23 of the Economics glossary’s terms, each with the part of the syllabus where you first meet it.
A record of all economic transactions between the residents of a country and the rest of the world over a period of time, usually a year; it is made up of the current, capital and financial accounts.
The value of a country’s exports of goods minus the value of its imports of goods over a period of time.
The value of a country’s exports of services, such as tourism, transport, banking and insurance, minus the value of its imports of services over a period of time.
A government budget in which government revenue equals government spending over the year, so there is neither a deficit nor a surplus.
A clear conclusion that answers the question after weighing arguments on both sides, stating which matter most and under what conditions.
The cash that commercial banks hold and the deposits they keep at the central bank, which they use to settle payments with each other and to meet withdrawals.
Obstacles that make it difficult or impossible for new firms to enter a market, such as economies of scale, patents, licences, control of key resources or strong brand loyalty.
The reference year against which values in other years are compared in an index, given the value 100.
The three questions every economy must answer because of scarcity: what goods and services to produce and in what quantities, how to produce them, and for whom.
The representative collection of goods and services bought by a typical household, in fixed quantities or weights, whose cost is tracked to calculate a consumer price index.
The branch of economics that uses insights from psychology to study how people actually make decisions, including the biases and rules of thumb that make behaviour depart from full rationality.
Aid given directly by one donor government to a recipient country, as opposed to multilateral aid, which is channelled through international organisations funded by many governments.
A trade agreement between two countries, or between two trading blocs, that reduces barriers to trade between them.
The phase of the business cycle in which real GDP grows rapidly and rises above potential output, so unemployment is low and inflationary pressure builds.
The idea that people try to make rational decisions but are limited by incomplete information, limited time and limited ability to process information, so they choose satisfactory rather than best options.
The limited ability of people to carry out decisions in their long-term interest, because they give too much weight to immediate costs and benefits compared with future ones.
The idea that people are not purely self-interested but also care about fairness and others’ well-being, sometimes acting against their narrow interest to help others or punish unfairness.
The emigration of skilled and educated workers, such as doctors, nurses, engineers and graduates, from a country to work abroad, reducing the human capital available at home.
The amount by which a government’s total spending exceeds its total revenue over a period, usually a year; a flow that adds to government debt.
The amount by which government revenue exceeds government spending in a given year.
A store of a commodity that the government buys when supply is high to support the price and sells when supply is low to stop the price rising, to stabilise prices.
The degree of optimism firms feel about future sales, profits and economic conditions, which strongly influences how much they invest.
The short-term fluctuations of real GDP around its long-term growth trend, through phases of expansion, peak, contraction and trough.