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Economics > Economics Theme 1 > Flashcards

Economics Theme 1 Flashcards

1
Q

Central bank

A

The governments financial authority responsible for managing money regulating banks and controlling interest rates to maintain economic stability

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2
Q

Demand

A

The quantity of a good or service that consumers are able and willing to buy at a given price during a given period of time

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3
Q

Utility

A

The usefulness or enjoyment a consumer can get from a service or good

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4
Q

Merit good

A

Provided by the state and private sector, eg healthcare

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5
Q

Exchange rate

A

The value of one currency for another

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6
Q

Change formula

A

Change/original x 100

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7
Q

Factors of production

A

The resources people use to produce goods and services

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8
Q

positive data

A

A positive statement is a statement that can be verified true or false

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9
Q

Normative data

A

A statement that is an opinion

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10
Q

Aggregate demand

A

All demand added up in the economy

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11
Q

Progressive tax system

A

Increase the tax rate as individuals increase their income

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12
Q

Indirect tax

A

Taxes paid via as 3rd party to the government, excise duty on fags

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13
Q

Unemployment

A

Willing to work but cannot get a job

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14
Q

British money into foreign money

A

British money x exchange rate

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15
Q

Local government

A

Responsible for delivering government services on a town/regional basis

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16
Q

Appreciation

A

An increase in the external value of one currency in relation to another

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17
Q

Depreciation

A

A decrease in the external value of one currency in relation to another

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18
Q

Balance of trade

A

Value of exports - imports (x-m)

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19
Q

Opportunity cost

A

The cost of missing out on the next best alternative

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20
Q

Economy

A

The environment in which business entrepreneurs employees governments and individuals operate

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21
Q

Fiscal policy

A

The manipulation of government spending taxation and the budget balance

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22
Q

Economic cycle

A

The overall state of the economy as it goes through alternating stages of expansion and contractions (recessions)

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23
Q

Demand pull

A

The upward pressure on prices follows a shortage in supply

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24
Q

Cost push inflation

A

When prices increase due to increases in production costs

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25
Q

Deflation

A

A sustained period when the general price level for goods and services is falling

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26
Q

Inflation

A

A general and sustained increase in prices over time

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27
Q

Monetary policy

A

The control of the quantity of money available in an economy

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28
Q

Vacancies/skill shortages

A

Unfilled jobs in the labour market

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29
Q

Supply side policies

A

Measures that are intended to improvise the long term growth of the economy

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30
Q

Austerity

A

The name used for the government fiscal policy which is aimed at reducing a government deficit (or borrowing)

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31
Q

Budget deficit

A

Occurs when government spending is greater than tax revenues

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32
Q

Monetary inflation

A

The rise in prices caused by an increase in the supply of money

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33
Q

RPI (retail price index)

A

Tracks the changes in the cost of a fixed basket of goods over time

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34
Q

CPI (consumer price index)

A

Designed to be representative of the purchases made by the average household

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35
Q

MPC (marginal prosperity to consume)

A

The proportion of aggregate raise in pay that a consumer spendings on the consumption of goods and services as opposed to saving it

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36
Q

Interest rates

A

The amount of a lender charges a borrower and is a percentage of the principal to the amount loaned

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37
Q

Base rate

A

The rate of interest that is set by a central bank and which is the lowest rate at which it lends money to other banks

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38
Q

Foreign money into British money

A

Foreign money/exchange rate

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39
Q

Scarcity

A

The demand for a good or service is greater than the availability of the good or service

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40
Q

Consumer sovereignty

A

Idea that it is consumers who influence production decisions

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41
Q

Disinflation

A

A slow down in the annual rate of price inflation

42
Q

Hyped inflation

A

Rapid and excessive and out of control general price increase in an economy

43
Q

Transition economics

A

An economy that is changing from a planned economy to a free economy

44
Q

Problems of inflation

A

Money can buy less
Uncertain investments
Fixed income people may struggle

45
Q

Benefits of inflation

A

Debt relief, erodes the real value of debt
Encourages spending
Can lead to nominal wage increases

46
Q

Zero hours contracts

A

When the employee has no set or guaranteed hours of work

47
Q

Direct tax

A

Taxes directly paid to the government, eg income

48
Q

Public good

A

Only provided by the state, eg street lights

49
Q

Underemployment

A

Those in work but working part time who want to be full time, whose with high skill levels working low skilled jobs

50
Q

Free market

A

A system of buying and selling goods and services that is not under government control

51
Q

Trade off

A

Any situation where making once choice means loosing out on somethings else usually forgoing a benefit or opportunity

52
Q

Signalling

A

Prices give signals to producers and consumers

53
Q

Rationing

A

Only those willing and able to pay the price get the products or resources

54
Q

Incentives

A

Profitably motivates firms value for money motivates consumers

55
Q

Homogenous

A

Products are uniform identical whatever their origin; all bananas look the same

56
Q

Differentaited

A

Products are distinctive with different design features or branding

57
Q

Mass markets

A

Products are supplied in significant quantities to all or most types of consumers

58
Q

Oligopoly

A

Markets where few large firms dominate the (usually) mass markets where there are often smaller firms competing as well

59
Q

Niche market

A

A small segment of a market with distinctive specialised requirements, they may be associated with subcultures

60
Q

Market research

A

The process of gathering data in order to understand the current and future customer needs, reduces risk when developing a new idea

61
Q

Primary market research

A

Obtained first hand involves fieldwork and can be directly related to the businesses needs

62
Q

Secondary market research

A

Uses data that has been gathered previously by someone else

63
Q

Quantitive market research

A

Markets research conducted where the results and numerical

64
Q

Qualitative market rearch

A

Market research that analyses opinions and feelings

65
Q

Sampling

A

Involves collecting data from a number of people to represent a larger demographic

66
Q

Bias

A

When information collected from a sample doesn’t represent the total population

67
Q

Quota sample

A

Dividing the the target market into groups according to their consumer characteristics

68
Q

Stratified samples

A

Select participants within the target groups or random bias more accurate

69
Q

Market segmentation

A

Identifying different groups of consumers in a market with different preferences

70
Q

Market repositioning

A

Refers to the way a product is seen in comparison with rival product so that businesses can match customer preferences or appeal to different market segments

71
Q

Repositioning

A

Means targeting a different market segment one with more potential sales revenue or profit

72
Q

Market map

A

A took that plots brands in the market according to how they meet customers needs

73
Q

Product differentiation

A

Unique features which distinguish a product from its rivals

74
Q

Adding value

A

When factors of production are used to make material inputs more valuable to potential customers

75
Q

Competitive pricing

A

Takes account of prices charged for similar products competing in the same market

76
Q

Break even formula

A

Fixed costs / contribution

77
Q

Contribution

A

Selling price (per item) - Variable costs (per item)

78
Q

Excess supply

A

When the quantity supplied is greater than the quantity demanded

79
Q

Excess demand

A

When the quantity demanded outweighs the quantity supplied

80
Q

Equilibrium price

A

Price at which quantity supplied and quantity demanded are equal

81
Q

Market clearing

A

A balance between quantity supplied and quantity demanded

82
Q

Price signalling mechanism

A

Refers to the way potential profits will attract entrepreneurs to a growing market

83
Q

Ceteris paribus

A

The affect of one economic variable on another provided all other variables are the same

84
Q

Signalling

A

Prices give signals to producers or consumers

85
Q

Rationing

A

Only those willing and able to pay the price get the products or service

86
Q

Incentives

A

Profitably motivates firms value for money motivates consumers

87
Q

Social costs

A

The total of private costs and any external costs

88
Q

Overproduction/overconsumption

A

When prices reflect only the private costs of production ignoring external costs

89
Q

Market failure

A

When markets allocate resources inefficiently often because market prices are distorted

90
Q

Command economy

A

Relies predominantly on public sector provision of goods and services

91
Q

PROFIT calculation

A

Sales revenue - cost

92
Q

SALES REVENUE calculation

A

Sales volume x selling price

93
Q

Contribution

A

The amount each sale raises towards fixed costs or profits

94
Q

Contribution calculation

A

Selling price - variable costs

95
Q

Break even formula

A

Fixed costs / contribution

96
Q

Barriers to entry

A

Obstacles to new entrants which affect some industries particularly where competing businesses are very large

97
Q

Gross profit

A

Sales revenue less the immediate variable costs of producing the goods sold

98
Q

Gross profit margin calculation

A

Gross profit x 100 / sales revenue

99
Q

Operating profit margin

A

Operating profit x 100 / sales revenue

100
Q

Net profit margin

A

Net profit x 100 / sales revenue

Economics (2 decks)

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