A:

Accelerator - explains how changes in investment can be directly linked to changes in the rate of GDP growth.
Aggregate demand - the total planned expenditure in an economy at any given price level.
Aggregate supply - the quantity of goods and services that businesses are willing and able to produce at any given price level.
Allocative efficiency - where an economy is producing what society needs the most and allocating it to those who need them the most.
Absolute advantage - when a country can produce a product using fewer factors of production than another nation.
Average rate of tax - the proportion of income paid in tax.
Automatic stabilisers - fiscal policy tools to influence GDP and counter fluctuations in the economic cycle.
Act of God - events considered uncontrollable by human intervention.
Adverse selection - when bad quality pushes out good quality from the market because of an information gap as sellers know more than buyers.
Asymmetric information - where one party in a transaction knows more than others.
Ad valorem taxes - a set percentage of the unit cost of the product.
Abnormal profit - any profit in excess of normal profit, also including economic profit.

B:

Boom - a period of rapid economic growth.
Balance of payments - a set of accounts showing the transaction conducted between the residents of a country and the rest of the world.
Business rates - taxes that businesses have to pay the council.
Buffer stock - the minimum level of inventory a business aims to hold.
Barrier to entry - anything that makes it difficult for new businesses to enter a market.

C:

Consumer price inflation - the annual rate of average price increases.
Capital - the man made machinery and infrastructure that is involved in the production of goods and services.
Consumer spending - household spending on goods and services. Contestable Market- a market in which firms face the threat of competition due to low barriers of entry.
Circular flow of income - the movement of spending and income throughout the economy.
Centralised economy - where the state controls most of the factors of production and the distribution of goods and services.
Consumer sovereignty - the idea that resources are allocated based on consumer choices.
Ceteris paribus - all other things remain the same.
Core inflation - inflation which excludes the most volatile prices.
Comparative advantage - the ability of an individual or group to carry out a particular economic activity more efficiently, with a lower opportunity cost, than another activity.
Crowding out - when the government increases its spending, it will increase the demand for goods and services, which can lead to higher interest rates and inflation.
Complementary goods - goods that are required together, they share joint demand.
Composite demand - when something has many uses, a rise in demand for one use causes a fall in its supply for another.
Competitive supply - where a resource has alternative uses.
Consumer welfare - the difference between the prices consumers were willing to pay and the one they do pay.
Cross price elasticity of demand - measures the responsiveness of demand of a product given a change in the price of another in percentage terms.
Common access resources - natural resources over which no private ownership has been established.
Cobweb theorem - the idea that price fluctuation can lead to fluctuations in supply which create a cycle of rising and falling prices.
Concentration ratio - the combined market share that is controlled by a given number of firms.
Corruption - the abuse of entrusted power for private gain.

D:

Depression - a sustained long-term downturn.
Disposable income - income after tax and transfer earnings.
Demand - the amount consumers are willing and able to buy at each price level.
Diminishing marginal utility - as we consume more and more of a product, each additional unit gives us less extra satisfaction than the one before as our need has already been met.
Derived demand - when the factor of demand isn't wanted for itself but instead for what it can provide.
Deflation - a fall in the general price level.
Disinflation - a fall in the rate of inflation.
Direct tax - a tax on income and wealth that can't be transferred.
Demerit good - a good which is less beneficial, or harmful, to a consumer than they realise so there is over consumption.
Duopoly - a market dominated by two producers.
Division of labour - breaking down the production process into separate tasks upon specialisation.
Dutch disease - refers to the problems associated with a rapid increase in the production of raw materials causing a decline in other sectors of the economy.
Dependency ratio - shows the ratio of dependents, aged 0-15 and over the age of 65, to the population of working age.

E:

Economic growth - the growth in a country's annual income excluding the effects of inflation.
Economic growth [short run] - the percentage annual increase in a country's real GDP.
Economic growth [long run] - long-term expansion of an economy's productive potential.
Exports - goods and services sold to consumers in overseas markets.
Enterprise - the involvement of an entrepreneur who seeks to supply products to a market for a rate of return.
Equilibrium - the point where supply and demand meet.
Economic cycle - demonstrates how GDP varies from one quarter to another.
Exchange rate effect - as price level decreases, international competitiveness increases which drives increased exports.
Employment rate - the proportion of men and women between 16 and 64 who are in paid work.
Economically inactive - the proportion of the population of working age choosing not to work.
Exchange rate - the value of one country's currency in relation to another country's currency.
Entrepreneurs relief - a UK tax scheme designed to incentivise people to grow a business. It works by reducing capital gains tax to a flat rate of 10%rather than a higher rate of 20%.
Elasticity of demand for labour - measures the responsiveness of demand for labour with a change in wage level.
Externality - a cost/benefit that is typically under considered by individual consumers, often as it is imposed to a third party not directly involved in the economic transaction.
Excludable - when an individual can prevent someone else from consuming the product.
Economic profit - the financial amount that remains after subtracting both explicit costs and opportunity costs from revenue.
Economic cost - the benefit that would've been gained if the resources employed in the production process had been used in their next most profitable use.

F:

Free market economy - private individuals control most of the factors of production and the distribution of goods and services.
Free goods - goods which are not scarce and not used up by consumption so they cannot, therefore, be priced.
Full employment - a typical macroeconomic goal for governments, ensuring that the maximum number of people possible are employed, i.e. everyone who wants to work can find employment at the current wage rates.
Fiscal policy - changes to government spending/borrowing and taxation in order to influence AD and the macro economy.
Free rider problem - the free rider problem is the burden on a shared resource that is created by its use or overuse by people who aren't paying their fair share for it.

G:

Gross domestic product - the value of output of an economy over a period of time.
Gross domestic product per capita - the value of a country's goods and services divided by its population.
Gross national income - the total amount of money earned by a country's people and businesses.
Gross national product - a measure of the total value of goods and services produced by a country's residents and businesses, regardless of where the production takes place.
Gross government debt - the total debt of the government accumulated over time as a percentage of national income.
Government consumption - state sector demand for goods and services.
Giffen good - a good where a higher price causes an increase in demand.
Goods - tangible items that satisfy human wants, provide utility or usefulness, and are scarce.
Government policy - actions the government can take to try and influence the economy.
Government failure - when government intervene in the economy and produce an inefficient allocation of resources and decline in economic welfare.

H:

Hyperinflation - rapid and accelerating inflation.
Human capital - the knowledge, skills, experience, attitudes and aptitudes of the human input into production and health.
Horizontal integration - two firms in the same industry at the same stage of the production process.

I:

Interest rate - an expression of the cost of borrowing and the reward for saving.
Interest rate effect - lower prices usually lead to lower interest rates which means there's less reward for saving which stimulates consumer spending and investment.
Investment - spending on capital goods including plant, machinery, infrastructure and employee training.
Imports - goods and services bought by domestic consumers and business from overseas.
Income effect - as prices rise consumers are less able to buy the product as their income is fixed and so the good is less affordable.
Inferior goods - we consume less of them as our income levels rise.
Inflation - a sustained rise in the average price level measured in percentage terms.
International trade - the exchange of goods and services across international borders.
Indirect tax - a tax levied on producers of goods and services.
Income elasticity of demand - measures the responsiveness of demand to a change in income in percentage terms.
Income - income means the money that individuals or businesses receive for their labour or products.
Information provision - government funded information provision/advertising/education to encourage or discourage consumption.

J:

Joint supply - two goods offered for sale which are by-products from the same thing.
J curve - a trendline that shows an initial loss immediately followed by a dramatic gain.

K:

Kaizen - a Japanese business philosophy of continuous improvement of working practices, personal efficiency, etc.

L:

Land - natural resources available for production.
Labour - human input into the production process.
Law of diminishing returns - implies the opportunity cost of switching resources always increases, we have to give up an increasing amount of good X in order to maximise the output of good Y.
Law of demand - as price rises, consumers will be less willing and able to buy the product.
Laissez-faire - the policy of leaving things to take their own course, without interfering.
Labour productivity - the output per worker over a given period of time.
LEDC - a less economically developed country which is categorised by low levels of income per capita and low standards of living.

M:

Marginal propensity to consume - measures how much more individuals will spend for every additional dollar of income.
Multiplier - a process by which any changes in the components of aggregate demand will lead to an even greater change in national output.
Multiplier [positive] - when an initial increase in an injection, or a decrease in a leakage, leads to a greater final increase in real GDP.
Multiplier [negative] - when an initial decrease in an injection, or an increase in a leakage, leads to a greater final decrease in real GDP.
Mixed economy - a balance of free market and centralised economies.
Marginal rate of tax - the rate of tax paid on the next £ earned.
Monetary policy - changes to interest rate, the money supply and the exchange rate by the central bank in order to influence aggregate demand.
Market - any place where buyers meet suppliers to exchange goods and services.
Marginal revenue - the extra total revenue earned by selling an additional unit of output.
Marginal revenue product of labour - the extra revenue generated when an additional worker is employed.
Monopsony - a market condition in which there is only one buyer.
Merit good - a product that society values and judges that everyone should have regardless of whether the individual has the ability to pay or wants them.
Moral hazard - a lack of incentive to guard against risk where one is protected from its consequences.
Market concentration - refers to the number of firms that produce and sell a given proportion of the market.
Monopoly - where an operator has a 25% market share [UK government definition].
Maximum price - a fixed price enacted by the government usually set below the equilibrium market price.
Minimum price - a fixed price enacted by the government usually set above the equilibrium market price.

N:

Negative growth - where an economy shrinks.
Needs - the basic things required for human survival.
Normal goods - most things, any good with a downward sloping demand curve.
Nominal value - the value of an economic variable based on current prices, taking no account of changing prices through time.
Normative statements - opinion statements.
National minimum wage - where the lowest possible wage in a market is not set by market forces, demand and supply, but by government legislation.
Natural monopoly - a market where there is only enough demand for one firm to be productively efficient.
Normal profit - the minimum return needed to keep factors of production in current use and also includes opportunity cost.
Natural resource trap - a phenomenon in which countries that rely heavily on natural resource exports struggle to diversify their economies and can become trapped in poverty.

O:

Output gap - the difference between potential and actual output.
Opportunity cost - the cost of a choice expressed in terms of the next best alternative foregone.
Oligopoly - a market dominated by a few producers.

P:

Purchasing power parity - a way of comparing the purchasing power of different currencies by calculating the exchange rate required to buy the same amount of goods and services in different countries.
Productive efficiency - when firms are producing the maximum output with the least inputs, thus minimising average costs.
Production possibility frontier - shows the combination of two or more goods and services that can be produced using all available factor resources efficiently.
Productivity - measures the output per input.
Price elasticity of supply - measures the responsiveness of supply to changes in price.
Price elasticity of demand - measures the responsiveness of demand to changes in price.
Participation rate - the proportion of the population of working age in the labour force.
Production - the volume of goods and services produced.
Protectionism - the introduction of measures to restrict free trade.
Progressive tax - higher marginal rates of tax, higher income earners pay a higher proportion of income in tax.
Proportional tax - the whole population pay the same proportion of tax relative to their income.
Positive statement - a statement which can be proven or supported by evidence.
Pareto efficiency - when both allocative and productive efficiency are achieved. It's the state when it's impossible to make an individual better off without making another individual worse off.
Price elasticity of demand - measures the responsiveness of quantity demanded to a change in price, in percentage terms.
Private goods - goods which are both excludable and rivalrous.
Public goods - goods which are both non-excludable and non-rivalrous.
Pure monopoly - where there is a single supplier in an industry.

Q:

Quota - an agreed limit on the volume of certain imported goods.
Quantitative easing - the introduction of new money into the money supply by a central bank.
Quasi-public good - a type of good or service that exhibits some but not all of the characteristics of a pure public good

R:

Recession - negative GDP growth for two successive quarters.
Real balance effect - as the value of the pound increases, the ability to output and consume increases.
Real value - the value of an economic variable taking into account changing prices through time.
Regressive tax - low income earners pay a higher proportion of income in tax.
Real wages - the 'price' of labour.
Rivalrous - when an individual's consumption of the good reduces the possible consumption by another consumer.
Regulatory capture - a process by which regulatory agencies may be dominated by the interests they regulate and not by the public interest.
Regulation - rules and laws enacted by the government that must be followed by economic agents to encourage a change in behaviour.

S:

Saving - deferred spending, disposable income that is not spent.
Specialisation - the concentration by a worker, workers, firm, region, or whole economy on a narrow range of goods and services.
Substitution effect - as price rises, consumers will be less willing to purchase a good because relative to other goods the price has risen and thus they will switch to buying other goods.
Supply - the amount that producers are willing and able to supply to the market at each price level.
Service - assistance or advice given to customers during and after the sale of goods.
Subsidy - where the government gives money to producers to produce certain goods they desire and reduce cost of production.
Sound money - money not liable to sudden appreciation or deprecation in value.
Supply side policies - policies designed to increase the productive capacity of the economy, shifting long-run aggregate supply to the right.
Substitute goods - goods that are competing for the same share of consumer income.
Supplier welfare - the difference between the prices suppliers were willing to supply at and the one they do supply at.
Semi public goods - goods which are public in nature but do not fully exhibit the features of non-excludability and non-rivalry.
Specific taxes - a fixed amount of tax per unit of the good.
State provision - direct provision of goods/services by the government free at the point of consumption.
Sustainable development - development that meets the needs of the present without compromising the ability of future generations to meet their own needs.
Shutdown point - the revenue needed to cover variable costs.

T:

Trade balance - the difference between exports and imports.
Taxation - compulsory payments to the government.
The basic economic problem - arises because society has far more needs and wants than its limited resources can satisfy.
Tariff - a tax imposed on certain imported goods.
Time lags - the period of time from when an economic imbalance is first recognised and acknowledged until the time that a chosen fiscal policy tool achieves its desired result.
Tragedy of the commons - the tragedy of the commons refers to a situation in which individuals with access to a public resource act in their own interest.
Terms of trade - measures the relative price of exports to imports in an economy.

U:

Unemployed - people willing, able and available to work at the going wage rate and actively seeking work but cannot find employment.
Utility - a representation of the amount of satisfaction that you get from consuming a product.
Unemployment rate - the number of people out of work as a percentage of the labour force.

V:

Vertical integration - two firms in the same industry at different stages of the production process.

W:

Wants - everything else beyond needs which we desire.
Wealth - the total value of all assets owned by a person, community, company, or country.

X:

X-inefficiency - when a lack of effective competition in a market or industry means that average costs are higher than they would be with competition.

Y:

Yield - the rate of interest earned from holding bonds.

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