theme 4

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absaloute poverty
means not having enough income to provide basic necessities and survive
1 of 89
allocation of resources
how factors of production are used to create goods and services
2 of 89
allocation of efficiency
is achievd when resources are used to yield the maximum benefit to everyone it is impossible to redistribute them without making someone worst off
3 of 89
anti competitive practices
aim to reduce competition they include price fixing and collution
4 of 89
asymmetric information
occurs when one party knows more about the product than the other
5 of 89
austerity
refers to cuts in public expenditure and tax increases that reduce public borrowing
6 of 89
balance of payments
the set of accounts that show export revenue and import costs capital movements and any other internwational transactions
7 of 89
bank of england
the uks central bank it controls monatary policy
8 of 89
barriers of entry
occur when strat up costs make it difficultm for new businesses to enter the industry
9 of 89
cartel
any agreement between businesses to reduce competition or not to compete with each other the agreement is usually secret and may be implemented in various ways
10 of 89
competition and markets authority
investigates uk market behaviour to ensure that all businesses are acting in line with competition policy requirements
11 of 89
consumer protection
refers to regulations that protect consumer from unsafe or fraudulant purchases
12 of 89
contestable markets
characterised by easy entry ie new firms can set up in business easily
13 of 89
current account
part of the balance of payments that covers imports and exports
14 of 89
demand side policies
affect the economy by increasing or reducing aggregate demand
15 of 89
de merit goods
over produced by free market in quantities that are greater than the optimal level for society they are generally thought to be bad for the society as a whole
16 of 89
de regultion
means reducing the number of regulations that affect businesses
17 of 89
direct tax
taken at source and goes directly to the gorvernment eg income tax and national insurance
18 of 89
entry and exit
refers to new bsuinesses entering a particular market and existing businesses leaving
19 of 89
eu competition policy
keeps markets competitive wherever there is trade between eu member countries
20 of 89
explicit collusion
occurs when there is a meeting or actual agreement between businesses to avoid competing vigorously and follow a joint strategy
21 of 89
extenal benefits
benefits or positive side effects imposed on a third party who is neither the producer nor the consumer
22 of 89
external costs
costs or negative side effects imposed on a third party who is neither the producer the consumer of the product
23 of 89
financial crisis
the period in 2007-9 when banks were endanered by excessive lending
24 of 89
fiscal policy
involves changes in the levels of taxation and or government expenditure in order to affect the level of output
25 of 89
free market policies
avoid government intervention functionaing on the basis of supply and demand
26 of 89
free rider problems
occurs hen public goods are under provided or not provided at all because individuals are able to consume the good by paying little or nothing towards the cost
27 of 89
full capacity output
the most that the economy can produce without an increase in the factors of production
28 of 89
geographic immobility
occurs when unemployed people cannot move to places where there are job vacancies
29 of 89
gini coefficient
measures income inequality a coefficient of 0 would mean income is shared equally between all individuals whilst coefficient 1 would mean one person within the population has all the income and everyone elso none. the higher the gini coefficient the
30 of 89
government failure
occurs when government intervention makes the situation worse rather than better in solving one problem another is created
31 of 89
imperfect markets
disorted in ways that reduce competition they include oligopoly and imperfect competition
32 of 89
incentives
payments or rewards that enable or motivate a particular course of action or count as a reason for preferring one choice to the alternatives
33 of 89
indirect taxes
added onto prices and go indirectly to the government from the sellor eg vat and excise duty
34 of 89
inequality
occurs where there are large differences in incomes and wealth within the society
35 of 89
innovation
refers to the development of new ideas or techniques
36 of 89
intellectual property rights
ideas or inventions that are protected by patents or copyright
37 of 89
interventionist policies
designed to control market forces usuallym for political reasosn
38 of 89
marginal cost
the cost for producing one more unit of output
39 of 89
marginal revenue
the extra revenue that comes from selling one more unit of ouput
40 of 89
market
any medium in which buyers and sellors interact and agree to trade at a price
41 of 89
market failure
happens when a market does not efficiently allocate resources to achieve the greatest possibleconsumer satisfaction the allocation of resources is such that a relocation would make some people better off
42 of 89
merit goods
can be provided by the private sector and often are but the quantity that the free market proides is lower than the optimum level of society they are under provided by the market mechanism public sector activity can create an optimum level of output
43 of 89
monetary policy
uses interest rates to vary the costs of borrowing and influence the level of aggregate demand
44 of 89
monetary policy comittee
sets interest rates and seeks to prevent inflation from changing significantly
45 of 89
moral hazard
means that people take bigger risks when they know they will not personally have to cover the cost of a mistake
46 of 89
natural monopoly
occurs when the most efficient scale of production is a monopoly more thsan ]]]
47 of 89
natural monopoly
occurs when the most efficient scale of production is a monopoly more thsan ]]]
48 of 89
natural monopoly
occurs when the most efficient scale of production is a monopoly more thsan ]]]
49 of 89
natural monopoly
occurs when the most efficient scale of production is a monopoly more thsan ]]
50 of 89
natural monopoly
occurs when the most efficient scale of production is a monopoly more thsan ]]
51 of 89
natural monopoly
occurs when the most efficient scale of production is a monopoly more thsan ]]
52 of 89
natural monopoly
occurs when the most efficient scale of production is a monopoly more thsan ]]
53 of 89
natural monopoly
occurs when the most efficient scale of production is a monopoly more thsan ]]]
54 of 89
natural monopoly
occurs when the most efficient scale of production is a monopoly more thsan ]]
55 of 89
natural monopoly
occurs when the most efficient scale of production is a monopoly more thsan ]]
56 of 89
natural monopoly
occurs when the most efficient scale of production is a monopoly more thsan ]]
57 of 89
natural monopoly
occurs when the most efficient scale of production is a monopoly more than one producer or supplier would involve wasteful duplication of resources
58 of 89
non excludable
means that if one person consumes a good it does not affect or reduce the amount left for someone else to consume
59 of 89
normal profit
means just enough profit to enable a business to keep going
60 of 89
occupational immobility
occurs when unemployed people lack the skills needed to do the jobs that are available
61 of 89
overheating
occurs when aggregate demand exceeds aggregate supply and inflation is accelerating due to shortages
62 of 89
perfect competition
model that describes markets where all products are identical with no differentiation and there are many competitng businesses only normal profit can be obtained and everyone will have perfect knowledge of the market
63 of 89
poverty trap
a situation in which an unemployed person woul be evn poorer or not much richer in work because they would no longer recieve unemployment benefit
64 of 89
price discriminition
means charging a higher price to people whose price elasticity of demand is low the sellor must be able to identify the groups of people who are more sensitive to prices
65 of 89
privitisation
means transferring production out of the public sector and into the private sector
66 of 89
productive efficiency
maximises the effective use of resources
67 of 89
profit signalling mechanism
means by which resources are allocated the presence of profit in a market attracts more resources and creates more outputs losses drive resources away
68 of 89
progressive tax
one that takes a greater percentage of income from richer people than poorer people
69 of 89
prudential regulation authority
part of the bank of england and supervises banks building societies and insurance companies
70 of 89
public sector deficit
occurs when public expenditure is greater than tax revenue the deficit is covered by borrowing
71 of 89
public good
one that the free market will not provide at all there is no incentive for a producer to supply it it is impossible to change for it and make a profit and it is impossible to prevent anyone else from consuming it for free
72 of 89
public interest
loose term but means the welfare or wellbeing of the public in general as opposed to the selfish interests of individuals groups and businesses in the context of this course it means the interest of consumers in general rather than bsuinesses
73 of 89
redistribution
refers to the use of tax revenue to raise the standard of living of poorer people
74 of 89
regulations
legal and other rules that apply to businesses they may come from governments the eu or trade associations
75 of 89
regulatory body
public authority or government agency responsible for enforcing government regulations
76 of 89
regulatory capture
happens when the regulator is more influenced by the industrys point of view than the consumers
77 of 89
relative poverty
exists when someone does not have enough income to participate fully in the society in which they live
78 of 89
research and development
helps to develop products or processes that are new better or cheaper
79 of 89
restrictive practices
include any action that abusiness uses to limit competition
80 of 89
shocks
unexpected events that affect the economy and often come from outside it they are not predictable
81 of 89
social benefits
the total benefits of producing goodss and services and are calculated by adding together the private and external benefits
82 of 89
social costs
the total costs of producing goods and services and are calculated by adding together the private and external costs
83 of 89
supply side policies
include all measures designed to increase the productive capacity of the economy they influence aggregate supply rather than aggregate demand
84 of 89
tacit collusion
occurs when competing firms appear to follow a similar strategy to reach the same aim such as avoiding price cutting but without meeting or having any kind of agreement
85 of 89
trade
the difference between exports which are part of the overall demand for uk produced products and imports which are not produced in the uk
86 of 89
tradable pollution permits
allows some businesses to pollute the atmosphere up to a certain level but no mre the toatl allowed can be reduced over time allowing businesses to reduce their polluting processes gradually if the business cuts pollution faster than it needs to it i
87 of 89
tradeoffs
occur when two objectives cannot both be achieved the more you have of one variable the less you have of the other
88 of 89
vacancies
unfilled jobs when they increase it is likely that there are skill shortages
89 of 89

Other cards in this set

Card 2

Front

how factors of production are used to create goods and services

Back

allocation of resources

Card 3

Front

is achievd when resources are used to yield the maximum benefit to everyone it is impossible to redistribute them without making someone worst off

Back

Preview of the back of card 3

Card 4

Front

aim to reduce competition they include price fixing and collution

Back

Preview of the back of card 4

Card 5

Front

occurs when one party knows more about the product than the other

Back

Preview of the back of card 5
View more cards

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