Economics - Definitions

1. Accelerator Principle
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Terms in this set (556)
11. ARTR/Q12. Article 50The formal mechanism for exiting the EU: the clause in the 2007 Lisbon treaty that allows any member state "to withdraw from the union in accordance with its own constitutional requirements". The two-year article 50 negotiations, which among other things must settle citizens' rights, the question of the Irish border and the UK's exit bill, are in effect the divorce talks.13. Automatic / Built in stabilisersChanges in state income and spending which occur without any changes in state policy. E.g. As national income rises - so does tax revenue. The effect of this has a downward effect on inflation while also providing extra funds needed to finance its current expenditure.14. AVCVC/Q15. BackstopThe EU and UK agreed in a political deal in December 2017 that a "backstop" was required in the withdrawal agreement - the divorce deal - that would guarantee an invisible border in the event of no other solution to achieve this being found in a Brexit deal, either in a specific solution for Northern Ireland or in a broader EU-UK trade deal. The December 2017 agreement also aims to protect North-South co-operation, support the all-island economy and safeguards the 1998 Belfast Agreement. In March 2018 the two sides agreed that there had to be a legal text - not just a political declaration - around how this option would work in practice should no better option be found.What exactly is the backstop?It is an insurance policy written into the withdrawal agreement, or Brexit treaty, guaranteeing no harder border on the island of Ireland.It would only be used as a last resort or the default option if the EU and UK could not reach an overarching free trade deal that would make trade so frictionless that there would be no border between the EU and the UK, including on the frontier between Northern Ireland and the Republic. (Irish Times, 17 Jan 201916. BailoutFinancial assistance granted to a failing business or country to save them from bankruptcy and to prevent financial debts spreading.17. Balance of Autonomous TransactionsThe balance on the current account of the B.O.P plus net capital inflows. OR Balance on the Current Account plus Long Term Capital inflows.18. Balance of PaymentsA country's total economic transactions over a year. 3 parts: Balance of Trade, Balance on the current account and Balance on the capital account.19. Balance of Payments on the Current AccountRefers to the difference between total exports and total imports (visible and invisible exports) - (visible and invisible imports)20. Balance of TradeDifference between the value of visible exports and visible imports21. Balanced budgetA state budget where planned income equals planned expenditure22. Balanced Regional developmentWhen the government identifies and targets regions which are disadvantaged or economically depressed and then implements policies which positively discriminate in favour of these regions.23. Barriers to entryThese are the main sources of Monopoly power... examples include: High cost of entry, Economies of Scale, Patents & Control over essential raw materials.24. BarterExchange of goods for another goods without the use of money / cash25. Benefit-in-kind (Income)Any non-income earned. (Company car etc.)26. Benefit-in-kind (Social services)Goods that the state provides directly to the recipient. (Fuel vouchers)27. Bi-lateral tradeTrade between 2 countries28. Birth rateAverage number of births per 1,000 of the population per annum29. Black EconomyTransactions in the economy that although liable to be taxed are not taxed, and which are not included in the National Income figures. Economic activity that goes unrecorded in the National Income Accounts - discouraged by: reduction in taxation, better enforcement, simplification of the tax system and better use of the revenue and educating the public about same.30. Black hole in the economyNon documented flow of funds from the economy. Also called 'Net Residual' / 'Errors and omissions'. It is the difference between the actual change in the external reserves and the change in value of these that should have happened according to the official BOP figures.31. BondA debt security. An official IOU stating when a loan will be repaid and the interest that the borrower must pay the bond holder. Sovereign bonds are issued by governments. When a government's ability to repay a loan is called into question, the market responds by bond holders trying to sell off the bonds, thus driving up borrowing costs. N.B - Concept of 'Burning the Bondholders'.32. Brand ProliferationFlooding the market with many similar products made by the same company. (e.g. Cadburys and their range of bars or Kelloggs with their breakfast cereals.)33. Break-even pointPoint on the consumption function where the value of consumption equals the value of disposable income.34. BREXITOn the 23rd June 2016, Britain voted to leave the EU. They hope to avail of free trade within the EU but this is not guaranteed. Ireland may lose some of its exports to the UK, may suffer from increased costs of imports from the UK but as the only English speaking economy remaining within the EU, Ireland may also stand to gain from an increase in foreign direct investment. (FDI)35. Broad Money SupplyThe currency outstanding plus balances in current and deposit accounts in associated banks plus balances in the Non-Associated banks less inter-bank balances. OR 1. Currency in the hands of the public plus - 2.Currency account balances in the associated and non-associated banks -M1 plus - 3.Deposit account balances in the associated and non-associated banks less inter-bank balances.36. Broaden the tax baseIncrease the number of people who are liable to pay tax. (Increase the tax net)37. BudgetA breakdown of the planned income and expenditure of a firm or a country.38. Building SocietyA financial institution which historically specialised in providing mortgages and where it is owned by its members as a mutual organisation.39. Canons of TaxationSmith's principals of taxation - equity, convenience, certainty and economy of taxation.40. CapitalAnything man made used to create wealth / Is defined as anything which is man-made which is used to produce goods and services.41. Capital AccountA record o a country's receipts and payments on items of a capital nature as well as the acquisition and disposal of non-produced, non-financial assets.42. Capital Account on the Balance of PaymentsThe section that records inflows and outflows of capital giving rise to an increase or decrease in internal reserves.43. Capital Acquisition TaxA tax levied on gifts or inheritances44. Capital Adequacy RatioThe percentage of a bank's capital to its risk weighted assets.45. Capital BudgetState planned income and expenditure on items not used up during the year but which increase the productivity capacity of the country.46. Capital DeepeningAn increase in the level of factors of production where there is an increase in the ratio of capital to other factors. (4 machine v 3 workers to 8 machines and 5 workers)47. Capital expenditureSpending on items of a capital nature (Large amount / infrequently)48. Capital FormationNet Investment. Gross Investment - depreciation49. Capital TaxesTaxes levied on our stock of wealth. CGT and CAT50. Capital WideningAn increase in the amount of capital used yet leaving the capital:labour ratio the same. (3 machine & 6 workers v 7 machines and 14 workers)51. CartelFirms that work together in a certain way to implement common strategies. (Usually to the detriment of the consumer) An attempt to give the firm more power / sales / profits.52. Cash ratioRatio of cash that the banks must hold to claims on the banks53. Census of PopulationImportant for planning and the provision of services, demographic changes and provides an accurate account of the population profile.54. Central Bank Rediscount Ratethe rate charged by the Central Bank when it discounts first class bills for the commercial banks in its role as lender of last resort.55. Centrally Planned EconomiesWhere all economic decisions are taken by central authorities.56. Circular Flow of Incomethe flow of receipts and expenditure between companies and households.57. Closed economyAn economy without any international trade.58. Collusion and Systems1. Deciding on output quotas , 2. An agreement to divide sales territories into different markets, with one firm supplying in each market , 3. Price Leadership - dominant firm sets the price and others follow59. Commercial BanksRetail banks - AIB, B of I PTSB, Ulster Bank, National Irish60. Common MarketAn agreement between member countries to remove all duties on goods between members (Free trade area), impose common external tariffs and to allow free movement of goods and services between the countries.61. Complementary goodsGoods that go together with others (Tennis ball & tennis racquet)62. Complete Market FailureA situation where a market does not exist at all. (Missing market)63. Composite DemandWhere a commodity is demanded for a number of uses.64. Composite Price IndexA simple price index adjusted for the proportion of income spent on each category of good. This gives a truer picture of the effect of inflation.65. Concentration Ratio (High)Where a small number of firms each have a high proportion of the overall market share. (Often found in Oligopolistic markets)66. Conspicuous ConsumptionWhere items are purchased by consumers to display their wealth. (Luxury goods)67. Constant Tax Price Index(CTPI) A CPI that has been adjusted for increase in indirect taxes. (A CPI where the level of indirect is kept constant)68. ConsumerThe decision making unit who buys or uses goods and services.69. Consumer Price IndexAn index overseen by the CSO to measure changes in the general level of prices over a given period year, usually a year.70. Consumer SovereigntyThe power of consumers to determine what goods and services are produced. The theory suggests that consumers, not producers, are the best judge of what products benefit them the most. Due to the fact that consumer markets depend so heavily on demand, producers must monitor the needs of these individuals if they want their products to have any chance at success.71. Consumer SurplusThe difference between what a person is prepared to pay for a good rather than do without it, and is actually paid. This is a saving to the consumer.72. Consumption FunctionC+I+G+X-M73. Consumption Function Curvea graph of a consumption function showing the different levels of spending at the different levels of income74. Contractionary fiscal policyA state policy which increases state income trough taxes and / or decrease state expenditure in order to reduce the impact of inflation.75. Cost/Benefit AnalysisA comparison between the total costs and total benefits of a project. This helps to get optimum benefit out of a project undertaken and helps with efficiency.76. Cost-push inflation is a type of inflation caused by substantial increases in the cost of important goods or services where no suitable alternative is available. A situation that has been often cited of this was the oil crisis of the 1970s, which some economists see as a major cause of the inflation experienced in the Western world in that decade.77. Credit crunch -- A sudden reduction in the availability of loans and other types of credit from banks and capital markets at given interest rates. The reduced availability of credit can result from many factors, including an increased perception of risk on the part of lenders, an imposition of credit controls, or a sharp restriction of the money supply. OR credit crunch -- slang for a general economic condition in which loans are harder to obtain. A sudden reduction in the supply of cash to lend to businesses and individuals when banks see an increased risk of default, or are unsure of money they have to lend. Usually occurs during recession and results in higher interest rates for borrowers.78. Credit UnionA financial co-operative locally owned.79. Cross price Elasticity of Demand (CED)Measures the change in the quantity demanded of one good due to the change in the price of another. (Tells if a good is a complement or a substitute)80. Current BudgetGov's planned current income minus current expenditure for a year. (Surplus / Deficit / Neutral)81. Current Expenditureday-to-day cost of running a firm or state. (Relatively small amounts but regular)82. Current Revenueday-to-day income by the state through tax and non-tax means.83. Current transfersSubsidies and monies receivable from and the taxes payable to the EU.84. Customs DutiesTax levied on imports85. Customs UnionEU members - plus Turkey, Andorra, Monaco and San Marino - trade without customs duties, taxes or tariffs between themselves, and charge the same tariffs on imports from outside the EU. Customs union members cannot negotiate their own trade deals outside the EU, which is why leaving it - while hopefully negotiating a bespoke arrangement - has been one of the British government's Brexit goals.86. Cyclical nemploymentEmployment due to the reduction in the demand of goods and services87. Deadweight DebtNon self-financing debt. The cost accrued from this expense will always be greater than any benefit accrued.88. Death RateAverage number of deaths per 1,000 of the population.89. Debt securitiesLoans that can be bought and sold on the stock exchange.90. Deductive Method of Analysisreasoning from the general to the particular. E.g. all animals will die, a dog is an animal, and therefore a dog will die.91. DeflationA drop in the general level of prices of goods and services. (Opposite to inflation)92. Deflationary budgetA budget where revenue is decreasing and taxation is increasing. More money is taken out of the economy than going back in.93. Deflationary GapOccurs when the equilibrium of National Income is not sufficiently high enough to fully employ all the productive resources in an economy. You must increase expenditure to bring about equilibrium.94. DemandThe quantity that consumers are willing to buy at a given price.95. Demand CurveGraph of a demand schedule96. Demand Pull InflationIncreases in price due to demand being greater than supply97. Demand ScheduleA table representing the different quantities at the different prices.98. DemographyThe study of the human population - size, density, wealth, age, marriage etc.99. Density of populationThe average number of people per square kilometre.100. Dependency ratioThe ratio of the number of people under 15 and over 65 to those aged between 15 and 65. Can also refer to the ratio of those in the labour force to those who are not.101. Deposit AccountA bank account that usually pays interest and no prior notice has to be given for withdrawals.102. Deposit facilityThe facility to make overnight deposits with the ECB.103. DepreciationA reduction in the value of an asset due to time or wear and tear.104. DeregulationIntervention by the state to remove barriers which are deemed to be detrimental to competition.105. Derived DemandThis means that a Factor of Production is not demanded for its own sake but for its use in the production of goods and services.106. DevaluationWhere a country reduce the value of its currency against other currencies on the international market.107. Developed CountriesCountries that are deemed developed in their economy and industrialisation. Also known as First World Countries as they are self-sufficient.)108. Developing CountriesThose countries that have low income per capita and are in the process of developing towards an industrialised nation.109. Direct InvestmentThe net level of investment by foreign companies operating in a country.110. Direct TaxTax on your income = PAYE and DIRT111. DIRT taxDeposit Interest Retention Tax. Tax on interest earned. Currently at 30% (From Jan 2012)112. Diseconomy of scalesomething that increases the average cost of production.113. Disguised employmentPeople who are unemployed who do not sign on the live register as they are not entitled to social welfare. (This category also includes those who are underemployed)114. Disposable IncomeAmount of a person's income that is available for spending. (Income - deductions)115. DumpingWhere items are sold at a greatly reduced price in one market to sell off excess capacity this keeping the price high in other markets.116. DuopolyAn oligopoly with two participants.117. ECB. (European Central Bank)Price stability, EU Monetary Policy, Manages official reserves of Euro area countries, Holds and manages external reserves, Supervises the various credit institutions and Issues the Euro currency.118. Economic dataFacts / information that has been gathered for the purpose of reference or analysis.119. Economic DevelopmentAn increase in the income / standard of living / GNP per person in a country is accompanied by a change in the structure of society.120. Economic DualismWhere one part of an economy lives at subsistence level while another sector of the economy is booming usually to the advantage of a very small minority.121. Economic GoodsItems that are scarce, that people are willing to (command) pay a price for, provide utility and are transferable.122. Economic GrowthAn increase the income / living standard per person where there is no change in the structure of society.123. Economic LawsStatements that given certain conditions, state that people will behave in a certain way.124. Economic PlanningConsultation with the social partners to agree on economic decisions relating to the future.125. Economic RentThe payment in excess of the supply price to a factor of production. OR Any surplus earned by a factor of production over and above its transfer earnings / supply price126. Economic SustainabilityUsing resources to a maximum and responsible use so that there can be long term prosperity in an economy.127. EconomicsA social science that studies the allocation of scarce resources.128. EconomyA system that solves the problem of unlimited needs versus limited resources.129. Economy of scaleSomething which reduces the average cost of production.130. Effective DemandDemand backed up by purchasing power131. Effective Incidence of TaxThose who end up paying the tax. A tax on farmers produce may cause a rise in food prices equivalent to the tax increase. The formal incidence/imposition is on the farmers but the effective incidence is on the consumer. (Impact : those on whom the tax is initially levied)132. Efficiency of labour depends onEducation, training, talent of the worker, quality of other factors, quantity of other factors, living conditions of the workforce, degree of specialisation, climatic conditions, management expertise and commitment of the worker.133. ElasticityA measure of a responsiveness of a change in quantity due to change in a variable.134. Elasticity of demandInfluenced by: availability of close substitutes; complementary goods, is it a luxury or necessity?, proportion of income spent, durability, expectations, length of time allowed for price adjustment, consumer habits and brand loyalty.135. Elasticity of supplyInfluenced by: Production capacity, mobility of the FOP, the time period under discussion, the nature of the product, storage costs, cost conditions, products in joint demand,136. EmbargoA ban on exports to or imports from a particular country. (Or product) (Can be done for health / safety / political grounds)137. EmigrationTo leave your country of birth. (Often linked with leaving home to find employment elsewhere due to a lack of jobs and opportunities in your home country)138. EnterpriseThe human factor which co-ordinates the other factors, it spots a gap in the market, creates a new product with a view to making a profit despite bearing all the risk.139. Enterprise economyFree market - minimal government interference.140. EquilibriumA situation where there is incentive to change / or if not at equilibrium, it is the desired point to attain.141. EquilibriumThe price at which demand equals supply.142. Equi-marginal UtilityA person will gain maximum satisfaction in the spending of income when the ratio of marginal utility to price is the same for all the different goods and services the person buys.143. Escalator Clausea clause in a contract providing for increases or decreases in wages, prices, etc. based on fluctuations in the cost of living, production costs, etc.144. Euro Interbank Offered rate(Euribor) The rate that banks in the euro wholesale interbank market charge on loans.145. European Economic AreaThe European Economic Area is made up of the EU's single market (see below), plus three European Free Trade Association members - Iceland, Liechtenstein and Norway. They trade freely with the single market in exchange for accepting its rules. Switzerland is in EFTA but not the EEA. Bilateral accords give it special access to the single market. The four EFTA countries are not in the customs union, and can negotiate trade deals with third countries such as China.146. European Regional Development FundPromotion of economic and social cohesion within the EU to reduce imbalances within areas.147. European Social FundThe financial arm of the EU to invest in areas and people.148. European UnionEconomic and political union with an aim for co-operation in economic, political and monetary matters. It is a free trade area which imposes tariffs on non-member countries. There is freedom of movement of goods, people and capital.149. Exchange rateThe value of one currency in terms of another.150. Exchange rate policyThe devaluation and revaluation of a currency. This is done in Ireland by the ECB.151. Exchange RiskRisks undertaken with foreign trade. An importer who buys on credit or a borrower who borrows from abroad may pay more because of a change in the prevailing exchange rate.152. Exchequer BalanceDifference between the total state spending (both current and capital) and total state income153. Exchequer Borrowing RequirementDeficit on the exchequer balance. Total borrowed to finance current and capital expenditure.154. Expansionary fiscal policyA state policy which decreases taxes and / or increases state expenditure in order to manage recessionary factors. (Opposite of deflationary policy)155. Expenditure methodThe measure of the national income of a country by measuring the expenditure of its citizens.156. Explicit costsCosts incurred when a firm pays out for something.157. ExportSomething that brings in money from abroad. (Can be visible or invisible (services)158. External diseconomies of consumptionAction taken by a consumer that imposes a cost on another party for which they are not compensated.159. External diseconomies of productionA producer carries out an activity that imposes a cost on third parties for which they are not compensated.160. External Diseconomies of ScaleFactors outside the control of the firm that increases the average costs of production.161. External Economies of ConsumptionAn action taken by a consumer that benefits a third party and where the consumer is not compensated.162. External Economies of ProductionAn action taken by a producer that benefits a third party and where the producer is not compensated.163. External Economies of ScaleFactors outside of the control of the company that causes the (average) costs of production to fall.164. ExternalitiesCan be positive or negative. They are the positive and negative by-products of production or consumption decisions.165. Factor costsThe cost of the four factors of production.166. Factor marketsMarkets where the factors of production can be bought and sold.167. Fair TradeA trading partnership that seeks greater equity in international trade through transparency, fairness, respect and dialogue.168. Favourable Terms of TradePrice paid for a unit of exports is greater than the price paid for a unit of imports.169. Fertility rateThe number of live births in a year per 1,000 women of childbearing age.170. FDIForeign Direct Invenstment171. Fiat money / Fiduciary Issue / Token moneyMoney based on trust172. Fiduciary IssueProportion of a country's currency that is not backed by gold but by foreign currencies and other securities. This is currency based on trust.173. Final MarketsThe location for the buying and selling of finished goods.174. Financial AccountTransactions in foreign financial assets and liabilities.175. First Degree / Perfect Price DiscriminationWhere the seller charges the next highest price to the next customer thus eliminating consumer surplus.176. Fiscal DragIn a period of revenue buoyancy when the economy is greater than anticipated, government expenditure may remain at the level originally planned.177. Fiscal PolicyDeals with Gov Revenue & Expenditure, Implemented by alterations in the levels of taxation and/or Gov spending, Can either inflate or deflate the economy, Any action taken by the Gov which influences the timing, magnitude and structure of Gov current revenue & expenditure178. Fixed CapitalStock of assets such as equipment and tools.179. Fixed CostsCosts incurred when the output is zero. Costs that do not increase as output increases in the short run.180. Fixed Exchange RateWhere the exchange rate between different currencies is static.181. Fixed SupplyOnly a certain limited number of goods can be sold regardless of market price. (Vertical supply curve)182. Floating Exchange RatesWhere the rate of exchange between currencies may change.183. Foreign Direct Investment(FDI) When a foreign company invests in a country through setting up a firm or the purchase of an asset.184. Four FreedomsThe fundamental pillars of the EU's single market: free movement of goods, capital, services and people.185. Free Enterprise/ Market economyWhere the market mechanism operates, the fop's are privately owned, limited Gov. interference, resources are allocated by a decentralised decision making process and citizens are motivated by self-interest.186. Free Trade AgreementTypically long and complex to negotiate, an FTA is an agreement between at least two countries to cooperate on reducing trade barriers such as import quotas and tariffs so as to increase the trade of goods and sometimes services between them. Re Brexit: an FTA between the UK and the EU will define the two parties' future relationship after the divorce under article 50.187. Free Trade AreaAn agreement between member states to abolish tariffs on goods coming from within member states.188. Frictional Unemployment(in between jobs) Where a person is unemployed on a temporary basis while one industry is declining and another is starting up.189. Full EmploymentThe (rare) situation where all those who are willing to work at the prevailing wage rates are employed. (Often viewed as an unemployment rate of below c.3%)190. Funding (Operation)(by the Central Bank) An attempt to reduce commercial banks' ability to create credit. This is done by forcing commercial banks to exchange short term government bonds for long term government bonds.191. Funk moneyMoney that is regularly moved from country tom country to avail of the highest bank interest rates being offered at any given time.192. GDP @ Factor CostTotal value of output of an economy as a result of engaging in economic activity within a year valued at the payments to the factors of production. It includes all output regardless if they are owned by Irish national s or not.193. GDP @ Market PricesTotal value of output of an economy as a result of engaging in economic activity within a year at the value of current market prices.194. General Government BalanceTotal Y minus Total X for all parts of the government. (Central Gov, local authorities, VEC's and non-commercial state bodies)195. General Government DebtTotal gross debt of the state. (Cumulative sum of local Gov sector, non-commercial state bodies, and most of the national debt. (It excludes central Gov liabilities to institutions classed within the general Gov sector; these are included in the national debt)196. Geographical MobilityThe ease with which one factor of production can move from one area to another.197. Giffen GoodAn inferior good that has a positive price effect. (Rare - examples include potatoes / rice etc.)198. G.N.P @ Factor CostTotal output produced by Irish owned factors of production in Ireland and abroad. It is a measure of the income owed to a country's residents.199. G.N.P. v N.N.PGNP at factor cost minus provision for depreciation equals NNP. NNP @ Factor Cost is another term for National Income.200. GNP @ Factor Cost to GNP @ Market PricesGNP @ FC + Indirect Taxes - Subsidies = GNP @ MP201. GNP @ Factor Cost to GDP @ Factor Costthe difference is net factor income from the rest of the world. GDP @ FC plus net factor income = GNP @ FC.202. GNP v National IncomeGNP less depreciation = National Income203. Gold StandardA currency where notes are fully backed and redeemable by gold.204. Gresham's LawBad money will drive out good money205. Gross Capital Expenditure / FormationTotal value of expenditure on capital goods in an economy in a year.206. Gross National Disposable Income(GNDI) Derived by adding national income to net current transfers.207. Gross National Income(GNI) Comprised of domestic and foreign income earned by the resident population of a country.208. Hard BrexitA hard Brexit would take Britain out of the EU's single market and customs union and end its obligations to respect the four freedoms, make big EU budget payments and accept the jurisdiction of the ECJ - what Brexiters mean by "taking back control" of Britain's borders, laws and money. It would mean a return of trade tariffs, depending on what, if any FTA was agreed.209. Harmonised Index of Consumer PricesA consumer price index that excludes mortgage interest, building materials, concrete blocks union subscriptions, motor tax and the non-service elements of motor and house insurance. This is an indicator of inflation and price stability for the ECB. It is a CPI which is compiled according to a methodology that has been harmonised across EU countries.210. Help-to-buy IncentiveThis is an initiative to assist first time buyers of newly built homes or self-build homes to fund the deposit under the Central Bank rules. It consists of a refund of income tax and DIRT paid over the previous 4 years. Maximum relief is €20,000 for homes between €400,000 and a €600,000.211. Hidden Economy(Shadow / Black Economy) Economic activity that goes unrecorded in the national income accounts of a country.212. Homogenous GoodsGoods that are identical but are made by different producers. (Goods made under Perfect Competition - No incentive to advertise)213. Housing CrisisWhere the demand for houses / accommodation has far exceeded the supply. This has led to large increases in house prices, increases in rent costs and has been a factor in increased homelessness. The long term solution to this must lead to an increase in the supply of homes.214. Human CapitalRefers to human knowledge and know-how. This can be increased by spending on training and education.215. Human development IndexA composite index which measures a country's average achievements in three aspects of human development.216. ImmigrationForeigners coming into a country.217. Imperfect CompetitionAn industry where MC=MR and AC = AR. Many suppliers supplying close but not perfect substitutes.218. Implicit CostsCosts that do not incur the outflow of money219. ImportWhere money leaves the country. (Visible or invisible imports)220. Imposition of TaxThe individual on whom the tax is initially levied.221. Incidence of TaxThose on whom the burden of tax falls. (The person who eventually pays the tax)222. IncomeFlow of wealth / earnings.223. Income EffectHow the demand for a good will change if the consumers income changes and the price remains constant.224. Income Elasticity of Demand (YED)The change in the quantity demanded of a good due to a change in income. (Tells you if a good is a luxury or an inferior good)225. Income in KindIncome not in the form of money (Benefit in kind)226. Indicative PlanningA voluntary plan agreed by the social partners to ensure growth in the economy.227. Indirect TaxA tax on your spending. VAT228. Individual DemandShows the quantities demand at each price.229. Individual Demand Schedule / curveA table / diagram which shows the combination of quantities demanded at each price230. Individual SupplyShows the quantity supplied at each price.231. Individual Supply Schedule / curveA table diagram which shows the combination of quantities supplied at each price.232. Inductive Method of AnalysisGoing from a particular statement to a general statement. For example, by observing the behaviour of many consumers who reduce their demand for a product when prices, we can form the general conclusion that as price rises, demand falls.233. Industrial BankA bank which specialises in providing credit to borrowers and companies in the form of fixed loans and HP facilities.234. IndustryAll of the firms selling the same product or service.235. Inequality of Wealth(In the Economic sense) Occurs when income earned within an economy is not distributed equally across the population.236. Infant IndustriesNew firms in a country that have yet to avail of economies of scale.237. Infant MortalityThe number of children who die on or before their first birthday out of every 1,000 children born alive.238. Inferior GoodA good with a negative income effect. As income increase less of the good is bought.239. InflationThe term used to describe a general increase in the prices of goods and services over time. This is measured by the Consumer Price Index ... a Composite Price Index which takes into account the percentage of income spent on each category of good. OR Inflation is an economic condition wherein the price of the goods and services increase steadily measured against standard level of purchasing power, whereas the supply of the goods and services decline along with the devaluation of money.240. Inflationary BudgetA budget where more money is being injected into the economy than is leaked thus stimulating economic activity and growth.241. Inflationary GapOccurs when the equilibrium level of National Income is at a higher level than full employment, there will be excess demand in the economy chasing too few goods thus creating an inflationary gap. You must decrease expenditure to bring about equilibrium.242. InfrastructureThe basic physical and organizational structures needed for the operation of a society or enterprise or the technical structures that support a society, such as roads, water supply, sewers, power grids, telecommunications etc.243. InjectionAny transaction that increase the income in the circular flow of income. This can be investment, state spending or exports)244. Institutional UnemploymentUnemployment caused by barriers to mobility of labour. (these include union closed shops, unavailability of local housing and lack of schools)245. Interbank MarketShort term money / foreign exchange swaps only available to financial institutions.246. Interest Ratethe charge used for the use of someone else's money. The return to capital.247. Intermediate MarketThe buying and selling of partly finished goods. (The output of one market becomes the input of another)248. Internal Diseconomies of Scalefactors under the control of the firm which increase the average cost of production.249. Internal Economies of ScaleFactors under the control of the firm that reduce the average cost of production.250. International Labour Organisation(ILO) An agency within the UN to establish labour standards.251. International Monetary FundA co-operative inter-state financial institution that provides financial aid and advice to its members.252. International TradeThe buying and selling of imports and exports between countries.253. InvestmentSpending on capital goods.254. Invisible ExportsThe sale of services that brings money into the economy.255. Invisible ImportsThe outflow of money for services paid for by people from within our country.256. Iron Law of WagesA rise in wages triggers an increase in the population, prompting a fall in wages back to subsistence levels. Also known as the subsistence theory of wages, this principle has no current relevance.257. Joint DemandItems that complement each other (go together)258. Joint SupplyItems where the production of one item leads to the production of another good (e.g. T.V and a remote control)259. Kinked Demand CurveThe demand curve in Oligopoly based on the Sweezy model. There is no incentive to change price. The demand curve is elastic for a price increase and inelastic for a price decrease.260. LabourAny human activity involved in the production of goods and services.261. Labour ForceThose working and willing to work at the prevailing wage rate.262. Labour Force Surveylists those unemployed who are actively seeking employment263. Labour Hoardingwhere a firm continues to employ labour even when it is not viable to do so. (Done to save them from paying extra when they have to re-hire / re-train staff)264.265.266. Labour ProductivityDepends on Wages, Training, Complementary factors of production, Specialisation & Climate267. Labour Theory of ValueStates that the value of a good is determined by the amount of labour embodied in it.268. Laffer CurveA curve showing that little tax revenue would be earned by the Gov form a tax rate that could be too high or too low. (An equilibrium rate exists that maximises state tax revenue and encourages maximum effort from the suppliers of the factors of production)269. Laissez FaireA policy which states that there should be little or no Gov interference in the running of the economy270. LandAnything supplied by nature involved in the supply or production of goods and services271. Law of Absolute AdvantageCountries should trade with each other and will benefit from trade so long as they trade in the good that they have an absolute advantage in and get the other goods from abroad.272. Law of Comparative AdvantageA country should specialise in the production of those goods in which it is relatively most efficient and obtain its other requirements through international trade.273. Law of DemandAs the price of a good increases, the quantity demand of the good decreases. (And vice versa)274. Law of Diminishing Marginal UtilityStates as more of a good is consumed; eventually a point will be reached where the utility we get from each extra unit will eventually begin to fall.275. Law of Diminishing Marginal ReturnsAs increasing quantities of a variable factor of production are combined with a fixed factor, eventually, a stage will be reached where marginal returns begin to decline.276. Law of Equi-Marginal ReturnsTo get maximum utility, a consumer must spend his/her income in such a way that the ratio of marginal utility to price is the same for all goods bought.277. Leakagesany transactions that reduce the level of income in the circular flow of income. (Done by savings, state taxes and imports)278. Least Developed CountriesThe poorest and weakest countries in the international community. (Linked to Rostow's Theory of Economic Growth)279. Legal TenderThe official currency that a seller must accept as payment for a good or service.280. Lender of Last ResortCentral Bank: when it lends cash to commercial banks when there 'is a run' on cash in the banks.281. LeveragingUsing debt to supplement investment, usually by borrowing money or buying assets in an effort to initiate growth. The more a borrower borrows, the more highly 'leveraged' they become. When they are 'overleveraged', they are unable to pay interest on the debts and have to 'deleverage' by paying off debt or selling assets, or risk going bankrupt.282. Life ExpectancyThe number of years that a person may be expected to live based on age, class and demography.283. Limit PricingA system whereby a firm or firms set a price at a level which will make it almost impossible for new firms to enter the industry. Profits may be smaller in the short term but will be greater in the long run due to a restriction on competition. It can be set by mutual consent between firms to discourage entry of new firms.284. Liquid AssetsAssets that can be turned into cash relatively quickly (Gov bonds)285. LiquidityA bank's needs to have liquid assets (cash and near cash) in order to meet the demand for cash by its customers.286. Liquidity Preferencerefers to the desire of people or institutions to hold their assets in cash rather than bonds287. Liquidity Preference Theory of InterestA theory that states that the rate of interest is based upon the interaction of the demand and supply of funds in the economy. (We can assume that the supply of money is fixed)288. Live RegisterA source other than the Labour Force Survey / Quarterly National House Survey (QNHS) from which the unemployment figures are taken.289. Loanable Funds Theory of InterestDemand for funds was based on the transactive, precautionary and speculative motives. This impacted on the rate of interest charged.290. Long Runa period of time long enough so that all factors of production are variable.291. Long Run Equilibrium of a FirmMR=MC to earn maximum profits or minimal losses and AR=AC so that normal profits are earned. (Perfect and Imperfect Competition models)292. LRACLong Run Average Costs293. LRSC of a firm in PCThat proportion of the MC curve which is greater than the AC curve.294. Luxury GoodsItems that have a positive YED and have a high PED295. M1Narrow money supply: The currency in circulation (outstanding) plus balances in current accounts in licensed banks in the state. (Overnight deposits)296. M2M1 + Deposits with an agreed maturity up to 2 years plus deposits redeemable at notice up to 3 months plus post office savings and bank deposits.297. M3Broad money supply: M2 + Repurchase agreements plus Debt securities up to 2 years maturity plus money market funds / units298. MacroeconomicsLooks at economics in the wider sense and the interaction between different parts of the economy. It examines topics such as inflation, unemployment, interest rates, national income, Gov and the economy and international trade.299. MCChange in Total Cost as a result of an increase in production by one unit.300. MarginThe change in a variable (factor) caused by the change (usually the increase) of one unit of another variable. (M? = Change in Total ? when there is an increase of a FOP by 1 unit)301. Marginal Efficiency of CapitalExtra profit earned as a result of employing one extra unit of capital - Marginal Revenue Productivity of additional capital goods minus their cost.302. Marginal Lending FacilityThe facility to borrow money from the ECB against appropriate capital.303. Marginal Physical Productivity of a factor of productionThe extra output generated by the employment of an extra unit of a factor of production.304. MPP CurveDemand for any factor of production.305. Marginal Productivity Theory of WagesA firm will employ the quantity of labour at which the wage rate is equal to the marginal revenue of labour306. Marginal Propensity to Consume (MPC)The proportion of the extra income that is consumed307. Marginal Propensity to Import (MPM)The proportion of extra income that is spent on imports308. Marginal Propensity to Save MPSThe percentage or fraction of additional income which is saved.309. Marginal Propensity to Tax (MPT)The percentage of extra income that is deducted in taxes.310. Marginal RevenueThe change in Total Revenue when there is an increase in output / sales by 1 unit.311. Marginal Revenue Product (MRP)The change in total revenue as a result of the increase in the employment of a factor of production by 1 unit. MRP = MPP x MR312. Marginal UtilityThe change in Total utility when we increase consumption by 1 unit313. Market (Aggregate) Demand Schedule / CurveThe table or graph that shows the combination of quantity demanded at each price for the entire market.314. Market (Aggregate) Supply Schedule / CurveA table or graph that shows the combination of quantity supplied at each price for the entire market.315. Market ConcentrationThe number of firms in a particular market and their market share.316. Market FailureWhen economic resources are not allocated efficiently. This is usually caused by the price mechanism of demand, supply and price working imperfectly.)317. MarketsWhere buyers and sellers meet to exchange goods and services.318. Marshall Lerner conditionA devaluation in a county's currency will improve a country's balance of payments only if the sum of the elasticities is greater than one319. Maximising UtilityThe consumer will maximise his/her utility when s/he spends their income in such a way that MU: P (ratio of Marginal Utility to Price) is the same for all goods bought.320. Merchant BankA financial institution which specialises in the needs of international finance, large companies and stock underwriting.321. Merit goods / needsGoods that society has decided should be available to everybody at some minimum quantity regardless of income. Food, clothing, shelter, education and basic medical services are examples.322. MicroeconomicsDeals with theory in detail. It covers demand, supply, basic theory, the types of markets and factors of production.323. Minimum Reserve RequirementsThe ECB requires that all credit institutions established in the euro area hold deposits on accounts with their national central bank.324. Minimum WageAs of Jan 1, 2017, this is now €9.25 per hour for anyone in full time employment. Note that higher incomes should lead to more revenue to the state via PAYE, PRSI and VAT.325. Mixed economyAn economy where decisions are partly made by the Gov and partly made by the market mechanism.326. ModelsHelps to predict the likely outcome of events given a set of circumstances.327. Monetarismtheory that states that the size of the money supply in circulation determines the level of economic activity.328. Monetary PolicyActions which influence the money supply, interest rates or the availability of credit, The European Central Bank is charged with implementing this policy, It can have a deflationary or expansionary impact on the economy. OR: Monetary policy concerns the decisions taken by central banks to influence the cost and availability of money in an economy. In the euro area, the European Central Bank's most important decision in this respect normally relates to the key interest rates. Any change it makes to these rates affects in turn the interest rates commercial banks charge their customers for borrowing money. In other words, the decision influences consumer spending and business investment. In the case of the ECB, the objective of monetary policy is to keep prices stable, i.e. to keep inflation below, but close to, 2% over the medium term. This in turn helps it support general EU economic policies aiming at full employment and economic growth.329. MoneyAnything that is generally accepted as payment for a debt.330. Money Market SecuritiesHighly liquid short term loans.331. MonopolyAn industry where 1 firm which produces the good or service is the industry332. Monopoly PowerThe influence that a firm has over the industry. Usually done by having a relatively high price and a lower level of production than that which would be available in a perfectly competitive market.333. MonopsonyWhere there is only 1 buyer in the industry334. Movement AlongCaused by a change in price335. Multinational Corporation (MNC)A firm that has an established presence in more than one country.336. Multilateral TradeWhere 1 country trades with many others and no significant proportion of imports or exports comes from any one or other country.337. MultiplierThe number of times an injection into the circular flow of income is multiplied in order to calculate the income created by the injection. The full multiplier formula is 1 divided by (MPS + MPM + MPT)338. National Assets Management Agency (NAMA)The purpose of NAMA is to remove uncertainty about the bank's balance sheets, clean them up, provide them with an ability to access liquidity and to thereby facilitate the availability of credit to the real economy. NAMA will buy loans from the participating banks - these loans will be from the riskiest part of the bank portfolios. This will take these riskier loan classes away from the balance sheets of the banks concerned and make the banks safer and more secure for depositors and investors.339. National DebtTotal amount borrowed by central Gov and not repaid to date, less liquid assets available for redemption of these debts at the same time.340. National IncomeThe total amount earned by residents of a country who supply the factors of production in an economy over a period, usually a year.341. NationalisationThe process by which a government takes over ownership of a private business or industry. (The opposition to privatisation)342. National Treasury Management Agency(NTMA) Main role is to manage the national debt and to cut the costs of public sector borrowing.343. Near MoneyAny money lent for a short period of time and repayable on demand. Examples include credit and charge cards.344. NeedsThe basic requirements to preserve life. Examples include food, shelter and clothing.345. Negative EquityWhen the value of a property is below the balance of the mortgage still to be paid on it.346. Negative interest rateWhen the interest rate charged is lower than the rate of inflation. (The true cost of borrowing is a negative interest rate)347. Net Factor Income (From Abroad)Describes the difference between income repatriated (in) by Irish factors working abroad and repatriated (out) by foreign factors working in Ireland. It can be a positive or negative value. This is the difference between GNP and GDP.348. Net MigrationThe difference between outward migration (emigration) and inward migration (immigration).349. Net National Product NNPNational Income.350. Neutral BudgetA budget that neither stimulates nor deflates the economy. The current expenditure is equal to the current revenue.351. Neutral BudgetThe budget neither stimulates nor deflated the economy352. Neutral Fiscal PolicyA structure of taxes and transfers that keeps the distribution of income unchanged within an economy.353. No dealA no-deal Brexit would mean the UK leaving the European Union and cutting ties immediately, with no agreement at all in place.If MPs do not approve Theresa May's deal, and there is no alternative deal or move to delay or stop Brexit, the UK will leave with no deal on 29 March 2019. (Subject to change)The UK would follow World Trade Organization rules to trade with the EU and other countries, while trying to negotiate free-trade deals.354. Nominal Rates of InterestThe actual rate of interest charged (Before Inflation)355. Non-price competitionWhere competitors do not compete with each other by altering their prices but by emphasizing the differences within the products. This can be done by giving a better guarantee, being a new and improved version etc. (They don't drop the price to sell more)356. Non-insurable risks faced by entrepreneursLoss of profit, Bad decision making, Industrial relations disputes, Changes in fashion, Entry of competition, New Laws and New Agreements. A risk that cannot be measured actuarially or in which the chance of loss is so high that insurance cannot be written against it.357. Normal GoodsGoods which have a negative price effect (P increases, Qd decreases), a positive income effect and a positive substitution effect358. Normal ProfitMinimum level of profit to keep an entrepreneur in production in the long run. Normal profit includes an element of profit as it is the return to enterprise as a factor of production. Normal profit occurs when TR = TC. (All costs are covered in the long run)359. Normative StatementA statement which describes what should / ought to happen.360. Occupational MobilityThe ease with which a FOP can move from one use to another.361. Official External ReservesA country's holdings of foreign currencies, gold and other reserves such as SDR's with the IMF.362. OligopolyAn industry in which there are only a very small number of very large firms.363. Open EconomyAn economy which engages in free international trade with no restrictions.364. Open Market OperationsSelling bonds on the market. Bringing in surplus cash.365. Opportunity CostThe cost of foregone choices. (What you must do without to get one thing instead of another.)366. Opportunity Cost and using an assetThere is an opportunity cost to a firm using an asset which it already owns once it could be put to a different use provided it is a non-specific asset or could be rented out. It is the cost of a good or service measured in terms of the best alternative good or service.367. Optimum PopulationWhere an increase or decrease in population will lead to a decrease in national income per head of population368. OverpopulatedWhen there are decreasing returns to labour given the existing economic resources - It has too many people in relation to the other production resources - The resources of a country are incapable of supporting any more people. An increase in population leads to a decrease in GNP per head.369. Paradox of ThriftThis occurs when an increase in saving leads to a decrease in spending - which is another person's income which may result in a further decrease in savings.370. Paradox of ValueSome goods have a high value in use and low price (water) while others have a low value in use and a high value in price (diamonds) (Based on Marginal Utilities)371. Partial FailureWhen the market produces at an unsatisfactory price or quantity.372. Participation RateThe percentage of the active population who are either employed or available for work at any given wage rate373. Perfect CompetitionA market where firms face a perfectly elastic demand curve. MC=MR=AC=AR. MRP = MPP x P374. Perfectly Elastic Demand Curvethis indicates that any price change to a higher price will lead to demand decreasing from infinity to zero. (If price decreases, there will still be an infinite demand)375. Perpendicular Supply CurveIndicates that the supply is fixed - irrespective of price the supply remains the same. Perfectly Inelastic demand.376. Personal Contract PlanA new finance system specialising in the automobile industry. It is an agreement between you and a finance company that usually runs for at least 3 years. It is broken into 3 parts: a deposit, payments and final payment. At the final stage of the agreement, you have 3 new options: 1. Keep the car and pay the final payment, 2. Hand back the car and make no further payments or 3. Trade in the car for a new one. For some drivers who change their cars regularly, this system is very popular as the total of the payments can be much less than the depreciation on the car.377. Phillips CurveA historical inverse relation between the rate of unemployment and the rate of inflation in an economy. Stated simply, the lower the unemployment in an economy, the higher the rate of increase in nominal wages in the economy.378. PortfolioA list of investments that is held.379. Positive StatementA statement that can be defined as true or false.380. Price CompetitionCompetitors in a large market compete with each other by trying to undercut each other's prices.381. Price ConstancyThis refers to a situation where small costs increases cannot be reflected in price increases due to administrative costs (The cost of reprinting price lists would far outweigh the absorption of the cost increase by a firm.382. Price DiscriminationWhen a firm (monopolist) charges different prices to different groups of consumers for the same good or service where the difference in price is not due to a difference in costs. #2: when goods and services are sold to different consumers (in different markets) at varying ratios between the marginal cost and price, when the price difference is not due to changes in costs of production.383. Price EffectHow the demand for a good is affected by both the income and substitution effects.384. Price Elasticity of DemandMeasures the change in quantity demanded due to a change in the price of that good.385. Price IndexA table which measures the change in the price of a good or service over time. A base year is used from which all other years are compared to.386. Price Leadershipa situation in an oligopoly where the dominant firm sets the price and all other firms then accept and possibly copy this price. (Budget Travel)387. Price MechanismThe method by which consumers and firms determine the allocation of scarce resources to competing uses.388. Price RigidityThis occurs when prices tend not to change even when there is an increase in costs of production.389. Price TakerThe situation where a firm cannot set its own price as the price is determined by the interaction of supply and demand for that product in the industry.390. Primary Liquidity RatioRatio of cash to deposits which the banks must maintain. Often referred to as the cash ratio.391. Primary SectorThe extractive sector of the economy. This sector produces the raw materials that will be processed later in the chain of production. Examples include farming, forestry and fishing.392. Private CapitalAssets owned by the individual393. Private CostThe direct cost to an individual or firm using a product.394. Private GoodsItems that are excludable. A person can be stopped from consuming them. (E.g. by eating a cake, you stop someone else from consuming it.)395. PrivatisationThe sale of a public sector service to the private sector.396. Producer SurplusThe extra revenue generated by a firm which is shown by the difference between what a supplier was willing to accept for a good or service and what he / she actually receives for the good or service. It is represented by the area between the equilibrium price and the supply price.397. Production Possibility Curve / Frontier(PPC / PPF) A graph that shows the varying quantities of goods that can be produced with limited productive resources. Points along the curve represent the various combinations of the items that can be produced.398. Profits Important in a Free Market System1. Without it, the entrepreneur would not continue in the long run, 2. Encourages risk taking, 3. Acts as a signalling system from consumers to producers to indicate which goods are popular or not, 4. Indicates the best use of resources, 5. Source of revenue through taxes for the state.399. Progressive TaxOne which takes proportionately more in tax as a person's income increases. PAYE tax is an example of a progressive tax.400. Promissory NoteA type of IOU promising to pay a given sum to the bearer on a certain date or on demand. Has a shorter repayment period than bonds, usually under five years. Promissory notes given to senior bondholders to cover the €28 billion Anglo debt were swapped early in 2013 for sovereign bonds, which don't have to be paid off until at least401. Proportional TaxA tax which takes a constant rate of tax. Often used with taxes from income even if income rises ... e.g. 41% over a certain limit.402. ProtectionismAny effort by a government to restrict imports / free trade / movement of goods.403. Public GoodsGoods that are provided and consumed collectively that would not otherwise be provided in a free market system. (Gardai, public parks, flood defence systems)404. Public Sector Borrowing RequirementExchequer (Government) borrowing for capital and current purposes plus borrowing by semi-state bodies plus borrowing by local authorities (public non-government sector and semi-state bodies).405. Purchasing Power Parity TheoryStates that the rate of exchange of a currency will settle at a rate where one unit of the currency will buy the same amount of goods wherever it is spent406. Quantitative EasingWhen a government increases the money supply to stimulate lending and spending by buying assets or bonds from banks and other financial institutions. This used to be done by simply printing more money but now it is done electronically - the government effectively credits its own bank account. This can lead to hyperinflation.407. Quasi Renteconomic rent of a temporary nature.408. QuotaA limit placed on the number of goods that can be imported409. Ratchet EconomyWhere wages and prices increase as demand increases but when wages and prices do not decrease as demand decreases.410. Rate of ExchangeThe price of one currency in terms of another411. Rate of InterestThe return to Capital. The cost / charge incurred when using some else's money. (Usually taken as the cost of borrowing money from a bank unless otherwise stated but also applies the percentage received on money on deposit accounts)412. RationingImposing a limit on the number of goods that can be purchased. Often done when items are rare, during a war or a time of major disruption.413. Real IncomeIncome adjusted for inflation414. Real Rate of Interest / True Rate of InterestThe rate of interest charged adjusted for inflation.415. RecessionDownturn/decline in economic activity of at least two consecutive quarters in the Gross National Product. Ireland was the first Euro zone country to enter into recession in 2008.416. Rediscount RateThe rate of interest charged by the Central Bank to commercial banks when it discounts first class bills of exchange for the banks.417. Regressive TaxOne which takes proportionately more in tax as a person's income decreases. Vat is an example of a regressive tax.418. RegulationThe mechanism used to protect consumers and ensure that goods and services are available in a fair, reliable and sustainable manner.419. Relatively Elastic PEDWhere the proportionate change in Qd is greater than the proportionate change in price.420. Relatively Inelastic PEDWhere the proportionate change in Qd is less than the proportionate change in price.421. Rent of AbilityLabour can vary in efficiency- some entrepreneurs will earn profits in excess of normal profits for their firms. It is a rent of ability to the individual entrepreneur who earns large profits for the firm.422. Residual UnemploymentThese are those who are unemployed due to medical reasons and those who simply just do not want to work.423. Resource DegradationWhere a natural resource becomes less productive over time.424. Resource DepletionWhere the quantity of a natural resource decreases over time.425. Retail BanksThe banks that have large branch networks and deal directly with the general public. They publish interest rates and charges.426. RevaluationThe increasing of the rate of exchange of the currency of a country against other countries. And at a lower interest rate.427. RevenueIncome received. (Usually by sales) Calculated by P x Q.428. Revenue BuoyancyWhen the actual revenue collected by the government during the year is significantly greater than the amount of tax revenue estimated in the budget at the beginning of the financial year.429. Roll Over DebtThe substitution of old debt for new debt. A Gov borrows money from one source to pay another.430. Sale and Repurchase AgreementThe Central Bank offers to buy the commercial banks stock (or part of) of Gov securities and will sell it back to them at an agreed later time.431. Say's LawSupply creates its own demand. Key question: will the potential demand or income generated be spent on the items produced? (This is where there is a gap in the law)432. SavingNot spending all your income.433. Seasonal UnemploymentThe situation where some firms operate at full capacity at various parts of the year. For the rest of the year, these employees are seasonally unemployed. (Fishing Industry)434. Secondary Liquidity RatioThe ratio of liquid assets held by the banks to claims on the banks. (Usually Gov bonds)435. Secondary SectorThe section of the economy that processes the output of the Primary Sector and makes goods.436. Shift in/with a Demand curveWhere the shape of the curve moves inwards or outwards due to a factor OTHER than a change in price.437. Shift in/with a Supply curveWhere the shape of the supply curve moves inwards or outwards due to a factor OTHER than a change in price.438. Short RunThe period of time in the production process so that at least one factor of production is fixed in quantity.439. Short Run Equilibrium of a firmThe situation where MR = MC (Maximise profits / minimise losses) and where AR must = AVC to cover variable costs. (Cover short run supply curve)440. Short Term Credit FacilityA facility provided by the Central Bank. If the commercial banks cannot satisfy their borrowing requirements on the wholesale market (Inter-bank Market) then they can borrow from the Central Bank at a penal rate of interest set by the Central Bank.441. Single MarketThe EU's single market is more than a free-trade area. It aims to remove not just the fiscal barriers to trade (tariffs) but also the physical and technical barriers (borders and divergent product standards) by allowing the freest possible movement of goods, capital, services and people. In essence, it is about treating the EU as a single trading territory.442. Social BenefitThe benefit that accrues to society as a result of the consumption or production of a good or service. (Not measured by price)443. Social CapitalAssets / wealth owned by the community. (Parks / hospitals etc)444. Social CostsPrice which society has to pay for the existence of a particular good or service. E.g. Pollution of air/water, Noise nuisance, Disfigurement of landscape, Traffic congestion & Reduction in public amenities / urban sprawl.445. Social WelfareBenefits paid to the community by the state.446. Soft BrexitA soft Brexit, which not officially defined, would keep Britain in either the single market or the customs union or both. It could be achieved along the lines of the Norway model - see EEA/EFTA - or via an FTA, but would require concessions on free movement, ECJ jurisdiction and budget payments. Brexiters do not consider a soft Brexit as really leaving the EU.447. Special DepositsDeposits of cash that commercial banks must give to the Central bank. It is a way of restricting the credit creating ability of the commercial banks.448. Specific TaxesA tax levied on a good at a fixed amount irrespective of the price of the good. (Tax on Kerosene = +1 cent per litre)449. SRACShort Run Average Costs450. StagflationThis occurs when there is an increase in both unemployment and inflation together.451. Stock AppreciationWhen the value of capital stock increases.452. Structural UnemploymentA result of the decline of a particular industry and when the skills used in that industry are no longer required elsewhere. This makes it very difficult for these workers to find jobs elsewhere.453. SubprimeSubprime lending (near-prime, non-prime, or second chance lending) is a financial term that was popularized by the media during the "credit crunch" of 2007 and involves financial institutions lending in ways which do not meet "prime" standards to an extent which puts the loans into the riskiest category of consumer loans typically sold in the secondary market. These standards refer to the size of the loan, "traditional" or "nontraditional" structure of the loan, borrower credit rating, ratio of borrower debt to income or assets, ratio of loan to value or collateral, documentation provided on those loans which do not meet Fannie Mae or Freddie Mac (2 US mortgage providers) underwriting guidelines for prime mortgages (are "non-conforming"). Although there is no single, standard definition, in the US subprime loans are usually classified as those where the borrower has a FICO score below 640. Subprime lending encompasses a variety of credit types, including mortgages, auto loans, and credit cards.454. SubsidyThe payment by the state of an amount of money for the provision of a certain good or service. The net effect of a subsidy is that the selling price charged to the consumer is reduced as the seller receives part of the original selling price from the state via the subsidy.455. Subsistence Theory of Wages / Iron Law of WagesA theory that states that wages will stay at subsistence level. If wages go above this subsistence level, then workers will have larger families, thus increasing the supply of labour and putting downward pressure on the prevailing wage rate. The opposite also applies if wages go below and family sizes become smaller.456. Substitute GoodsWhere one good can take the place of another. (Tea and coffee)457. Substitution EffectHow will demand for a good be affected if price changes but the consumer's real income remains constant?458. Supernormal ProfitsAre earned when AR is greater than AC and costs do not have to be at a minimum.459. SupplyGoods that are made available for sale at any given price460. Supply CurveA graph of a supply schedule. A diagram which represents the quantity supplied at each price.461. Supply of LabourThe total number of hours worked in an economy over a specific period.462. Supply Price of a Factor of ProductionThe minimum payment necessary to bring a factor into use and maintain it in that particular use.463. Supply ScheduleA table showing the quantity of goods supplied at any given price at any time.464. SustainableThe ability to continue an action indefinitely. Usually meaning the production of a good or service can be maintained without reducing the future availability of the good or service.465. TariffA tax on imports that is calculated by adding a percentage onto the cost of a good.466. Tax AvoidanceThe legal way of reducing your tax liability. (Section 35 property etc.)467. Tax EvasionThe illegal non-payment of tax. (Non-disclosure of income etc.)468. Tax WedgeThe difference between the consumption wage and the product wage - The difference between the after-tax income of an employee and the wages including pay-roll taxes, which it costs an employer.469. Terms of TradeThe relationship between the price of a unit of exports and the price of a unit of imports. OR the number of imports that can be bought with the money earned from a unit of exports: Formula = (Index of Export Prices divided by the Index of Import Prices) multiplied by 100.470. Tertiary SectorThe sector of the economy that deals with the distribution of finished goods and services. (Also known as the services sector)471. Time Deposit AccountA bank account where notice of withdrawal must be given.472. Token MoneyA type of money where the exchange value of the currency is greater than the intrinsic value of the currency473. Total CostComplete cost incurred when making a good or service. It is the addition of Fixed Costs AND Variable Costs. (FC & VC)474. Toxic DebtLarge amounts of loans were improperly given higher credit ratings (implying lower risk of default). The second is that the value of the homes securing these loans has dropped. OR When such Collaterized Debt Obligations are backed by assets of dubious value, such as subprime mortgage loans, and lose market liquidity, the bonds and their derivatives are also referred to as toxic debt. OR Debt acquired through normal financial transactions which later proves to have little or no actual value475. Trade CyclePeriods of growth and recession experienced by economies. (Trough - recovery - boom - peak - recession and then a repeat)476. Trade ProtectionMeasures adopted by a country to reduce the imports of certain goods.(or services)477. Trade Union & a monopoly supplier of labourThe union can control the price or the quantity of labour but not both.478. Trading BlocA group of countries who share freed trade agreements with each other.479. Transfer CostThe minimum payment that must be made to transfer a factor of production from one use or industry to another.480. Transfer EarningsThe minimum payment necessary to keep that factor in its present use and discourage its movement to another employment. These are the wages which a factor can earn if it is transferred to the most attractive alternative employment. The amount a factor can earn in the next best available employment. OR The amount that a factor must earn to prevent it from transferring to another use. Economic rent is any excess over transfer earnings that a unit of any factor actually earns i.e. the surplus over the minimum amount necessary to keep the factor in use OR The income a factor of production could earn if it was transferred to its best alternative employment OR What a factor must receive to keep it in its present use and prevent it from transferring to another use.481. Transfer PaymentWhere a payment is made and there is no factor of production given in return. E.g. State paying Social welfare payments to the unemployed.482. Transition Period (WRT Brexit) Transition periodIf Theresa May's deal was accepted, this period would last 21 months from Brexit day, on 29 March 2019, to 31 December 2020. It could be extended by up to two years if both the UK and the EU wanted.The transition is intended to allow time for the UK and EU to agree their future relationship.The UK would have no say in the making of new EU laws during the transition but would have to follow all EU rules, including freedom of movement.483. Transitional UnemploymentPeople who are in-between jobs. (Thus classified as unemployed ... it is unemployment of a temporary nature)484. UnderemploymentWhere a factor of production is working below maximum capacity.485. UnderpopulationWhere an increase in population will lead to an increase in the average income per head of population486. UnemploymentWhere those seeking work at existing wage rates cannot find work.487. Unitary Elastic (In PED)Where the proportionate change in quantity demanded equals the proportionate change in price. (The elasticity can by +1 or -1)488. UtilityThe satisfaction or benefit gained from the consumption of a good or service.489. Variable Costs (VC)Costs that change as output changes. (Can change up or down)490. Variable Exchange RatesThe rate of exchange of a currency is determined by the supply and demand of the currency on a daily basis.491. Visible ExportsPhysical / Tangible goods that are sold to another country.492. Visible ImportsPhysical / Tangible goods that are purchased from abroad and brought into the country.493. Wage DriftWhen the demand for labour exceeds a given supply, then the wage levels will rise above the negotiated rates.494. Wage RateThe price for labour. (Usually given at an hourly rate)495. WantAnything in excess of a 'Need' that is not necessary for our survival.496. WealthThe stock of goods and services. (Also known as the store of income)497. Working CapitalIncludes all finished goods, work-in-progress goods and stocks of raw materials. (Do not confuse with accounting definition of current assets minus current liabilities.)498. World BankProvides long-term capital to support economic development in countries who use measures such as tighter monetary policies.499. World Trade OrganisationOversees the administration of the General Agreement on Tariffs and Trade (GATT)500. Write DownA reduction in the book value of an asset to reflect a fall in the market value. The holy grail for mortgage holders in negative equity.