Basic Economic Terms 1 & 2

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• Factors of production Resources used by firms in their production processes, namely land and the natural resources in it, labour, capital, and (in recent definitions) information
• Externalities Costs imposed on others without their receiving compensation, or benefits received by others without their paying the proper cost
• Microeconomics Concerns the economic factors affecting individual consumers and companies
• Equilibrium State of balance
• Econometrics Is the application ofd mathematical and statistical models of economic theories and problems
• Macroeconomics Is the study and analysis of the economy as a whole
• Aggregate demand The total demand for goods and services within a particular market
• Gross National Product (GNP) Is the total wealth earned or created in a country in a year
• Gross Domestic Production (GDP) Market value of all the final goods and services produced in a specific time period
• Endogenous Means coming from or controlled from within, e.g. variables that are totally under the control of a company, a government, etc
• Exogenous Means coming from or controlled from without; uncontrollable variables
• Economic Adjective meaning of or relating to an economy or economics
• Fiscal Adjective meaning related to public (i.e. government) finances (taxation, expendiure, etc.)
• Economical Adjective meaning using a minimum of resources; or cheap
• Inflation A rise in the general level of prices, and an increase in the money supply
• Scarcity A shortage of something; insufficient supply to meet demand
• Capital The accumulated stock of goods used for the production of further goods (and the money required to purchase them)
• Cost of living A measure of the amount of money that has to be paid for essentials such as food, accommodation, heating, clothing, etc
• Standard of living A measure of the amount of disposable income that people have to spend on both necessities and luxuries
• Balance of payments The difference between what a country pays for its imports and receives for its exports
• Protectionism The prectice of restricting imports in order to increase the sales of domestic products
• Fluctuate To change constantly, to show irregular variation
• Economize To save money, to reduce expenses, to reduce an amount normally used
• Mixed economy An economy with both private and public sectors
• Austerity A word used to describe economic policies and measures designed to reduce inflation, the quantity of imports, government spending, and so on
• Public sector All nationalized industries or services, such as education, health care, justice, public transport
• Market failure Situations in which free competition and the effects of supply and demand do not operate (e.g. monopolies and oligopolies, and externalities)
• Laissez-faire The belief that the economy works best when the state does not plan, control or interfere
• Deregulation The ending or relaxing of legal regulations or restrictions in a particular industry (e.g. finance, television)
• Demand management The Keynesian policy of stimulation an economy in a period of recession, and concentrating the economy if it overheats
• Intervention The neutral term that describes governmental action in the economy
• Infrastructure All the services such as roads, railways, electricity, telephones, etc. that exist in developed countries
• Crowd out Reduce the amount of money available for private investment by increasing government borrowing
• Aggregate supply The total supply for goods and services within a particular market
• Free enterprise An economy where the market determines the prices, products and services rather than the government
• Market Sum of all the buyers and sellers in an area
• Monetarism The theory or practice of controlling the supply of money as the chief method of stabilizing the economy
• Protectionism The practice of restricting imports in order to increase sales of domestic products
• Mixed economy An economy with both public and private sectors
• Utilities Services that are used by the public, such as electricity and gas supply
• Fiscal stimulus Increasing government consumption or lowering taxes
• Austerity tax Set of political-economic policies that aim to reduce government budget deficits
• Surfeit An excessive amount of something
• Vertically integrated Suppliers of inputs and producers of final goods are under the same ownership

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