Micro

• What is the basic economic problem?

  Scarcity and choice
• What does opportunity cost represent?

  The cost of the next best alternative
• What does PPF stand for?

  Production possibilities frontier
• What is the role of markets in an economy?

  To allocate resources efficiently
• What are the two main components of market dynamics?

  Demand and supply
• How is price determined in a market?

  Through the interaction of demand and supply
• What is the price mechanism?

  The process of price determination in markets
• What is price elasticity of demand?

  Responsiveness of quantity demanded to price changes
• What is price elasticity of supply?

  Responsiveness of quantity supplied to price changes
• What does income elasticity of demand measure?

  Change in demand due to income changes
• What does cross elasticity of demand indicate?

  Change in demand for one good due to price change of another
• What are the types of market failure?

  Public goods, externalities, merit and demerit goods, information failure
• What is government intervention in markets?

  Actions like taxes, subsidies, and regulation
• What is government failure?

  When government intervention leads to inefficient outcomes
• What are price controls?

  Government-imposed limits on prices
• What are price ceilings?

  Maximum allowable prices set by the government
• What are price floors?

  Minimum allowable prices set by the government
• What are indirect taxes?

  Taxes imposed on goods and services
• What are subsidies?

  Financial support from the government to encourage production
• What is the provision of public goods?

  Government supply of goods that are non-excludable and non-rivalrous
• What does GDP stand for?

  Gross Domestic Product
• What is economic growth?

  Increase in the production of goods and services
• What is unemployment?

  The percentage of the labor force without jobs
• What is inflation?

  Increase in the general price level of goods and services
• What are the Consumer Price Index and Retail Price Index?

  Measures of inflation in the economy
• What is the balance of payments?

  Record of all economic transactions between residents and the rest of the world
• What does distribution of income and wealth refer to?

  How income and wealth are shared among individuals
• What are the components of aggregate demand?

  Consumption, investment, government spending, net exports
• What are short-run and long-run aggregate supply curves?

  Short-run: fixed prices; Long-run: flexible prices
• What is equilibrium output?

  The level of output where demand equals supply
• What is the price level?

  The average level of prices in the economy
• What is the business cycle?

  Fluctuations in economic activity over time
• What are the government's macroeconomic objectives?

  Economic growth, full employment, price stability, balanced trade
• What is fiscal policy?

  Government spending and taxation policies
• What is monetary policy?

  Management of interest rates and money supply
• What is quantitative easing?

  Central bank's purchase of financial assets to increase money supply
• What are supply-side policies?

  Policies aimed at improving productivity and reducing market imperfections
• What is the purpose of improving productivity?

  To enhance economic efficiency and growth
• What does reducing market imperfections involve?

  Eliminating barriers to competition and improving market efficiency
• What is the significance of the UK economy in the global context?

  It plays a major role in international trade