Economics key terms A-G

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Balanced budget

  • When total public-sector spending equals total government income during the same period from taxes and charges for public services.


  • A bond is an interest-bearing security issued by governments, companies and some other organisations. Bonds are an alternative way for the issuer to raise capital.

Business cycle

  • Boom and bust. The long-run pattern of economic growth and recession.

Buyer's market

  • A market in which supply seems plentiful and prices seem low.

Capital markets

  • Markets in securities such as bonds and shares.


  • A free-market system built on private ownership, in particular, the idea that owners of capital have property rights that entitle them to earn a profit as a reward for putting their capital at risk in some form of economic activity.

Central Bank 

  • A guardian of the monetary system.

Ceteris Parabus

  • Other things being equal.

Closed economy 

  • An economy that does not take part in International trade.

Command economy

  • When a government controls all aspects of economic activity.


  • A comparatively homogeneous product that can typically be bought in bulk.


  • The more competition there is, the more likely are firms to be efficient and prices to be low.

Consumer surplus

  • The difference between what a consumer would be willing to pay for a good or service and what that consumer actually has to pay.


  • A loan extended or taken by, for example, delayed payment of an invoice.

Credit Crunch

  • When banks suddenly stop lending, or bond market liquidity evaporates, usually because creditors have become extremely risk-averse.


  • A lender.


  • In the red- when more money goes out than comes in.


  • Falling prices.

Deposit insurance

  • Protection for people's savings in case their bank goes bust.


  • A fall in the value of an asset or a currency.


  • The process of removing legal restrictions on the amount of competition, the sorts of business done, or the prices charged within a particular industry.


  • Financial assets that derive their value from other assets.


  • A sudden fall in the value of a currency against other currencies.

Developing countries

  • The world's poor countries, also known as emerging


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