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QUIZ: Econ Paper 1 Terms?

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HintAnswer
Revenue - Cost
the time period in which at least one of the factors of production is fixed (slightly inelastic or unit elastic)
the condition experience by people in a country whose incomes are considerably lower than the higher income group in the same country
the total market value of all final goods and services produced within an economy over a period of time (usually a year) (and in dollars)
a market in which economic activity is not officially measured/recorded
a market failure in which unfair distribution of resources occurs in the free market
an economy where resource allocation is determined mainly by market forces of demand and supply
the non-price variables that influence the demand for a good or service
Consumer Price Index measures the prices of goods and services in a particular nation over time, and is widely used by governments to measure changes in the price level of products
the amount of output a firm is able to produce in the short run beyond its current level without having to expand their factors of production
Interest rates, Business Confidence and expectations (future prices, technology, business taxes, inventories, the degree of excess capacity)
real GDP is GDP adjusted for inflation and nominal GDP is measured in current dollars
an unexpected decrease in AS of a nation
a hypothetical market that shows the relationship between the real interest rate in a country and the supply and demand for money from households and firms for private investment
the utility or benefit derived from the use of a good, including benefits to the consumer and the rest of society
the point at which a firm produces at the lowest unit or average total cost (or where MC equals ATC)
The study of economy-wide aggregate (total) behaviors.
the market value of all goods and services produced by domestically-owned factors of production over a specific time period, usually one year (it attempts to measure the flow of in
the time period in which none of the factors of production are fixed
the amount by which an injection is multiplied to result in a change in GDP that is higher than the injection
the allocation of resources is concerned with how resources (land, labour, capital and management) are distributed in an economy
business spending on capital goods
a decrease in the value (price) of a currency (in terms of a foreign currency or in a floating exchange rate system)
income that is not spent, setting aside income or money for future use
an agreement between firms to fix prices (or output)
the output attributable to each unit of output
taxes charge levied by the government on firms burning fossil fuels in their production process
including the same good or service more than once in your valuation of output
the benefit consumers receive when they pay a price below what they are willing and able to pay
a tax is a charge placed on an individual firm that is payable to the government under punishment of law
the utility or benefit derived exclusively by the consumer of a good
a good for which demand will increase when the price of the other good increases (and vice versa)
a good for which demand will increase when the price of the other decreases (and vice versa) - goods consumed together
a measure of the responsiveness of the consumers to a change in price of a good or service
an increase in government spending or a reduction in taxes
taxes placed on income and collected by the government directly from the individual or household
Incomes abroad, Taste and preferences of consumers, Exchange rates
an increase in price levels for goods and services due to an increase in the cost of production (faced by producers) which shifts the SRAS curve to the left
the level of consumption which does not depend on income (the argument is that even with zero income you still need to buy enough food to eat, through borrowing or running down sav
the fluctuations of real GDP in a given time period
policies designed to increase the aggregate supply of an economy (shift the AS curve to the right)
the cost of an economic decision in terms of the value of the next best alternative that was sacrificed
an increase in price levels for goods and services due to the increased overall demand for a nation's output (when consumption, investment, government spending and net exports rise
a minimum legally allowable price for a good or service, set by the government
a public good, unlike a demerit or merit good, is a good which, when left to the free market, would not be produced as producer cannot gain profit from them
the surplus achieved by combining the consumer and producer surplus
Unemployment due to seasonal circumstances.
state of economy declining - a decrease in real GDP over two consecutive quarters
workers who have a job but are redundant or non-productive
the situation in which demand-pull inflation leads to cost-push inflation (a major threat to the economy)
an increase in the output of goods and services in a nation over time (outward shift of a nation's PPC) and is measure by an increase in real GDP.
intermediate are goods which are produced by a firm and used in the production process whereas final goods are the ones used for final consumption
the condition experienced by people in a country whose incomes are too low to be able to afford even the most basic necessities for a healthy and safe existence
taxes placed on goods and services by governments (consumption/expenditure taxes)
Land and Capital (non-human factors), Labour and Entrepreneurship (human factors)
total supply of goods and services in an economy.
a good where demand increases as consumer income increases (and decreases when consumer income decreases)
is when the change in price of a product leads to a proportionately smaller change in the quantity demanded (PED is less than 1)
a market is monopolistically competitive if there are many firms producing differentiated products and in which there are no barriers to entry or exit
the market for a good with a large amount of buyers and sellers, where the single seller has very little or no market power
a market where one firm dominates the market for a good that has no substitutes and where there are high barriers to entry
workers who have dropped out of the labor force because of lack of success in finding a job (not included in unemployment rate)
total demand for goods and services in an economy (C+I+G+Xn)
a transaction where someone other than the buyer or seller (a third party), experiences a benefit or loss as a result of their transaction
a decrease (or reduction) in the rate of inflation (at which avg. price level is rising)
the cost incurred from the production or use of a good, including costs to the producer and costs to the rest of society
HintAnswer
the percentage change in a price index between one period of time and another. It measures the change in the average price level of goods and services in nations over time.
the situation in which MSB is greater than MSC and therefore causes positive spillover effects on a third party through the production or consumption of a good or service
a sustained decrease in the average price level of a nation's output
a system for taxing pollution levels where pollution licenses are exchangeable between firms on a secondary basis - they are meant to internalize the external costs of burning foss
they measure the proportion of a change in household income that is ... (used to consume domestic output, saved by households, paid in taxes and used to purchase imports)
accumulation of deficit (imbalance in money intake)
economic theory based on the principles of John Maynard Keynes stating that government spending should increase during business slumps and be curbed during booms.
is when the change in price of a product leads to a proportionately greater change in the quantity demanded (PED is greater than 1)
1) Low unemployment or full employment (NRU) 2) Price level stability 3) Economic growth
economy-wide fluctuations in production or economic activity over a period of months or years, consisting of recession and recovery and growth and decline
when it looks like an economy is recovering but only recovers for a short period and turns to a recession again
working below productive capacity (part time instead of full time)
the level of employment where there is no cyclical unemployment (100% employment - NRU = 94-95% for industrialised countries)
the number of workers without a job, who are willing and able to work, expressed as a percentage of the workforce
the theory that in the long run identical goods and services sold in different countries will cost the same (for GDP measures it looks at the buying power in a country: the amount
Frictional + Structural + Seasonal unemployment (5-6% for industrialised countries) - it is the level of unemployment that prevails when a nation is producing at it's full-employme
unemployment caused by variations in the business cycle (recession - decrease in GDP)
people who don't pay for a good or service but enjoy the benefits of it
when marginal benefits (MB) equal marginal costs (MC)
a tax which increases proportionally with income
smaller disparities among a nation's households in their maintainable living standards and in the distribution of income and wealth
when real GDP expands beyond recovery
a market failure in which factors of production are immobile and cannot be increased
the income earned from a firm's sale of its good or service P * Qd (Price x Quantity demanded)
a good that is abundant; is obtained without opportunity cost.
the amount of a good held in stock by a firm
used when economy is concerned with annual budget deficit and dept - decrease Government spending and increase Taxes
getting the most out of a given input
describes how economic activity occurs between groups in an economy. Saving, taxation & spending on imports are leakages. Investment, govt spending & export revenue are injections
a corrective tax
businesses are greedy and raise prices to gain profits
Persistent increase in the average price level of goods and services in a nation, measured by consumer price index.
a method used to calculate GDP by summing up all incomes received by factors of production
any situation where the allocation of resources is inefficient; where the optimal output for a good does not match that of the private market
used when economy in a recession - increase in Government spending and decreasing direct Taxes such as: Expansionary Fiscal Policy
a form of price floor which is a legal minimum price for labour, set by the government
the total value of the accumulated assets owned, minus its liabilities. The wealthier a nation's households, the greater the level of consumption
a payment from the government to an individual or firm for the purpose of increasing the purchase or supply of a good
Inventories are goods that have been produced but have not been sold
the revenue needed to keep a firm in an industry (in order to cover all opportunity costs of production)
a random event that disrupt the normal supply of goods and services (can be positive, but mainly negative)
a nation's capital stock is the value of all capital goods in the country (at a point in time)
when government expenditures (G) exceed government (tax) revenues (T)
the basic economic problem - something is scarce when it is both limited in supply and desire
income that is adjusted for prices changes, and implies the actual buying power of a consumer
a maximum legally allowable price for a good or service, set by the government
fixed quantity supplied (perfectly or highly inelastic)
the total value of all income in a nation (Consumption + Government Spending + Investment + (Exports - Imports))
adds up all production values of final output from firms
as the price of a good increases, the quantity demanded of a good decreases. (and vice versa =) as the price of a good decreases, the quantity demanded of a good increases.
the amount of goods or services that can be purchased (with a unit of currency)
a place where buyers and sellers come together to engage in exchange with one another
people want to raise their wages
a macroeconomic curve that shows the relationship between the price level and the quantity of real output (real GDP) when resource prices (especially wages) do not change
a good that is used to produce something else
a measure of the responsiveness of the consumers of a good to a change in their income
a market is perfectly competitive if there are a large number of firms producing identical products, facing identical production costs, and in which there are no barriers to entry
a statement which is subjective or political; a matter of opinion
the quantity of a good or service that producers are willing and able to supply at a certain price and during a certain time period.
refers to the fairness in economics, and requires a level in which all individuals of a society have a fair shot at achieving economic success
an approach to economics based on supply and demand which depends on economic agents operating rationally based on available info
goods and services that foreign countries buy from the domestic country
a good where demand decreases as consumer income increases (and increases when consumer income decreases)
unemployment that exists as a result of rigidities in the labour market (such as a fall in the demand for a particular type of labour)
a percentage tax on one or more goods
a dilemma posed when common resources are use or degraded rapidly by private individuals who enjoy the short-term benefits of the resource, but are ignorant or neglectful to its lo
HintAnswer
a decrease in AD/consumption/investment that results from government's increased borrowing (which drives up interest rates)
a measure of the responsiveness of the consumers of one good to a change in the price of another good.
as price increases, more of a good is offered for sale by firms (and vices versa)
a severe reduction in an economy's total output, accompanied by high unemployment lasting several years
a representation of preferences over some set of goods and services (and the satisfaction received)
either zero or negative economic growth (cost-push inflation is often accompanied by stagflation)
the situation in which MSC is greater than MSB and therefore causes costs to a third party through the production or consumption of a good or service
Level of national income (consumption, savings, taxes, imports), wealth, real interest rates, debt, consumer confidence and expectations of future income
a good or service which can be produced is a similar way, with similar inputs and processes as another good (ex: supply substitutes are the product of joint supply)
the quantity of a good or service that consumers are willing and able to buy at a given price during a specific time period
taxes placed on one type of good
curve showing a short-run trade-off between unemployment and inflation; only applies if there is a change in AD; in the long run, leads to an increase in inflation
state of economy rising - an increase in real GDP, usually accompanied by a rise in employment
the additional utility or satisfaction derived by an increase or a decrease in the amount of an item consumed or an activity enjoyed
a measure of the total output of an economy, taking into account the environmental consequences (externalities) involved in the production of that output
the total value of all goods and services produced in a country of a country's national income over a given time period (adjusted for inflation and measure in dollars)
business spending on capital goods
the price of money (borrowing or loaning), expressed as a percentage (often called the opportunity cost of spending money)
the market for a good with a large number of buyers and sellers (where a single seller has very little market power)
other things equal; assuming other variables are constant (Latin phrase)
a very high rate of inflation (basically when prices increase on a daily basis)
a policy that uses changes in government spending (G) and/or taxation (T) to affect aggregate demand
a measure of the average level of prices of goods and service in an economy
when you cannot pay back bonds
household spending on goods and services (both durable and non-durable goods)
the benefit producers receive when the sell a good for a price that is above what they are willing and able to sell it at
a good which is non-rivalrous and non-excludable (typically provided by the government) - extreme examples of merit goods
a market where a few sellers dominate the market for an homogeneous or differentiated good and where there are high barriers to entry in the market
a good that is used for social/private entertainment/use
a statement which can be testable as right or wrong; when you claim a 'fact' to be true
the loss of welfare, utility or benefit to market participants (typically as a result of taxes, policies or externalities)
occurs at a price where quantity demanded and quantity supplied are equal (market-clearing price)
method used to calculate GDP by summing total expenditures on final goods & services or calculating GDP based on summing C + I + G + X - M
people who are unwilling to work at the market wage rate
goods that will last longer than a year (cars, house, etc.)
wages are the payment for labour/working and that real wages are the value after they have been adjusted for inflation (thus real wages refers to the 'purchasing power' of wages)
a good that is scarce; has an opportunity cost
a good for which marginal social costs (MSC) exceed marginal social benefits (MSB) when sold on the open market - they are considered to create negative spillover costs to third pa
the cost suffered solely by the producer of a good
the point at which marginal costs equal the price
the labour force of a country or the human capital of a country
the non-price factors that influence the supply of a good or service
Unemployment between jobs.
goods or services for which and increase in price results in an increase in demand (and vice versa) as these are seen as better the more expensive they are (this is often called th
a measure of the consequences of a tax on all the affected parties
once the economy goes down it will keep going down
goods and services that are produced domestically and sold to foreign countries
all non-institutionalized civilian individuals age 16 or above, who are either working or actively looking for work
a demand-side policy, where the central bank uses changes in the money supply or interest rates to affect AD
a set amount charged per unit of the product sold
wages that can not be reduced when the AD of labour decreases (like a price floor on wages)
people who are actively looking for a job
a rare type of good whose demand rises when price rises, due to the income effect of a rise in the price causes you to buy more of this cheap good because you can't afford more exp
a measure of the responsiveness of the producer to a change in price of a good or service
the degree of optimism or pessimism characterizing he businesses which affects their decisions on investment spending.
an economy in which resource allocation is carried out partly by the state and partly by market forces
the factor of production involving organising of the other factors and/or risk taking.
a good or service for which marginal social benefits (MSB) exceed marginal social costs (MSC) when sold on the open market - they are considered to be beneficial for people (societ
a tax on income/wealth/firm's profit
the amount of money that a country owes to other countries and/or international institutions
when one side of a market knows more than the other side does
as we consume additional units of something, the satisfaction (utility) we derive for each additional until (marginal unit) grows smaller (diminishes)
additions to the stock of capital over a period of time
produced means of production (tools, equipment, machines, etc.)
when government (tax and other) income (T) exceeds government expenditures (G)

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