33 of the Economics glossary’s terms, each with the part of the syllabus where you first meet it.
An outcome of a game in which no player can improve its payoff by changing its strategy, given the strategy chosen by the other player.
The system of measuring the total value of an economy’s output, income and expenditure over a period of time, usually a quarter or a year.
The argument that industries producing goods vital to a country’s defence or survival in a crisis, such as weapons, energy, food or advanced technology, should be protected from foreign competition.
The stock of natural resources, such as soil, forests, water, fish stocks, minerals and the atmosphere, that provides a flow of goods and services to the economy over time.
A real-world event, such as a policy change in one place but not a similar neighbouring one, that lets economists compare an affected group with an unaffected one as if in a controlled experiment.
A market in which long-run average cost falls over the whole range of market demand, so one firm can supply the market at a lower average cost than two or more firms could.
The rate of unemployment when the economy is at full employment output: the sum of structural, frictional and seasonal unemployment, with no cyclical unemployment.
A normal good with income inelastic demand, so that YED lies between 0 and 1 and spending on it rises more slowly than income.
Needs are the goods and services required for survival, such as food, water and shelter; wants are everything else people desire beyond those needs.
A cost of producing or consuming a good that falls on third parties and is not paid for by the producer or consumer, so the good is overproduced or overconsumed.
An external cost created when a good is consumed, borne by third parties, so that marginal social benefit is less than marginal private benefit, as with second-hand smoke or traffic congestion.
An external cost created when a good is produced, borne by third parties, so that marginal social cost is greater than marginal private cost, as when a factory pollutes a river.
A balancing item in the balance of payments that corrects for mistakes and missing records, so that the current, capital and financial accounts sum to zero.
The value of a country’s exports of goods and services minus the value of its imports (X − M); the component of aggregate demand that comes from trade with other countries.
Income earned abroad by a country’s residents (profits, interest, dividends and wages) minus income paid to non-residents; the difference between GNI and GDP.
The value of the foreign assets owned by a country’s residents minus the value of the domestic assets owned by foreigners, measured at a point in time.
The school of thought holding that markets clear quickly and people form rational expectations, so the economy tends to return to full employment on its own and active demand management is ineffective.
A piece of journalism from a newspaper, journal or news website, published no more than one year before the commentary on it is written; television and radio broadcasts are excluded.
The interest rate expressed in money terms, as quoted by a bank or lender, with no adjustment for inflation.
A value measured at the prices of the time it refers to (current prices), with no adjustment for changes in the price level.
An oligopoly in which firms do not cooperate but compete with each other, while taking account of how their rivals are likely to react.
A characteristic of a good when it is impossible, or too costly, to prevent people who have not paid for it from using it.
A not-for-profit organisation independent of government, such as a charity or community group, that works for social, humanitarian or development goals and is funded mainly by donations and grants.
Competition between firms by means other than price, such as advertising, branding, product quality, design, packaging, after-sales service and loyalty schemes.
The factors other than the good’s own price that affect how much consumers want to buy, such as income, tastes, expectations, the prices of related goods and the number of consumers; a change in one shifts the demand curve.
The factors other than the good’s own price that affect how much producers offer for sale, such as costs of factors of production, technology, taxes and subsidies, related goods, expectations and the number of firms.
Allocating a good in short supply by a method other than price, such as queuing, waiting lists, lotteries, ration coupons or sellers' preferences.
A natural resource, such as oil, coal or a metal ore, that exists in a fixed quantity, so that every unit used today reduces the amount available in the future.
A characteristic of a good whose consumption by one person does not reduce the amount available for others to consume, so the marginal cost of an extra user is zero.
A good for which demand rises when consumers’ incomes rise and falls when incomes fall, ceteris paribus.
The minimum profit a firm needs to keep its resources in their current use, counted as part of its economic costs; it is earned when average revenue equals average cost (AR = AC).
The part of economics that makes value judgments about what ought to happen, such as which goals matter most or which policy a government should choose; its statements cannot be proved true or false by evidence.
A change in the way choices are presented that steers people towards a particular decision without forbidding any option or significantly changing financial incentives.