Economics theme 4 Key terms

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Absolute poverty
means not having enough income to provide basic necessities
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Allocation of resources
How factors of production are used to create goods and services
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Allocative Efficiency
is achieved when resources are used to yield the maximum benefit to everyone. Have to make someone worse off.
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anti competitive practises
aim to reduce competition, include price fixing and collusion
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Bank of England
its the UK's central bank; it controls monetary policy
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barriers to entry
occur when start up costs make it difficult for new businesses to enter the market.
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a cartel
is any agreement between businesses to reduce competition or not to compete with each other
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contestable markets
are characterised by easy entry. Firms can now set up businesses easier.
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demand side policies
effect the economy by increasing ro reducing aggregate demand
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De regulation
means reducing the number of regulation that effect businesses
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direct tax
is taken at source and goes directly to the government e.g. income tax
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Eu competition policy
keeps markets competitive when trading between EU member countries
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explicit collusion
occurs when there is a agreement between businesses to avoid competing vigorously and follow a joint strategy
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external benefits
are benefits or positive side effects imposed on a third party who is neither a consumer nor a producer
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external costs
Negative side effects imposed on a third party who is neither a producer or consumer
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financial crisis
the period in 2007-09 when banks were endangered by excessive lending
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fiscal policy
Involves changes in the levels of taxation and or government spending in order to effect the level of output
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geographic Immobilities
occurs when unemployed people cannot move to places where there are job vacancies
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gini coefficient
measures income inequality. A coefficient of 0 would mean income is shared equally between al individuals, whilst a coefficient of 1 would mean one person within the population has al the income and everyone else none.
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Government failure
occurs when government intervention makes the situation worse rather than better. By solving one problem another is created
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imperfect markets
are distorted in ways that reduce competition. they include oligopoly and imperfect competition
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indirect taxes
are added onto prices and go indirectly to the government from the seller, e.g. VAT
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Inequality
occurs when there are large differences in income and wealth within the society
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Innovation
refers to the development of new ideas or techniques
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intelectual property rights
Are ideas or inventions that are protected by patents or copy right
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Marginal costs
is the price for producing one more unit of output
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marginal revenue
is the extra revenue that come from selling more more unit of output
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Market failure
Happens when a market does not efficiently allocate resources to achieve the greatest possible consumer satisfaction. the allocation of resources is such that a reallocation would make some people better off.
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Merit goods
can be provided by the private sector and often are,
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monetary policy
uses interest rates to vary the costs of borrowing and influence the level of aggregate demand
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monetary policy committee
Sets interest rates and seeks to prevent inflation from changing significantly.
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Moral hazard
means that people take bigger risks when they know they will
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Natural monopoly
Occurs when most efficient scale of production is a monopoly. more than producer
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non excludable
Means its impossible to prevent people who have not paid for a good from consuming it.
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Normal profit
means just enough profit to enable businesses to keep on going
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occupational immobility
occurs when unemployed people lack the skills needed to do the jobs that are available
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Overheating
occurs when aggregate demand exceeds aggregate supply and inflation is accelerating due to shortages
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Poverty trap
is a situation in which an unemployed person would be even poorer or not much richer in work because they would no longer receive unemployment benefit
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Price discrimination
means charging a higher price to people whose price elasticity of demand is low. the seller must be able to identify the groups of people who are more sensitive to prices.
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profit signalling mechanism
the means by which resources are allocated. the presence of profit in a market attracts more resources and creates more output. losses drive resources away.
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Progressive tax
A tax that takes a greater percentage of income from richer people than poorer people.
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PRA
is part of the bank of england and supervises banks.
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Public sector deficit
occurs when public expenditure is greater than tax revenue, covered by borrowing
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Public good
Is one that the free market will not provide at all,. there is no incentive for a producer to supply it, its impossible to make profit from.
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Redistribution
refers to the use of tax revenue to raise the standard of learning
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social benefits
are the total benefits of producing goods and services and are calculated by adding private and external benefits
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social costs
are the total costs of producing goods and services and are calculated
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supply side policies
include all measures designed to increase the productive capacity of the economy. They influence aggregate supply.
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tacit collusion
When firms appear to follow a similar strategy to reach the same aim, such as avoiding price cutting.
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Other cards in this set

Card 2

Front

Allocation of resources

Back

How factors of production are used to create goods and services

Card 3

Front

Allocative Efficiency

Back

Preview of the front of card 3

Card 4

Front

anti competitive practises

Back

Preview of the front of card 4

Card 5

Front

Bank of England

Back

Preview of the front of card 5
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Zayn123

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Some/Most of these are Theme 3/Micro?

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