Economics Definitions

Economics Definitions.

Chapter 1.

Income: Total money received from a person’s wages/salary, interest and dividends.

Borrowing: Getting money from a lender that must be repaid in the future (e.g. A mortgage).

Savings: Money put aside for later use.

Needs and wants: Needs are essential to our lives and wants are something we can survive without.

Leaving school / college / university: When a person ceases full time education and looks for employment.

Gaining employment: Being offered and accepting a paid job.

Promotion: A new higher paid job role involving greater responsibility and skill.

Debt: The amount still owing from funds borrowed.

Unemployment: When an individual without a job is seeking paid employment or is able to work.

Retirement: When we cease to do paid employment.

Benefits: Regular payments from the government to support people in need.

Tax Credit: a state benefit to employees through the tax system, which acts like a negative tax.

Pensions: A benefit paid as a right to those of retirement age who have paid the minimum National Insurance contributions.

Taxes: A fee levied by a government on a product, income or activity.

Tax Allowances: Sums deducted from your total income before income tax is calculated.

Scarcity: Resources are limited compared with our needs and wants.

Choice: Deciding between different options because our resources are limited.

Basic economic problem: Resources are limited but our needs and wants are infinite.

Resources: The land, labour, capital and enterprises used to produce a good or service.

Opportunity cost: Something given up when we make a choice.

Benefits: the advantage of a particular choice.

Costs: The expenses and drawbacks of a particular choice.

Demand: The quantity of a good or service that consumers are willing and able to purchase at a particular price.

Factors affecting demand: things that cause consumers to buy more or less of a product at a given price.

Supply: the quantity of a good or service that businesses will offer for sale at a particular price.

Factors affecting supply: things that cause suppliers to offer more of less of a good or service at a particular price.

Markets: a market exists whenever buyers and sellers come together.

Market price: the price that buyers and sellers agree on for a particular good or service.

Competition: the process of trying to beat others (e.g. trying to gain more customers).

Bank / building society savings account: an account for which the main objective is to gain interest…