AS Economics - Key terms

A situation where a country can produce a particular good or service using fewer resources than another country

• Absolute advantage

• Aggregate demand

• Consumer surplus

• Disinflation

Automatic stabilisers

• capital investment that is not related to changes in the level of national income in an economy

• changes in the level of taxation and/or public expenditure automatically bring about changes in an economy without the need for deliberate action by a government

• savings that are not related to changes in the level of national income in an economy

• the total fixed cost of production divided by the number of units produced

Where trade takes place between two countries

• Economic rent

• Budget deficit

• Collective bargaining

• Bilateral trade

Group of countries which agree to integrate their economies as much as possible through various rules, laws, policies and regulations

• Economic rent

• Economic law

• Economic union

• Economic growth

Ban on imports from particular countries, applied either to particular products or to all products from particular countries

• Embargo

• Gini coefficient

• Import duty

• Merger

Situation where two items are consumed together (i.e. they are complements); an example is shoes and shoe laces

• A rise in the general level of prices in an economy, caused primarily by too much money in an economy

• The use of money as an acceptable means of payment between buyers and sellers of a product

• The proportion of an increase in income that is spent on imported goods and services

• Situation where two items are consumed together (i.e. they are complements); an example is shoes and shoe laces

Where a government decides to take over the ownership of a particular firm or industry

• Oligopoly

• Nationalisation

• Globalisation

• Privatisation

Where taxation takes a higher proportion of a person’s income as that income rises

• Persuasive taxation

• Aggressive taxation

• Regressive taxation

• Progressive taxation

Restriction of free trade between countries in an attempt to protect local firms and industries from competition

• Rationing

• Trade liberalisation

• Protectionism

• Ceteris paribus

Group of countries that promote free trade between themselves, and that impose a common external tariff on imports from countries outside the area

• Customs force

• Customs union

• Customs squad

• Customs team