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GCSE Economics OCR
All of the definitions ie both papers
| Term | Definition |
|---|---|
| Capital | The factor of production that relates to human-made aids to production. |
| Opportunity cost | The cost of the next best alternative given up when making a choice. |
| Government | A political body that decides how a country is run and manages its operation. |
| Consumer | an individual / household that directly uses a good or service |
| Producer | an individual, company or country that makes or supplies a good or service |
| Land | the factor of production that relates to natural resources |
| Unlimited wants | The infinite desire for goods and services consumers would like to have |
| Economic problem | How to best allocate scarce resources in order to satisfy the unlimited wants of people |
| The factors of production | resources used in the production process. |
| Labour | the factor of production that relates to human resources. |
| Enterprise | the factor of production that relates to organisation and risk bearing activity. |
| Scarce resources | When there is an insufficient amount of something to satisfy all wants. |
| Economic choice | An option for the use of selected scarce resources. |
| Economic sustainability | The best use of scarce resources to promote development or growth now and in the future. |
| Social sustainability | The impact of growth or development that promotes an increase in the quality of life for all, now and in the future. |
| Environmental sustainability | When the impact of growth or development on the environment is small and manageable now and in the future. |
| Market | Where buyers and sellers come together in order to buy or sell goods and services. |
| Primary sector | Direct use of natural resources such as extracting basic materials from land and sea. |
| Secondary sector | All activities in an economy that involve manufacturing or construction. |
| Tertiary sector | All activities in an economy that involve a service. |
| Goods | Tangible products ie products that can been seen or touched. |
| Services | Intangible products ie products that cannot been seen or touched. |
| Factor market | Market in which the services of the factors of production are sold. |
| Product markets | Where final goods and services are offered to consumers businesses and the public sector. |
| Specialisation | The process whereby individuals, firms, regions or countries focus on producing what they are best at. |
| Exchange | Giving up of something you have in return for something you do not have. |
| Demand | The quantity of goods/services that consumers are willing and able to buy at a given price, at a given time. |
| Individual demand | The demand for a product by a consumer/individual. |
| Market demand | The demand for a product by all consumers/individuals in a market. |
| Price elasticity of demand (PED) | The responsiveness of quantity demanded to a change in price. |
| Supply | The quantity of goods/services that producers are willing and able to provide to the market at a given price, at a given time. |
| Individual supply | The supply of a product by one producer. |
| Market supply | The supply of a product by all producers in a market. |
| Movements along the demand or supply curve | are caused by changes in price. |
| Shifts of the demand or supply curve | are caused by non-price factors. |
| Price elasticity of supply (PES) | The responsiveness of supply to a change in price. |
| Price | How much you pay for a good or service, determined by demand and supply. |
| Equilibrium | Where demand equals supply. |
| Worth | How much you value something. |
| Price determination | The interaction between demand and supply. |
| Allocation of resources | How scarce resources are distributed to producers and allocated to consumers. |
| Market forces | The forces of demand and supply. |
| Competition | Where different firms in a market are trying to sell similar products to consumers. |
| Market economy | Where the forces of demand and supply determine the allocation of resources. |
| Monopoly | A monopoly exists when a market is dominated by one producer of a good or service. |
| Oligopoly | A few large firms control the majority market share. |
| Production | Total goods or services produced in a period of time. |
| Productivity | Output per unit of input, how efficient a firm is. |
| Cost | The amount of money a producer has to pay for supplying the good or service. |
| Excess demand | The quantity demanded is greater than quantity supplied at the current market price. |
| Total cost (TC) | All costs added together. |
| Average cost (AC) | Total costs divided by total output. Unit cost of production. |
| Total revenue | Total income from the sale of goods and services. |
| Average revenue | Total revenue divided by total output. Revenue per unit sold. |
| Profit | Total revenue minus total costs. Money left over after all costs have been paid. |
| Loss | When total revenue is less than total cost. |
| Economies of scale | Fall in long run average costs due to an increase in the scale of production. |
| Production | Total goods or services produced in a period of time. |
| Productivity | Output per unit of input, how efficient a firm is. |
| Labour market | Workers sell their labour and firms buy their labour. |
| Determination of wages | Interaction of supply of labour and demand for labour. |
| Supply of labour | The amount of workers willing and able to supply their labour (including the unemployed). |
| Demand for labour | Is derived demand due to demand for the good or service the labour produces |
| Gross pay | Earnings before any deductions are taken. |
| Net pay | Earnings after all deductions have been taken. |
| Income tax | A direct tax levied on income. |
| National insurance contributions | Contributions paid by employee and employer to pay towards state benefits. |
| Pension contributions | Contributions paid by employee and employer towards future pension payments. |
| Money | Anything that is generally accepted as a means of payment for goods and services. |
| Medium of exchange | Anything that sets the standard for exchange of goods and services that is acceptable to all parties. |
| Financial sector | Firms that provide financial services. |
| Interest rates | The cost for borrowing and the reward for saving. |
| Investment | The purchase of capital goods. |
| Financial institutions | Banks (central bank and commercial banks), Building societies and insurance companies. |
| Central bank (Bank of England) | The institution responsible for issuing a country’s banknotes, acting as a lender of last resort for other banks, and implementing monetary policy (e.g. setting interest rates). |
| Commercial (retail) Bank | Take deposits from customers individuals and firms and turn them into assets for the bank. |
| Building societies | Mutual financial institution owned by its members. |
| Insurance company | Institution that guarantees to cover for losses in return for a premium. |
| Economic growth | Growth in GDP (value of output). |
| Gross Domestic Product (GDP) | Total value of goods and services produced in an economy in a year. |
| GDP per capita | The total value of goods and services in a country divided by the population. |
| Investment | Spending on capital goods. |
| How changes in technology cause economic growth | Better technology leads to better quality of capital. |
| Size of workforce | A larger workforce means there is more labour (a factor of production). |
| Education and training | An increase in the skills of the workforce will improve the quality of labour. |
| Availability of natural resources | If there is the discovery of more natural resources, it enables an economy to grow. |
| Employment | Use of labour to produce goods and services. |
| Unemployment | When workers are willing and able to work but unable to find employment. |
| Claimant Count | A measure of unemployment counting the number of people who are claiming unemployment benefits. |
| The unemployment rate | The percentage of the workforce who are unemployed. |
| Cyclical unemployment | Unemployment when there is a lack of demand in the economy. |
| Frictional unemployment | Unemployment when workers are in between jobs. |
| Seasonal unemployment | Unemployment when there is a lack of demand during a certain period of the year. |
| Structural unemployment | Unemployment caused by a permanent decline in an industry. |
| Distribution of income | How incomes are shared out between individuals and households. |
| Income | The reward for a service provided by a factor of production. |
| Wealth | A stock of assets at a point in time. |
| Price stability | When the general level of prices stays constant. |
| Inflation | A sustained increase in the general price level. |
| CPI (Consumer price index) | Method used to calculate the rate of inflation. |
| Nominal value | The value of something in money terms. |
| Real value | The value of something when inflation is taken into account. |
| Government spending | Total amount of money spent by the government in a given period of time. |
| Government revenue | A source of revenue for government spending. |
| Direct taxes | A tax on income or wealth. |
| Indirect taxes | A tax on spending. |
| Balanced government budget | When tax revenue is equal to government spending. |
| Budget surplus | When tax revenue is greater than government spending. |
| Budget deficit | When tax revenue is less than government spending. |
| Fiscal policy | Use of government spending and taxation to have an impact on the economy. |
| Progressive taxes | Tax that takes a higher percentage of tax the higher the income. |
| Positive externalities | Beneficial effect of an economic activity on a third party. |
| Negative externalities | Harmful effect of an economic activity on a third party. |
| Subsidies | Grant given by government to producers to encourage production of a good. |
| Exports | Goods and services produced in one country and sold to another country. |
| Imports | Good and services that are brought into the country, when they have been produced elsewhere. |
| Free trade agreement | International trade without any restrictions such as trade barriers. |
| European Union | A political and economic union of member states that are located primarily in Europe. |
| Exchange rate | The price of one currency in terms of another currency. |
| Currency | The system of money used in a country or group of countries. |
| Globalisation | The increasing integration of economies internationally, an expansion of world trade. |
| Development | The process of improving people’s standard of living and wellbeing over time. |
| Developed country | These are countries with a high GDP per capita and are industrialised. |
| Developing economy | These are countries that rely on labour- intensive industries and have a low GDP per capita. |
| Balance of payments | This records all the financial transactions between one country and other countries. |
| Current account deficit | When goods and services that have been imported are greater than those exported. |
| Current account surplus | When goods and services that have been exported is greater than those imported. |
| Monetary policy | A policy aimed to control the total money supply in the economy. |
| Supply side policies | Policies that increase the productive potential of an economy. |
| Incidence of tax | how the burden of tax is divided between consumers and producers. |
| State provision | Expenditure for provision of public goods. |
| Legislation | Laws imposed, meaning action can be taken against those who break the rules. |
| Regulation | Rules to control/reduce negative behaviour by consumers and producers, that are enforced by legislation. |
| Information provision | Ensuring economic agents have access to the information they need. |
Created by:
victoria.shaw
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