costs (FC)

-

those costs which are more than enough

the demand for them
do not with
vary output satisfy
grant given to exporters by the Free trade - the exchange of goods

government that does not need to Fixed exchange rate-a system

e repaid
Exports-locally-made goods and
services sold abroad
Extension in demand-an increase
in quantity demanded
of a fall in price
Extension in supply-an increase
in the quantity supplied in
response to an increase in price
External
third
benefits the benefits to
a
party from the production (weekily
or consumption of a good
External costs - the costs to a
third party from the production or
consumption of a good
External economies -arise
trom
factors outside the control of a
firm and fall on all firms in the
industry regardless of size
Factor endowments- the factors of
production a country has available
to produce goods and services
actor immobility - the difficulties
in transferring factors of
production so that they may De
used by an alternative
where the value of the currency
and services between countries
without any government-imposed
1s controlled by government
intervention in the foreign restrictions on volume or prIce
Free trade agreement (FTA) - an
exchange market
Fixed exchange rate system - agreement between two or more
result countries to reduce restrictions
as a maintains a country's exchange
rate within a very narrow band on some or all products traded
against other currencies between them
Fixed income earners - individuals rictional unemployment
that exists when
who receive a set amount of
unemployment
people are between jobs, moving
-
income at regular intervals
from one job to another
monthly), for example
pensioners and those who receive
or
Full employment - also referred
welfare payments to as low unemployment, this
Fixed system - the value of a is a situation in which the vast
maintained at a certain majority of the labour force in an
Currency
level by the government
economy are in paid work
Gender
Floating exchange rate
where the value of
-
a system distribution the
proportions of people in a country
a
countryy's
currency is determined by demand wno are male and female
and supply
Geographical distribution the
Floating system -the value of a way people
are spread acrossa
currency determined by the marketounuy or region, for example,
forces of demand and supply in the the proportion of the population
foreign exchange market Ving in urban and rural areas
Geographical mobility - the
industry ease with which an individual

Glossary 383
 rate
-

the number
Intant mortality
food
services such as housing and of babies who die before their firs
can change from one location to
tor every 1000 live birth
another for work purposes collectively
(HDI)-Dirthday
index
Globalisation - the integration of Human development n à year
development
human
the sustained rise in
local markets into a single global measure of into
Inflation
-

market and wellbeing that takes the general

level OT prices in an

and services tax (GST)- see

account the three dimensions economy over t i m e

o0ds of living standards,

and
health
Inflation rate - the percentage
Value added tax
Government budget - a plan of a
education increase in t h e general price level
forced and
Human trafficking-the in an economy over time (usually
government's future income and beings
llegal transport of human
expected spending over a period à year)
from one country to anotner
of time (usually a year) Informal economy-the unofficial
the movement of
Immigration
-

is not taxed or
(G) economy, which
Government spending
-

reside
people into a country to controlled by the government
expenditure by the government
there permanently
Grant a sum of money that is Infrastructure facilities that
a limit on thee
mport quota
-

given by the government which into

a r e essential for an economny

quantity of a good imported to function, including roads,

does not have to be repaid
a country network, a
Gross domestic product (GDP) -
mports foreign-made goods anda transport
the total value of all final goods communication network,
services purchased locally electricity supply, etc.
and services produced within a
Income t h e reward for the
country over a year Interest-the cost of borrowing
factor of
services provided by a
paid creditor
money which is
national (GNI) total
income to a
aross
-

production, including labour

income earned by the residents in addition to the principal.
of a country (individuals and Income tax a tax levied the income received
Alternatively,
on a person's earnings from on money that is loaned out: the
businesses) at home and abroad
Gross national income per head - employment factor reward for capital
gross national income averaged Increase in demand-a rightward Interest rate - the cost of

demand
across the population ofa country
(GNI per head = GNI/population)
shift inthe
that
curve
greater quantity is
borrowing money
showing a
the
Health and safety - the laws and
demanded at each price than was Intergenerational poverty
continuation of poverty from one
rules for identifying potential previously
I n c r e a s e in s u p p l y - a rightward
generation to the next, mainly
dangers and health problems due to lack of access to quality
at work and, also, the ways of shift in the supply curve showing education
preventing these issues and that a greater quantity is supplied
nternal economies -

come from
keeping people safe at each price than was previously
the growth of the firm itself,
Home country - the country in Indirect tax -a tax on goods or
resulting in a fall in average costs
which a multinational company services, such as sales tax or VAT
(economies) or rise in average
was originally established and Industrial action - any measure
costs (diseconomies)
where its headquarters are based taken by a trade union (or other
()-the purchase of
Horizontal merger two firms at organised labour) to try to enforcevstment
capital goods by firms to expand
the same stage of production in their demands or to address their
tion
the same industry join together Complaints; this may take the
of strikes, overtime bans, go-slows, Invisibles - services and other
Host country - the country in

which a multinational company work-to-rules or sit-ins products that are intangible (they
do not exist in a physical form)
operates that is not its home Infant industry (or sunrise
country industry)an emerging or Labour- includes all human
Household - a group of people newly established industry that resources

who share the same living is still too small to benefit from Labour force - all individuals of
accommodation, who pool at internal economies of scale and is working age (between the ages
of their income and
therefore unable to compete with of 15 and 65 in most
least some
and large foreign rivals countries
who consume certain goods

384 Glossary
who are either employed or
unemployed in a country Macroeconomic aims -

the goals Merit goods - a lack of

a
government wishes to achieve information about how beneficial
Labour Force Survey (LFS)
a measure or unemployment
-

that
for the
economy as a whole at a these products are for the
national and
uses data gathered from a survey international level consumer leads them to be

of a sample ot households to
Market- where many buyers and underconsumed
calculate the unemployment rate
many sellers come
together Micro economics t h e study of the

economic behaviour of individuals

Labour intensive production- disequilibrium -where the
quantity demanded by consumers and Dusinesses
where the production of a good or and the
service depends more heavily on quantity supplied by Minimum price control - prices

labour than the other factors of producers are not equal are not permitted to fall
production Market economic system- below a certain level set by the
d
system with prices that are based
Labour productivity- output per on
governimen
worker per time period competition between private Minimum wage - t h e lowest wage
sector businesses; markets are
Land - includes all natural not level that an employer may iegany
controlled by the
resources government pay their workers
Market economy also called Mixed market system - an
Law of demand as the price of a a Tree market economy', an economy that has both private
good service falls, the
or
quantity economy in which goods are sector firms and government
demanded increases
bought and sold, and prices are supplying goods and services
Law of supply -

as the
price of a determined by the free market
Mobility of factors of production
good or service falls, the quantity without intervention by the
supplied decreases government
-

easily any of the factors of

how
production can be transferred to
Lender of last resort where Market equilibrium - where the an alternative use
the central bank gives loans to quantity demanded by consumers
and
Monetary policy when the
other
anks or
eligible institutions the quantity supplied by
producers are equal
government controls the money
that are
experiencing financial supply (usually by changing
difficulty and may not be
able to Market failure -

situation where
a interest rates) in order to achieve
auickly borrow money elsewhere the
economy's resources are not certain macroeconomic aims
ute expectancy t h e number efficiently allocated: the market
does not produce the goods and
Money anything that is generally
OT years a person in a country is accepted as a means of payment
expected to live services that consumers most want for goods and services
and in a quantity that is
Living standards- the economic required
Maximum price control Money GDP the total money
wellbeing and quality of life off -

prices value of the

members of a population are not permitted to rise goods and services
produced in an economy, not
above a certain level set by the
Living wage - a wage set at a accounting for inflation (may also
Evel to enable workers to reach
government be referred to as
GDP or nominal
Measure of value or unit of GDP)
a minimum acceptable living account-the idea that money
standard Money supply the quantityy
-

allows the value of

Loan a sum of money that s
and services to be compared
goods different of
money in circulation in the
given to a person or entity on the
Medium of
economy
promise that it will be repaid at exchange -

anything Monopoly - the sole producer or

that sets the standard of valuue
an agreed time in the future with seller of
of goods and services and is
a
good or service
nteres
acceptable to all parties involved Monopoly power a single firm
Long run- the time it takes to dominates the market and
in a transaction has the
change the factors of production power to determine the market
Menu costs the costs incurred
by
-

to expand and produce on à price

Scale
large firms in changingprices their
Multinational company (MNC)-a
Merger the process by which two como
acro economics the study of independent firms come together company that operates in more
the whole economy than one country
to form a new firmn

Glossary 385
 elastic supply
-

the
Price
situation
-a in quantity
population percentage change
Nationalisation - the transfer Optimum
is greater than the
sufficient
is
of ownership (of property or a where a
population supplied
to ensure
that all
resources
in percentage
change in price
business) from the private sector and
utilised
are fully of demand
to the government à country Price elasticity
output is maximised
responsiveness of
the
(PED)-
Natural rate of unemployment in the
Overcrowding
an
increase demanded to changes
-a certain amount of quantity
beyond whatto
number of people in price
unemployment that will always living
due to lack of
exist in an economy as a result of is comfortable
Price elasticity
of supply (PES) -

people moving between jobs space the responsiveness of supply to

situation
-
a
Needs goods or services Overpopulation changes in price
not enougn
necessary for survival where there are population Price inelastic
demand the
resources to sustain the in quantity
percentage change
Net errors and omissionsin-athe of a country
demanded is lower than the
balancing item included
Pensioners
-
individuals who
balance of payments which n price
and percentage change
accounts for mistakes made in are retired (no longer work)
as their income Price inelastic supply -the
calculating inflows and outfiows receive a pension in quantity
percentage change
of money to and from a country Planned economy a n economy
than the
supplied is lower
Net exports (X M) -the in which all decisions concerning in price
and percentage change
difference between the value of production, investment, prices
the Price mechanism
-

a system that
exports and the value of imports incomes are determined by
enables buyers and sellers to trade
Net migration - the difference government
with each other at an agreed price
between immigration into a Population density the number
of people living in a certain area, Primary income -

earnings that
country and emigration out of
a
come from a factor of production
USually one square kilometre
country (land, labour, capital or enterprise)
Non-excludability - consumers Population growth the change
direct
who have not paid good (or
for (increase or decrease)
a
in the Primary sector- the use

in a of natural resources; t is the

service) cannot be excluded from number people living
of
extraction of basic materials and
geographical area
benefitting from the consumption particular
of that good or service Population growth rate- the goods from the land and sea

Non-rivalry-the consumption
rate of change (expressed as a Principal-the total amount
of goods by one individual does percentage) in the number of borrowed

not prevent another individual people residing country

in a or a
Private benefits the benefits to
consuming the good at the same particular geographical area an individual or business when
time Positive supply shock -a sudden they produce or consume a good
Non-wage factor - something increase in aggregate supply in an
Private costs-the costs to an
other than pay that influences economy, such as a sudden fall in
individual or business when they
choice of occupation oil prices produce or consume a good
Occupational distribution -the Poverty cycle -a situation in w
in developing country is unable to
Private goods (or private
proportion of people working a services)-goods that it is
each of the primary, secondary and develop economically due to low
possible to exclude individuals
tertiary sectors of an economy income, leading to low savings,
from consuming if they have not
Occupational mobility the leading to low investment, leading paid and in the
To low productivity, leading to low
Paid and there is rivalry
ease with which an individual
consumption of these goods
can change from one job in a economic growth and, thus, again
leading to low income Private sector the part of the
particular field or industry to one
economy made up of individuals
in another field or industry Price elastic demand-the
and businesses that make
percentage change in quantity
Opportunity cost the next best
-

demanded is greater than the

economic decisions
alternative foregone when making
percentage change in price Privatisation the transfer of
an economic decision
ownership (of property or a

386 Glossary
 siness) from the government
the privare s e c t o r
ernment
jobs and
in order
to safeguard Recovery a period in al
product diterentiation- setting domestic industries wnic
GDP begins to rise as a result of
one product apart from another O gods (or public
public services) -rising aggregate
seer demand in the
by emphasIsing ods that eO cannot be economy
used t
aspect
fro
excludedfrom ers
aspects; it is used to increase
or aspects
or
they have
enjoying even if Redundant a worker is made
consumer interest not paid; everyone can redundant when they lose their
Production-the total output of yenjoy consuming the good job because their skills are no
Public sector the
the goods and services produced part of the longer needed by the business
by a firm Onomy that is under the control
or industry in a
period of of the Regional unemployment- wne
time government unemployment occurs in a
Production possibility curve Purchasing power- the value of particular geographical area
(PPC)-shows the maximum oney in terms of the quantity of Regressive taxation -a tax
system
possible output for two goods or goods and services it
buy can that takes a higher proportion of
services with a given amount of Quantitative easing (QE) where from the poor than the
central bank
-

income
rich
resources
buys
assets from banks financial
Productive and other Regulation the imposition of
capacity (or productive
potential)- the ability of an
private sector businesses with new rules by the
economy to produce goods and electronically created money government, Dacked
by the use of penalties that are
services if all factors or Quota-a physical limit on the intended to modify the behaviour
production quantity of
are fully employed
into a country
a
good that is alloweea of individuals and firms in the

Productivity - measures the private sector

contribution to production Rate of inflation-the persistent Relative poverty -a situation in
rise in the which an individual does not have
(total output) by each factor general price level over
time enough income to buy the goods
of production employed. It is
one measure of the Rate of interest/interest rate t h e and services normally consumed by
degree of
cost of members of the society in which
efficiency in the use of factors borrowingmoney from a
of production in the lender, and the reward for saving they live
production
Remittance - a sum of money sent
process. It is measured in terms of Real GDP the total value for
-

output per unit of input. goods and services an by a worker in a foreign country to
Profit the income a firm
produced in an
economy which has been adjusted relatives in their home
country
receives after expenses have been to take inflation into account Renewable resources resources
deducted (total revenue total Real GDP per head (real GDP that can be replaced as they
per
costs). Profit is the factor reward e are Used to produce goods and
capita) - a measure
of the average
for enterprise. income of the population within a evICes

Profit maximisation -the greatest country Retaliation -

the
imposition
of protection policies by a
profit a firm can make is shown by
where there is the most
eal incomeincome taking the
effects of inflation into account, government on imports from
positive another
difference between TR and Tc so it is the purchasing power of country in response to
Progressive taxation - a tax system income protection policies imposed on
that takesa Real o u t p u t - the total value exports from its country
higher proportion
goods and Revaluation rise in the value of
of services
produced a
-

Of income from the rich than the

in an economy after inflation the domestic
poor currency as a result
of
Proportional taxation - a tax
rising prices) has been taken into government intervention in the
account foreign exchange market
system that takes an equal
Recession - a sustained period Salary an annual sum of money
-

proportion of income from all
hcome earners (rich and poor
Protection (or protectionism)-
rictions on imports and/or
exports that are imposed by a
of negative GDP in the economy
over time; also defined as two
consecutive quarters (three-
monthly periods) of negative
economic growth
usually paid in twelve equal
monthly amounts
Sales (revenue) maximisation -
where a firm increases market share
and/or increases total revenue
 Saving that part of someones
-

Soial costs the private costs plus Substitute good -a good that
income which is not the external costs of producing a is consumed as an alternative to
spent on
consumption good another good
Scarcity a lack of goods and Social optimum quantity - the Sunrise industry - see Infant
services available to satisty level of output where the social industry
unlimited wants costs equal social benefits: the Sunset industry -

see
Declining
Seasonal unemployment - market equilibrium
reached fully industry
that exists because takes into account all the costs
unemployment
theworkers are
Supply - the quantity of a goodor
not needed all and benefits associated with the
year round
service that producers are willing
production and consumption of
and able to supply at a given price
Secondary income income the good
in a particular time period
received through Social welfare firm
transfers
current -

a being9 Supply curve - a graph plotting

Secondary sector - all activities in oncerned aboutthe weltare or ts the quantities of a product
an
economy that Workers, society as a whole or local
are concerned supplied at a range of prices
with either community
manufacturing or Supply schedule - a table that
construction pecialisation - the process by
gives the quantities supplied at a
Shoe leather costs -

the costs which individuals, firms, regions

range of prices
incurred by and whole economies
a business in
searcning o Supply-side policy- a government
tor the best
prices from suppliers
on
producing those products in

which they have àn advantage

action which leads to an increase
Shortage (or excess demand) - in aggregate supply in an
economy
demand is greater
greater than supply at
than suppiy a Spending -involves the use of
at d
by improving either the quality or
given price money to purchase goods and
the quantity of resources
services
Short run -an amount of time
that is less than what isis required effects
Surplus (or excess supply) -

supply
ases require pover effects - on a
is greater than demand at a
given
for a firm to be able to third party
expand price
and increase all of the factors of Standard for deferred
payment Survival - the objective of
production. It is when at least one enables people to borrow money
of the remaining in business
tactors of production has and pay It back at a later date
not been changed
Store of value allowS
Takeover- the process by which
weaitn
-

to

Short-term capital flows ('hot be stored in the form of money

onefirm buys another firm either
money')-the flow of money by buying out the o n e r or
by
Strategic industry an industry purchasing more than 50% of its
from one
country to another on a that is important to the
long-term shares
temporary basis in order to earn wellbeing of a country
income from changes in interest Tariff -
a tax imposed
Structural unemployment-
on imported
rates 900ds
unemployment that exists due
Slum-an area in a city in which Tax avoidance the process of
to a change in the structure or
people live in poor conditions
because it is finding legal ways to minimise
characterised by non-durable an economy, usually
becoming more developed the amount of tax paid to the

housing, unpaved paths, and laCk government

of space, sanitation facilities
Subsidy a n amount of money
ana Tax evasion illegal non-payment
given to a firm to lower
-

the cOst
access to safe drinking water of taxes to the
of
suppiying the good or service to government
Slump-a period of negative
real GDP characterised by low
the market Tax revenue t h e money a

Subsistence economy - an government receives from direct

aggregate demand in the and indirect taxes
economy in which people are
economy self-sufficient, producing only
Social benefits - the private
Technological unemployment-
enough to satisfy their own basic unemployment that exists because
benefits plus the benefits
external needs, including food, clothing people are replaced by machines
of producing a good and shelte, and the basic needs of
their families
Tertiary sector all activities in
the
economy that involve the idea
o
a service

388 Glossary
 onomic problem- now can
e economic resources be most
Unemployment the state of Wage-price spiral - the
offectively used to satisty people's being without paid work but
inflationary cycle of higher wages,
unlimited needs and wants? willing and able to work if
becomes available
a
job leading to higher production
Time lag - the period of time costs, which in turn leads to
Unemployment rate - the prices and living costs,
between an economic action and
when it starts to take effect percentage of a country's higher lead
labour which again to higher wages,
force that is without and so on
Total costs (T)-all the costs of paid
the firm added together. TC = FC employment but actively seeking Wage rate-the amount of money
work
.VC paid to a worker per unit of time
Unit elastic
Total revenue (TR) - the total supply the Wages -the income an individual
income of a firm from the sale of percentage change in quantity receives from their employer
Supplied is equal to the
ts goods and services in return for mental or physical
percentage change in price effort. Wages are the factor
Trade cycle -

see Economic cycle Unit elastic

demand -the reward for labour.
Trade deficit -

a situation where
value of
percentage change in quantity Wants goods or services not
the imports of a
country demanded is the same as the
greater than the value of necessary for survival
exports
percentage change in price Weighted average - the
Unlimited wants there is always calculation of an average by
Trade in
goods (also known
balance of trade) the
as the mething
like and
else that
people would multiplying each item by a factor
difference
-

Denween the value of visible

so
people are never indicating its importance; the
satisfied
eports and the value of
total sum of the weightings in a
visible Value added tax calculation equals 1
mports (VAT)-a tax
levied on goods and
services Weighted price index - an index
Trade in services (also known sold in
as a
country calculated as a (with a base year of 100) in which
e
balance of trade in
percentage of the sales price (also
re difference between the value services' called a goods and
the prices of goods are
weighted
invisible exports and services tax
(GST) in some countries) according to their
importance
the value Weighting- an indication of
invisible imports Variable costs (VC) -

those costs the

Trade surplus a situation where which change importance of a good when
output changes
-

as
e value of
exports is greater Vertical merger
calculating a weighted average
two firms at the more
*an the value of imports different stages in the same important the good, the
higher the weighting it receives
Trade union industry join together;
organisation of
an this may be
-

Welfare services financial

norkers that actively supports forward or backward
members in support provided by the
sJ as increasing wages and
a
variety of ways, Visibles-goods that are tangible government to those most in
(they exist in a physical form) need, including theelderly,
moroving working conditions Voluntary unemployment a r e n and the
when unemployed
Underpopulation a situation an individual chooses
wtere some of the resources ofa unemployed when they have the
to remain Working-age population-
the
utry are left unused or wasted option of working proportion of a country's
Decause there are not
population that is of working age,
enough Wage a payment for units of usually between the ages of 15
Deople to fully exploit them time or units of product and 64

Glossary 389