IGCSE Economics Key Terms (edexcel)

Aggregate demand
the total demand in an economy, including consumption, investment, government expenditure, and exports minus imports
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Anti-competitive practices or restrictive trade practices
An attempt by firms to prevent or restrict competition.
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Average costs
The cost per unit of output; it is equal to total cost divided by the number of units produced
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Balance of payments
A record of all transactions relating to international trade.
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Barriers to entry
Obstacles that might discourage a firm from entering a market
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Basic economic problem
Allocation of a nation's scarce resources between competing uses that represent infinite wants
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Capital intensive
Where production relies more heavily on machinery relative to labour.
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Cartel
Where a group of firms or countries join together to agree on pricing or output levels in an industry
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Choice
Deciding between alternative uses of scarce resources.
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Collusion
Informal agreements between firms to restrict competition.
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Complementary goods
Goods purchased together because they are consumed together
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Consumer price index (CPI)
A measure of the general price level excluding housing costs; used in the UK and across the Eurozone.
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Cost-push inflation
Inflation caused by rising business costs.
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Costs
The expenses incurred when producing goods and services.
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Current account
Part of the balance of payments where all exports and imports are recorded.
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Cyclical (or demand deficient) unemployment
Unemployment caused by falling demand as result of a downturn in the economic cycle. Cyclical or demand deficient unemployment
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Demand
The amount of a good that will be bought at given prices over a period of time.
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Demand curve
Line drawn on a graph which shows how much of a good will be bought at different prices.
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Demand-pull inflation
Inflation caused by too much demand in the economy relative to supply
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Depression or slump
The bottom of the economic cycle where GDP starts to fall with significant increases in unemployment. Negative economic growth for more than 8 consecutive quarters
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Derived demand
Demand that arises because there is demand for another good or service
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Diseconomies of scale
Rising average costs when output rises
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Division of labour
The breaking down of the production process into small parts with each worker allocated to a specific task.
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Dumping
Where an overseas firm sells large quantities of a product below cost in the domestic market.
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Downturn
A period in the economic cycle where GDP grows but more slowly
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Economic policy
The range of actions taken by the government to help achieve its macroeconomic objectives
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Economic policy instruments
Economic variables such as interest rates, taxation rates and government expenditure that governments can adjust in managing the economy
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Economies of scale
Falling average costs due to expansion
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Economy
System that attempts to solve the basic economic problem.
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Effective demand
The amount of a good people are willing and able to buy at any given price over a period of time
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Efficiency
Minimising costs and the use of resources.
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Elastic demand
A change in price results in a greater change in quantity demanded
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Entrepreneur
An individual who organises the other factors of production and risks their own money in a business venture.
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Equilibrium price
Price where supply and demand are equal.
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Excess demand
Where demand is greater than supply and there are shortages in the market
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Excess supply
Where supply is greater than demand and there are unsold goods in the market.
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Exchange rate
The price of one currency in terms of another.
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Devaluation
The depreciation or fall in the value of a currency.
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Appreciation
When the exchange rate rises
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Exports
Goods and services sold overseas.
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Externalities
The spillover effects of consumption or production. They affect others and can be positive or negative.
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Factors of production
The resources used to produce goods and services. They include land, labour, capital and enterprise.
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Fiscal policy
Decisions about government spending taxation and levels of borrowing which affect aggregate demand in the economy.
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Fixed capital
The stock of 'man made' resources such as machines and tools used to help make goods and services.
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Fixed costs
Costs that do not vary with the level of output.
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Foreign direct investment (FDI)
Business investment undertaken by a firm in another country.
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Free trade
Trade between nations that is completely without government restrictions
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Frictional unemployment
When workers are unemployed for a short period of time as they move from one job to another.
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Globalisation
The growing integration of the world's economies.
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Gross domestic product (GDP)
An internationally recognised measure of national income.
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Human capital
The value of the workforce or an individual worker.
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Imports
Goods and services bought from overseas.
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Income elasticity of demand
The responsiveness of demand to a change in income.
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Inelastic demand
A change in price results in a proportionately smaller change in demand.
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Infant industries
New industries yet to establish themselves.
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Inferior good
A good for which demand will fall if income rises or rise if income falls
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Inflation
A general and persistent rise in prices.
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Interdependence
Where the actions of one large firm in an oligopolistic market will have a direct effect on others.
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Inverse relationship (between price and quantity demanded)
When price goes up the quantity demanded falls and when the price goes down the quantity demanded rises
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Invisible trade
Trade in services.
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Labour
The people used in the production of goods and serivces
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Labour intensive
Where production relies more heavily on labour relative to machinery.
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Macroeconomics
The study of the whole, five-sector, economy
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Microeconomics
The study of the relationships and interactions between households and individuals and firms and businesses as sectors in an economy
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Market failure
Where markets lead to inefficiency
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Market
A set of arrangements allowing buyers and sellers to communicate and exchange goods and services.
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Market-clearing price
Price where the amount supplied in a market matches exactly the amount demanded.
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Market system or price mechanism
The automatic determination of prices and the allocation of resources by the operation of markets in the economy
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Minimum wage
A minimum amount per hour which most workers are entitled to be paid.
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Mixed economy
An economy where goods and services are provided by both the private and the public sectors.
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Monetarists
Economists that believe there is a strong link between growth in the money supply and inflation
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Monetary policy
The use of interest rates and the money supply to control aggregate demand in the economy.
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Monopoly
A situation where there is one dominant seller in a market.
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Multinational company
Companies that have significant production or service operations in at least two countries
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Other cards in this set

Card 2

Front

An attempt by firms to prevent or restrict competition.

Back

Anti-competitive practices or restrictive trade practices

Card 3

Front

The cost per unit of output; it is equal to total cost divided by the number of units produced

Back

Preview of the back of card 3

Card 4

Front

A record of all transactions relating to international trade.

Back

Preview of the back of card 4

Card 5

Front

Obstacles that might discourage a firm from entering a market

Back

Preview of the back of card 5
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