Econ

• Absolute advantage


  When a country's output of a product per unit of input is greater than that of any other country.
• Absolute poverty


  When a person does not have the income or wealth to fulfil their basic needs.
• Aggregate Demand (AD)


  The total demand/spending in an economy at a given price level over a given period of time. Made up of consumption, investment, government spending and net external demand.
• Aggregate Supply (AS)


  The total amount of goods and services that can be supplied in an economy at a given price level over a given period of time.
• Aid


  The transfer of resources from one country to another.
• Allocative efficiency


  Where the price of a good is equal to the price consumers are willing to pay. This occurs when all resources are allocated efficiently.
• Asymmetric information


  Where buyers have more information than sellers in a market, or vice versa.
• Automatic stabilisers


  Parts of fiscal policy that automatically react to changes in the economic cycle.
• Average Cost (AC)


  The cost of production per unit of output.
• Average Revenue (AR)


  The revenue per unit sold.
• Backward vertical integration


  Where a firm merges with or takes over a firm further back in the production process.
• Balance of payments


  A record of the international transactions of an economy.
• Bank rate


  The official rate of interest set by the central bank (e.g. by the Monetary Policy Committee of the Bank of England)
• Barriers to entry


  Potential difficulties that make it hard for firms to enter a market.
• Barriers to exit


  Potential difficulties that make it hard for firms to leave a market.
• Black market


  Economic activity that occurs without taxation and government intervention.
• Budget deficit


  When government spending exceeds tax revenues.
• Budget surplus


  When tax revenues exceed government spending.
• Capital account of the balance of payments

  A part of the balance of payments that shows transfers of non-monetary and fixed assets into and out of the economy.
• Cartel


  A group of products who collude to limit output in order to keep prices high.
• Central bank


  The institution responsible for issuing banknotes in an economy, acting as a lender of last resort, and implementing monetary policy.
• Ceteris paribus


  All other things remaining equal
• Circular flow of income

  The flow of national output, income and expenditure between firms and households.
• Command economy


  An economy where only the government determines the allocation of resources.
• Comparative advantage


  When the opportunity cost of producing a good or service is lower than that of any other country.
• Competition policy


  Government policy aimed at reducing monopoly power in order to increase efficiency and to ensure fairness for consumers.
• Concentration ratio


  A measure of the dominance of firms in a market.
• Conglomerate integration


  Where a firm merges with or takes over a firm in a completely different market.
• Consumer surplus


  The difference between the price a consumer pays and the price they were willing to pay.
• Consumption


  The purchase of goods and services.
• Contestability


  The degree to which new entrants find it easy to enter the market.
• Cost-push inflation


  Inflation caused by rising costs of production.
• Cross elasticity of demand (XED)

  A measure of the responsiveness of demand of one good/service to a change in price of another good/service.
• Current account of the balance of payments

  A part of the balance of payments that consists of: trade in goods, trade in services, primary income and secondary income.
• Cyclical unemployment


  Unemployment caused by a lack of demand in the economy.
• Deflation


  The sustained fall in the average price of goods and services in an economy over a period of time.
• Demand-pull inflation


  Inflation caused by increased demand in the economy.
• Demand-side policy


  Government policy that aims to alter aggregate demand in the economy.
• Demerger


  Where a firm sells of a part/parts of its business to create separate firms.
• Deregulation


  Removing government legislation that could restrict competition.