25 of the Economics glossary’s terms, each with the part of the syllabus where you first meet it.
The model in which consumers logically compare the costs and benefits of every option, with full information, and choose the combination of goods that maximises their utility given their income.
The role of prices in distributing scarce goods: a rising price reduces quantity demanded until it equals the quantity available, so the good goes to those willing and able to pay.
GDP measured at the constant prices of a base year, so that changes in it show changes in the volume of output rather than in prices.
The nominal interest rate adjusted for inflation, approximately the nominal interest rate minus the rate of inflation; it measures the true cost of borrowing and the true return to saving.
A value adjusted for changes in the price level, measured at the constant prices of a base year, so that it reflects changes in quantity only.
A specific, identifiable case, such as a named country, market, firm or policy with its date and if possible figures, used to support an economic argument.
A period in which real GDP falls, commonly defined as two consecutive quarters of negative real GDP growth.
Government policies that change the distribution of income or wealth, usually to reduce inequality, through progressive taxes, transfer payments, minimum wages and public services used mainly by lower-income groups.
The rejection of a hypothesis or theory because empirical evidence contradicts its predictions; a scientific claim must be stated so that evidence could in principle refute it.
A trade agreement between several countries, usually in the same region of the world, that reduces barriers to trade between them.
A tax whose average rate falls as income rises, so that people with lower incomes pay a larger percentage of their income in tax than people with higher incomes.
A situation in which income is well below the typical income of the society a person lives in, usually measured as household income below 50% or 60% of the median.
Money sent home by people working in another country to their families or communities in their country of origin.
A natural resource, such as a forest, fish stock or groundwater, that regenerates naturally and can be used indefinitely if it is used no faster than it regenerates.
Spending by firms or governments on investigating and developing new products and new methods of production.
Foreign currencies, gold and other foreign assets held by a country’s central bank, which it can use to pay for imports, repay foreign debt or intervene in the foreign exchange market.
The way scarce factors of production are assigned to producing different goods and services; in a market economy it is decided by the price mechanism through signalling and incentives.
A form of choice architecture in which the number or type of options available is limited, to make decisions simpler or steer people away from options that may harm them.
Trade protection imposed by a country in response to barriers placed on its own exports by another country; repeated rounds of retaliation form a trade war.
A decision by the government or central bank to raise the value of its currency in a fixed (or managed) exchange rate system.
Describes a good whose consumption by one person reduces the amount available for others, such as a fish caught from the sea.
The three formal rules marked under criterion F: each article from a different unit, each from a different and appropriate source, and each published within one year of the commentary.
The principle that everyone, including the government, is subject to the same known laws, enforced fairly and predictably by independent courts.
A simple mental shortcut used to make a decision quickly, instead of comparing all the costs and benefits of every option; also called a heuristic.
The criteria used to decide which country a good comes from, such as a minimum share of its value produced inside a trading bloc, so that only members’ goods receive tariff preferences.