- Created by: Rhea Khakhria
- Created on: 02-05-13 21:28
Aggregate Demand (AD)
The total demand for a country's goods and services at a given price level and in a given time period.
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Aggregate Supply (AS)
The total amount that producers in an economy are willing able to supple at a given price level in a given time period.
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Where consumer satisfaction is maximised.
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The sum of the items dived by the number of items.
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Information not equally shared between two parties.
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Forms of government spending and taxation that change automatically to offset fluctuations in economis acticity.
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Average Propensity To Consume (APC)
The proportion of disposable income spent. It is consumer expenditure divided by disposable income.
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Average Propensity To Save (APS)
The proportion of disposable income saved. It is saving divided by disposable income.
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Balance Of Payments
A record of money flows coming in and going out of a country.
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A diagram with the lengths of the bars show different values of the items.
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The extent to which firms are using their capital goods.
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Man-made aids to production.
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Assuming other variables remain unchanged.
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The selection of appropriate alternatives.
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Circular Flow Of Income
The movement of spending and income throughout the economy.
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A measure of unemployment that includes those receiving unemployments related benefits.
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Same as equilibrium price.
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An economic system in which resources are state owned and also allocated centrally.
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Goods for which there is joint demand.
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How optimistic consumers are about future economic prospects.
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Spending by households on consumer products.
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Consumer Prices Index
A measure of changes in the price of a representative basket of consumer goods and services. Differs from the retail price index in methodology and coverage.
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A tax on a firms profits.
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Increases in the price level caused by increased the cost of production.
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Cross elasticity of demand (XED)
The responsiveness of demand for one product in relation to a change in the price of another product.
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Current Account Defecit
When more money is leaving the country than leaving it, as a result of sales of its exports, income and current transfers from abroad being less than imports, income and current transfers going abroad.
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Unemployment arising from a lack of aggregate demand.
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A suistained fall in the general price level
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The quantity of a product that the consumer are able and willing to purchase of various prices over a period of time.
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This shows the relationship between the quantity demanded and the price of a product.
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Increases in the price level caused by increases in aggregate demand.
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The data that is used to draw the demand curve for a products.
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An economy with a high level of income per head.
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An economy with a low level of income per head.
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One that taxes the income of people and firms and that cannot be avoided.
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Income after taxes on income have been deducted and state benefits have been added.
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Spending more than disposable Income
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Who Do You Love?
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Distribution Of Income
How income is shared out between households in a country.
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Division of Labour
The specialisation of labour where the production process is broken down into separate tasks.
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The tendacy for economic activity to fluctate outside its trend growth rate, moving from a high level of economic activity (boom) to negative economic growth (recession)
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Where both allocative and productive efficiency are achieved.
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In the short run, an increase in real GDP, and in the long run, an increase in productive capacity, that is, in the maximum output that the economy can produce.
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People of working age who are neither employed nor unemployed.
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How to allocate scarce resources among alternative uses.
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The study of how to allocate scarce resources in the most effective way.
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The way in which production is organised in a country or group of countries.
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The willingness and ability to buy a product.
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Where the best use of resources is made for the benefit of consumers.
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Responsive to a change in market conditions.
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The extent to which buyers and sellers respond to a change in the market conditions.
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Someone who bears the risks of the buissness and who organises production.
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The price where the demand and supply are equal.
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The process by which goods and services are traded.
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The price of one currency in terms of another currency or currencies.
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Products sold abroad.
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The benefits that accrue as a consequence of externalities to third parties.
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The costs that are consequences of externalities to third parties.
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An effect whereby those not directly involved in taking a decision are affected by the actions of others.
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Of policy measures designed to reduce aggregate demand.
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Discretionary Fiscal Policy
Deliberate changes in goverment spending and taxation designed to influence aggregate demand.
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Any position in the market where demand and supply are not equal.
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The stock of factors of production.
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Factor of production
The resources inputs that are available in an economy for the production of goods and services.
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The services provided by the factors of production.
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Peple's income being dragged into higher tax bands as a result of tax brackets not being adjusted in line inflation.
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The taxtation and spending decisions of a goverment.
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Free Market Mechanism
The system by which the market forces of demand and supply determine prices and the decisions made by consumers and firms.
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Someone who directly benefits from consumption of a public good but who does not contribute towards its provision.
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Short-term unemployement occuring when workers are in-between jobs.
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A situation where those wanting to work can find employments at the going wage rate.
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Tangible products, i.e. products that can be seen and touched, such as cars, food and washing machines.
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A financial asset issued by the centraal or local goverment.
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Spending by the central bank and local government on goods and services.
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Gross Domestic Product (GDP)
The total output of goofs and services produced in a country.
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Group of people whose spending decisions are connected.
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Education, training and experience that a worker, or group of workers, possesses
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An inflation rate above 50 per cent.
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Unemployment causing unemployment.
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Products bought from abroad.
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Goods for which a change in income produces a greater proportionate change in demand.
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Income Elasticity of Demand
The responsiveness of demand to a change in come.
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Goods for which a change in income produces a less than proportionate change in demand.
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A number showing the variation in, for example, wages or prices, as compared with a chosen base period or date.
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A tax levied on goods and services.
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Any situation where economic efficiency is not achieved.
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Goods for which an increase in income leads to a fall in demand.
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A sustained rise in the price level; the percentage increase in the price level over a period of time.
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The distortion of price signals cause by inflation.
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Economic activity that is not recorded or registered with the authorities in order to avoid paying tax or complying with regulations, or because the activity is illegal.
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A lack of information resulting in consumers and producers making decisions that do not maximize welfare.
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Addition of extra spending into the circular flow of income.
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International Labour Organisation (ILO)
A member organisation of the United Nations that collects statistics on labour market conditions and seeks to improve working conditions.
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International Moetary Fund (IMF)
An international organisation that helps co-ordinate the international monetary system.
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Spending on capital goods.
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The quantity and quality of human resources.
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The people who are employed and unemployed, that is, those who are economically active.
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Labour Force Survey
A measure of unemployment based on a survey using the ILO definition of unemployment.
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Output of a good or service per worker in a given time period.
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Natural resources in an economy.
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Withdrawals of possible spending from the circular flow of income.
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Unemployement lasting for more than a year.
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A situation where aggregate demand equals aggregate supple and real GDP is not changing.
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The study of issues that affects economies as a whole.
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An arrangement tha brings buyers into contacts with sellers.
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An economic system whereby resources are alloated through the free market mechanism.
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Where the free makret mechanism fails to achieve economic efficiency.
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The costs of changing prices due to inflation.
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These have more private benefits than their consumers actually realize.
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The study of how households and firms make decisions in markets.
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An economic system in which resources are allocated through a mixture of the market and direct public sector involvement.
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Central Bank and/or goverment decisions on the rate of interest, the money supply and the exchange rate.
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Monetary Policy Committee (MPO)
A committee of the Bank of England with responsibility for setting the interest rate in order to meet the government's inflation target.
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Movement Along The Demand Curve
This is in response to a change in the price of a product.
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The process by which any change in a component of aggregate demand results in a greater final change in real GDP.
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This exists where the social cost of an activity is greater than the private cost.
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The value of exports minus the value of imports.
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People who save more than they borrow.
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Output measured in current prices and so not adjusted for inflation.
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Situation existing where individual consumers cannot be excluded from consumption.
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Situation existing where consumption by one person does not affect the consumption of all others.
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Goods for which an increase in income leads to an increase in demand; goods with a positive income elasticity of demand.
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The desire for a product.
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Occupational Immobility of Labour
Difficulty in moving from one type of job to another.
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The cost of the best alternative, which is foregne when a choice is made.
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The difference between an economy's actual and potential real GDP.
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The growth in aggregate demand outstripping the growth in aggregate supply, resulting in inflation.
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Polluter Pays Principle
Any measure, such as a green tax, whereby the polluter pays explicitly for the pollution caused.
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This exists where the social benefit of and activity exceeds the private benefit.
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The amount of money that is paid for a given amount of a particular good or service.
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Price Elastic (or Price Sensitive)
Where the percentage change in the quantity demanded is sensitive to a change in price.
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Price Elasticity of Demand (PED)
The responsiveness of the quantity demanded to a change in the price of the product.
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Price Elasticity of Supple (PES)
The responsiveness of the quantity supplied to a change in the price of the product.
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The average of the prices of all the products produced in an economy.
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A methos of allocating resources by the free movement of prices.
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The benefits directly accruing to those taking a particular action.
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The costs incurred by those taking a particular action.
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Transfer of assets from the public to the private sector.
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The difference between the price a firm is willing to supply and what it is actually paid.
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The output of goods and services.
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Production Possibility Curve
This shows the maximum quantities of different combinations of output of two products, given current resources and the state of technology.
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Where production takes place using the least amounth of scarce resources.
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The maximum output that an economy is capable of production
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Output, or production, of a good or service per worker.
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The difference between the total revenue (sales revenue) of a producer and total cost.
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A tax that takes a higher percentage from the income of the rich.
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The protection of domestic industries from foreign competition.
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Goods that are collectively consumed and have the characteristics of non-excludability and non-rivarly.
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Goods having some but not all of the characteristics of a public good.
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A limit on imports.
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Rate of Interest
The charge for borrowing money and the amount paid for lending money.
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Real Disposable Income
Income after taxes on income have been deducted and state benefits have been added and the result has been adjusted to take into account changes in the price level.
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The country's output measure in constant prices and so adjusted for inflation.
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Real Interest Rate
The nominal interest rate minus the inflation rate.
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A fall in real GDP over a period of six months or more.
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Of policy measures designed to increase aggregate demand.
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A tax that takes a greater percentage from the income of the poor.
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Profit kept by firms to finance investment.
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Real disposable income minus spending.
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Savings as a proportion of disposable income.
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A sisuation where there are insufficient resources to meet all wants.
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Intangible products, i.e. products that cannot be seen or touched, such as banking beauty therapy and insurance.
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Costs in terms of the extra time and effort involved in reducing money holdings.
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An excess of demand over supply.
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The total benefits of a particular action.
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The concentration by a worker or workers, firm, region or whole economy on a narrow range of goods and services.
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Unemployment caused by the decline of certain industries and occupations due to changes in demand and supply.
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A recognised or distinguishable part of a market. Also known as a market segment.
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A payment, usually from government, to encourage production or consumption of a product.
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A competing good.
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The quantity of a product that producers are willing and able to provide at different market prices over a period of time.
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This shows the relationship between the quantity supplied and the price of a product.
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The data used to draw up the supply curve of a product.
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Policies designed to increase aggregate supply by improving the efficiency of labour and product markets.
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An excess of supply over demand.
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Sustainable Economic Growth
Economic growth that can continue over time and does not endanger future generations ability to expand productive capacity.
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People who save with a target figure in mind.
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A tax on imports.
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Those not directly involved in making a decision.
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Infrmation shown at successive points or intervals of time.
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A permit that allows the owner to emit a certain amount of pollution and that, if unused or only partially used, can be sold to another polluter.
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The calculation involved in deciding on whether to give up one good for another.
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The value of imports exceeding the value of exports.
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The value of exports exceeding the value of imports.
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The expected increase in potential output over time. It is a measure of how fast the economy can grow without generating inflation.
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A situation where people are out of work but are willing and able to work.
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The percentage of the labour force who are out of work.
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Average cost per unit of output.
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Voluntary Export Restraint (VER)
A limit places on imports from a country with the agreement of that country's government.
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Anything you would like, irrespective of whether you have the resources to purchase it.
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A stock of assets e.g. property, shares and money help in a saving account.
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An average that takes into account the relative importance of the different items.
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World Trade Organisation (WTO)
An international organisation that promotes free international trade and rules on international trade disputes.
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Retail Prices Index (RPI)
Measure of inflation that is used for adjusting pensions and other benefits to take account of changes in inflation and frequently used in wage negotiations. Differs from the consumer pricer index (CPI) in methodology and coverage.
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Other cards in this set
Aggregate Supply (AS)
The total amount that producers in an economy are willing able to supple at a given price level in a given time period.