Economics Unit 2 Definitions.

Across

• 1. A good or service whose consumption is considered unhealthy or undesirable due to its bad effects on the consumers. It is over-consumed if left to market forces. E.g, drugs. Demerit goods tends to lead to negative externalities. (7, 4)
• 4. The interest rate is set by the Bank Of England, which affects all interest rates in the economy. (Also called the base rate). (4, 4)
• 5. A sustained rise in general price leves over time. (9)
• 7. Anything that is generally acceptable as a medium of exchange. (5)
• 8. When the market (through demand ad supply) fails to allocate resources in the best interests of society as a whole. (6, 7)