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dobwefobfob Cheat Sheet (DRAFT) by


This is a draft cheat sheet. It is a work in progress and is not finished yet.

unit 1-2

wants are infinite, resources are finite
factors of produc­tion: land, labour, capital, enterprise
land: natural resources, extracted and cultivated from nature.
labour: mental and physical human output into production
capital: man made means of production
enterp­rise: entrep­reneurs who organize FoP and take risks
production possib­ility curve: shows max combin­ations of products that can be produced by economy in given time period with limited resources. points beyond curve: unatta­inable, within the curve is ineffi­cient
free market system: decisions by private sector, no role to govt. price mechanism plays a role
price mechanism: consumer demand impacts supply
elasti­city: measure of how quickly consum­ers­/pr­oducers respond to a change in price
PeD= percentage change in quanti­ty/­per­centage change in price
perfectly inelastic: vertical, perfectly elastic: horizo­ntal. more than 1: elastic, less than 1: inelastic
PeD impacted by: no. of substi­tutes, time needed to purchase, proportion of income spent, necess­ity­/habit forming, cost of switching brands, brand loyalty, breath of definition of product
PeS impacted by: spare capacity (more capacity = more elastic), time to manufa­cture (quicker manufa­cturing = higher elasti­city), amount of stock/­ability to stock, mobility + cost of FoP
market failure: when the price mechanism results in ineffi­cient allocation of resources. shows through the existences of extern­ali­ties, public goods, FoP immobi­lity, monopolies
social costs = private costs + external costs. social benefit = private benefit + external benefit
merit goods: goods which have an unappr­eciated benefit. often underc­onsumed and underp­rod­uced.
demerit goods: goods that have an unappr­eciated cost. often overco­nsumed and overpr­oduced
public goods: a good not provided by market forces, has to be provided by govt. non-rivial and non-ex­clu­dable
monopoly: >26% share of market, can charge higher prices and restrict quantity.
direct tax: tax on income, (income, wealth, corpor­ation)
indirect tax: tax on spending, (VAT, excise)

unit 4

unempl­oyment: people willing and able to work but don't have a job.
price stability: maintains economic stability + products can compete with intern­ational products
economic growth: sustained expansion of production possib­ilities over time, increase in quantity + quality of FoP, measure of aggregate demand and aggregate supply
aggregate demand: total demand for goods and services within a particular market
aggregate supply: total output of all producers in an economy
balence of payments: record of a country's transa­ctions with an other countries
budget: govt financial plan showing govt income and expend­iture
progre­ssive tax: increases with income
propor­tional tax: fixed with percentage income
regressive tax: decreases with income increased
fiscal policy: govts seek to influence total demand in economy by changing either govt spendi­ng/­tax­ati­on/­inc­reases
monetary policy: process of contro­lling supply, cost of money, availa­bility of money. influences AD level
money supply: the money in circul­ation in economy
exchange rates: value of one currency against another. bought­/sold as commodity to change price. manipu­lated by export­s/i­mports
quantitive easing: affect amount of money in circul­ation by printing more money
supply­-side policy: govt policies that stimulate producers to produce more. increases AS, more produc­tivity capaci­ty/­pot­ential of economy
economic growth: increase in amount of goods/­ser­vices produced by economy over time.
GDP: measuring adding total spending on final goods/­pro­ducts produced in a country over a year period. C+I+G+ (X-M)
nominal GDP: total GDP while inflation hasn't been taken into account. (still in the figures)
real GDP: total GDP after inflation has been taken into account. (out of the figures)
economic recovery: real GDP grows faster than normal. AD increases, firms output increases, job creation.
economic boom: demand for goods increases, output rises, profits peak, economy can 'overheat'
economic recession: real GDP falls. Ad falls and production is cut. less employ­ment, profit­s/i­ncome lower. has to be two/more consec­utive quarters of negative economic growth.
labour force: total people working age in work/a­ctively seeking work
labour force partic­ipation rate: labour force as a proportion of workin­g-age popula­tion, % population that is econom­ically active
employment by industrial sector: people working in agricu­ltu­re/­man­ufa­ctu­ring/ related services
employment status: no. of people employed full time/p­art­-ti­me/temp work
unempl­oyment: people registered as being without work as proportion of labour force
econom­ically active popula­tion: supply of work
claimant court: counting individual who register as unempl­oyed. usually counted by no. of people claiming unempl­oyment benefit.
labour force survey: data gathered from survey of sample households for unempl­oyment rate. determines people employed. used worldwide and is standa­rdized.
frictional unempl­oyment: short-­lived unempl­oyment as jobs change. seasonal unempl­oyment: temporary unempl­oyment because some production and AD is seasonal
cyclical unempl­oyment: prolonged, wide spread unempl­oyment during recessions due to falling AD
structural unempl­oyment: long lived unempl­oyment caused by industrial decline. workers are unemployed and have unwanted skills.
inflation: sustained increase in av. price level of country.
deflation: sustained fall in gen. price level inflation is negative
creeping inflation: prices increase by a few % per year
hyperi­nfl­ation: prices rising signif­icantly over 100%
malign deflation: sustained decline in GPL in economy due to demand slump
disinf­lation: slow down in rate at which prices are rising in general
stagna­tion: economic situation with high/r­ising unempl­oyment + inflation
imported inflation: rising prices caused by increase in import costs following fall in value of exchange rate of importing country's currency
weighting: technique of adjusting certain payments by price index to preserve real value/­pur­chasing power

unit 4

unempl­oyment: people willing and able to work but don't have a job.

unit 3

money: medium of exchange used to buy goods and services. is a unit of account, store of wealth, standard of deferred payment, medium of exchange
charac­ter­istics of money: durable, accept­able, divisible, portable, scarce
banks: act as a financial interm­ediary between borrowers and savers.
interest rate: cost of borrowing as a % of unit of money.
stock exchange: market where shares and securities are sold and bought
stock brokers: indivi­duals who buy/sell stocks on stock exchange to pay loans
ipo: initial public offering
bull market: prices going up, bear market: prices going down
dividend: share of profit given to shareh­older per share
yield: dividend as % of share price
joint stock companies: shares sold for permanent capital, shares never paid back. people purchasing become the shareh­olders, get dividend.
bonds: sold as govt as loans for a set time. paid back with interest
average propensity to consume: the likelihood of spending your income. APC = consum­pti­on/­dis­posable income
derived demand: demand for goods/­ser­vices increase, demand for other thing increases. like labour
trade unions: associ­ations repres­enting workers' interests. general unions support workers from different indust­ries. there can be craft unions, non-manual unions, industrial unions, etc
collective bargai­ning: how trade unions negotiate with employers over wage and non-wage benefits
arbitr­ation: involves employers and unions agreeing to let indepe­ndent referee (often senior govt offici­al/­lawyer) to settle industrial dispute.
overtime ban: workers refuse to work more than normal hours.
work to rule: workers delibe­rately slow production by complying rigidly with every rule and regulation
go-slow: workers carry out tasks slowly to reduce production
strike: workers refuses to go into to work and protest, picket outside work to stop deliveries and prevent non-un­ionized workers from working.
specia­liz­ation: the process by which an employee becomes more skilled at a subset of work, doing what you're best at
division of labour: one person specia­lizes at one task of production rather than the whole process.
horizontal integr­ation: EoS, increases market share. same level of production
vertical backward integr­ation: secures supply and quantity of goods. goes towards suppli­ers­/pr­imary sector
vertical forward integr­ation: captures retail market. goes towards consumers
take-over: one company buys shares of another, can be hostile or friendly

unit 5

less-d­eve­loped economy: lower levels of human/­eco­nomic develo­pment, divers­ifi­cation, low industrial develo­pment, lack of infras­tru­cture, low education levels and skills, low average incomes and poor living standards, low average life expectancy

unit 3 cont.

merger: two companies join for a new company with a new name.
joint venture: two businesses set up separate, new business for a short period of time
conglo­merate integr­ation: mergers and takeovers of two firms making a divers­ified portfolio by producing different products
EoS: number of units produced increase, cost per unit decreases
diseco­nomies of scale: the rise in cost per unit as output increases.
internal EoS: when companies increase output to reduct costs, external: when costs fall because industry is growing, costs fall
Really Fun Mums Try Making Pie. risk-b­earing, financial, manage­rial, techno­log­ical, marketing, purchasing
produc­tion: total output of goods/­ser­vices in production process, increased by using factor inputs/ increased produc­tivity of FoP
produc­tivity: measure of degree of efficiency in use of factor inputs in production process av. of output­/wo­rker, revenu­e/s­ales, output­/ma­chine
fixed costs: CoP paid regardless of how much is produces. (rent, salaries, etc)
variable costs: CoP that change with output (raw materials, wages)
revenue: money payable to a hushes from sales of product.
break-­even: the point at which the total revenue = the total costs
profit maximi­sation: goal of private sector firms, pos. difference between firm's revenue and costs.
market structure: how many firms are in a structure, the influence of the firms on pricing, differ­ences among products, barriers to entry/exit
perfect compet­ition: large no. of firms that have equal say in pricing. buyers buy homogenous product, no obstacles to entry/­exit.
monopo­listic compet­ition: many firms, products differ, low price control

unit 3 cont.

oligopoly: market controlled by few main firms
monopoly: one seller of particular good/s­ervice