Econ

• Balance of payments


  A record of all financial transactions between the UK and the rest of the world
• Balance of payments (current account) deficit


  When the value of the UK's exports of goods and services are less than the value of imported goods and services. X > M
• Balance of payments (current account) surplus


  When the UK's exports of goods and services are greater than the values of imported goods and services. X > M
• Balance of trade


  The part of the current account that records the sales and purchase of physical items between the UK and the rest of the world
• Barriers to entry


  Circumstances that could prevent a firm from successfully joining a market (selling a particular good or service)
• Base rate


  The interest rate set by the Bank of England that influences market interest rates
• Budget deficit


  When government spending is greater than tax revenue (spending > tax)
• Budget surplus


  When government tax revenue exceeds expenditure (tax > spending)
• Consumers


  A person who purchases goods and services for personal use
• Consumer price index (CPI)


  Measuring inflation by taking the average weighted price level of a basket of goods and comparing it between years
• Cost push inflation


  When inflation is caused by an increase in the costs of production. For example, an increase in wages or the cost of raw materials
• Current account


  The part of the balance of payments which records the exchange of goods and services between the UK and the rest of the world
• Demand


  The quantity of a good or service that consumers are willing and able to buy at a given price and a given time period
• Demand pull inflation


  When inflation is caused by an increase in demand for goods and services within an economy (this often occurs during a recovery or boom stages of the economic cycle)
• Depreciation


  When the value of one currency falls in value to another
• Deregulation


  The removal of regulations or restrictions on a particular business or industry
• Developed countries


  A country with a relatively high level of economic growth and mature institutions and infrastructure
• Direct taxation


  Taxes based on income such as income tax or national insurance contributions
• Division of labour


  When production of a good or service is split into a number of smaller tasks and employees then specialise in completing each of these tasks with the intention of increasing productivity
• Economies of scale


  Where an increase in a firm's output results in a fall in average costs
• Enterprise/entrepreneurship


  Individuals who take the factors of production and convert them into goods and services which can be sold for profit. The payment for enterprise is profit
• Equilibrium price


  When demand for a good or service is equal to supply. When a market is in equilibrium then the price is likely to be stable
• Excess demand


  Where quantity demanded of a good or service exceeds supply, resulting in shortages and higher prices
• Excess supply


  Where quantity supplied of a good or service exceeds demand, resulting in shortages and higher prices
• Exchange rates


  The value of a currency in terms of another. For example, £1 = $1.2
• Exports


  Goods which are produced within a country and then sold abroad
• Factor markets


  The market for the factors of production; land, labour and capital
• Fiscal policy


  The use of government spending and taxation in order to influences the level of demand within the Economy
• Fixed costs


  Costs which do not change with output for example rent for a shop would be the same regardless of how many shoes it sold over the course of the month
• Free trade


  Trade that takes place without tariffs or other barriers
• Frictional unemployment


  This is caused by imperfect information where workers are unable to find work for their skill set
• Full employment


  When all those who are fit, able and willing to work in the next two weeks are employed
• Globalisation


  The process of growing economic integration between the world's economies. Goods can be produced anywhere, sold anywhere and the profits stored anywhere globally
• Goods


  Tangible or physical products
• Government


  The organisation regulating consumers and producers
• Government intervention


  When government attempts to influence markets in order to correct market failure
• Government provision


  Where the government choses to provide a good or service for free. For example, healthcare in the UK
• Gross domestic product


  The value of all goods and services produced within an economy within one year
• Gross domestic product per capita


  The value of goods and services produced within and an economy within one year divided by the country's population
• RGDP = RGDP per capita / Population