A-Level Economics Key Terms And Definitions

The benefit of production or consumption of a product for society as a whole.

A government grant given to firms into to help lower their cost of production and

A fall in the rate of inflation. This means a slower increase in prices but not a fall in

Unemployment which is known to exist but is not included in the official government

A measure of money's value in terms of what it can buy.

Resources which are finite and cannot be replaced.

The rate of interest market investors demand when purchasing government bonds.

If there is an initial injection into the economy then the final increase in AD and Real GDP will be greater.

A single seller of a product in a given market or industry.

Subjective statements, containing a value judgement which cannot be tested.

When demand for a product falls as real incomes increases.

The use of tariff and non-tariff restrictions on imports to protect domestic producers

The increase in revenue resulting from an additional unit of output.

When government spending is greater than tax revenues.

Measures the relationship between a change in quantity demanded and a change in

A persistent decrease in the general price level of goods and services in a country over time.

Effects on a third party outside the price mechanism arising from the production or consumption of goods and services.

The number of people claiming unemployment-related benefits.

Where a firm or economy can produce more with existing resources.

A system similar to the CPI but includes mortgage repayments and some

The number of people able, available and willing to work at prevailing wage rates.

Responsiveness of demand for good X following a change in the price of good Y (a

The process of transferring ownership of a public asset or service from the government to the private sector.

Spending on capital goods including plant & machinery and infrastructure.

Variations in the annual rate of growth of an economy over time.

Transitional unemployment as people move between jobs or are in active job search.

The cost of production or consumption of a product for society as a whole.

When supply equals demand.

Spill-over effects from economic activity are absorbed by the consumer or firm themselves.

A formal agreement among firms that agree to reduce competition in an attempt to increase profits. Usually occurs in oligopolistic markets.

The difference between potential and actual real national income in an economy.

A tax per unit levied on our spending on goods and services such as cigarettes, fuel

A limit on the quantity of a product can be supplied to a market.

Involuntary unemployment due to a lack of demand for goods and services.

When income increases, quantity demanded increases.

A period of at least six months (two quarters) when an economy suffers a fall in output.

Different stages of making, distributing and selling a good or service from the

The extent to which a household's financial resources falls below an average income threshold for the economy. Exact definition varies by country

Made when total revenue is greater than total costs.

Occurs when third parties benefit from the spill-over effects of production/consumption.

Goods that are both non-rival and non-excludable.

Objective statements that can be tested or rejected by referring to the available evidence.

Competing through means such as the quality of the product, packaging, customer service, etc.

When a country imports a greater value of goods and services than it exports.

A measure of efficiency = output per unit of input or output per person employed.

Balance of trade in goods, services, net transfers of money and net investment income.

Ability of people to undertake trade with people in other countries free from any

The sum of gross value added by all resident producers divided by the population.

Total cost divided by the number of units produced.

The change in total costs resulting from increasing output by one unit.

The reserves of gold or foreign currencies typically held by central banks on behalf of their national government

A good that society values and judges that everyone should have regardless of whether an individual wants them.

The ever increasing integration of the world’s local, regional and national economies

Money that flows freely around the world looking to earn the best available rate of

Measures taken by government to transfer income from some individuals to others.

The first company to introduce a new product to market, has the opportunity to

A composite measure of development in countries, quantified in terms of expected

A merger of two firms that have completely unrelated business activities (not within the same industry).

The breaking down of a production process in smaller, specific tasks, intended to increase productivity.

The barriers preventing people from moving from one area to another to find work.