45 of the Economics glossary’s terms, each with the part of the syllabus where you first meet it.
The area of biologically productive land and sea needed to produce the resources a person or population consumes and to absorb the waste it produces, measured in global hectares.
A broad improvement in people’s economic well-being and quality of life, including higher incomes, better health and education, less poverty and greater freedom of choice.
A good that is scarce, so its production or use has an opportunity cost, whether or not consumers pay a price for it.
An increase in the real output of goods and services in an economy over time, measured as the percentage change in real GDP (or real GDP per capita), usually over a year.
Differences in the way income or wealth is shared out between individuals or households in an economy; the larger the differences, the greater the inequality.
The process by which countries reduce or remove barriers to the movement of goods, services, capital and labour between them and coordinate their economic policies.
A simplified representation of part of the economy, in words, diagrams or equations, that keeps only the variables thought to matter most in order to explain and predict behaviour.
The way a society organises the ownership of resources and makes decisions about what, how and for whom to produce, ranging from free market to planned economies.
A general explanation of how part of the economy works, built from linked hypotheses and assumptions, that has been tested repeatedly against evidence and not yet refuted.
The level of prosperity and quality of life of people, including financial security, the ability to meet basic needs and to make choices that bring satisfaction.
A country with relatively low income per capita and low levels of development in health, education and living standards, compared with economically more developed countries.
A country with high income per capita, high levels of development in health, education and living standards, and a broad mix of manufacturing and service industries.
The social science that studies how individuals, firms, governments and societies choose to use scarce resources to satisfy their needs and wants, and the consequences of those choices.
Falls in long-run average cost that occur as a firm increases its scale of production, for example through specialisation, bulk buying or cheaper finance.
Government campaigns and information that change people’s knowledge of a good’s costs or benefits, so as to raise demand for merit goods and lower demand for demerit goods.
Making the best possible use of scarce resources, so that the greatest useful output is obtained from given inputs, or the output society values most is produced with the least waste.
A measure of how responsive one economic variable is to a change in another, calculated as the percentage change in the first divided by the percentage change in the second.
A complete ban on trade with a particular country, or on trade in a particular good, usually imposed for political or security reasons.
Information gained from observation, measurement or experiment in the real world, such as statistics or survey results, used to test hypotheses and theories.
A disease that is constantly present in a population or region, such as malaria in much of sub-Saharan Africa, reducing health, working capacity and school attendance year after year.
Measures of development based on energy, such as the share of the population with access to electricity or clean cooking fuels and energy consumption per person.
A curve showing the relationship between consumers' income and the quantity demanded of a good, with all other influences on demand held constant.
A factor of production consisting of the ability to organise the other factors of production, take risks and start new businesses or ideas; its factor income is profit.
The deterioration of the environment through the depletion of natural resources such as soil, water, forests and fish stocks, and through pollution and the loss of ecosystems.
Measures of the environmental side of development, such as carbon dioxide emissions per person, forest area, access to clean water or the depletion of natural resources.
A hypothesis that environmental damage per person first rises and then falls as real GDP per capita increases, giving an inverted-U relationship.
The situation in which people have the same amount of something, such as income, wealth or opportunities; a measurable, positive idea, unlike equity, which concerns fairness.
The interest rate at which the quantity of money demanded equals the money supply set by the central bank, shown where the money demand and money supply curves intersect.
Fairness in the distribution of income, wealth or opportunities; a normative idea that is different from equality, which means everyone having the same.
The weighing of the strengths and limitations of an argument, theory or policy to reach a reasoned judgment supported by evidence.
The gap between the output a firm in monopolistic competition produces in long-run equilibrium and the output at which its average cost would be lowest.
The situation where, at the current price, quantity demanded is greater than quantity supplied; it arises when the price is below the equilibrium price.
The situation where, at the current price, quantity supplied is greater than quantity demanded; it arises when the price is above the equilibrium price.
Government limits on the amount of foreign currency that residents and firms may buy or take out of the country, used to reduce pressure on a fixed or managed exchange rate.
The price of one currency expressed in terms of another currency, for example US$1.30 per pound.
Describes a good from which people who do not pay can be prevented from benefiting, for example by charging an entry price.
An increase in government spending, a cut in taxes, or both, intended to increase aggregate demand; it usually increases a budget deficit or reduces a surplus.
Monetary policy that lowers interest rates or increases the money supply to raise aggregate demand, used to close a deflationary gap and reduce unemployment.
A method of measuring national income by adding up all spending on final goods and services produced in the economy: GDP = C + I + G + (X − M).
Policies that aim to reduce a current account deficit by lowering total spending in the economy, including spending on imports, through contractionary fiscal or monetary policy.
Policies that aim to switch spending by domestic residents and foreigners away from imports and towards domestically produced goods and services, such as protectionism or a lower exchange rate.
A growth strategy in which the government encourages firms to produce for world markets, using a competitive exchange rate, export credit, tax incentives, special economic zones and investment in infrastructure and skills.
A government payment to domestic producers, per unit produced or exported, that lowers their costs so that they can compete with imports or sell more abroad.
Goods and services produced in one country and sold to buyers in other countries; export revenue is an injection into the circular flow of income.
A cost or benefit of producing or consuming a good that falls on a third party not directly involved in the transaction and is not reflected in the market price.