Glossary of words in Economics

Glossary of words in Economics

A

Absolute poverty- a situation where people lack necessities such as food, clothing, and shelter.

Acceptance house- and organization, usually a merchant bank, that accepts guarantees bill of exchange as well as finances trade deals and goods being shipped.

Actual economic growth- and increase in an economy’s output.

Age distribution- the proportion of the population in different age categories.

Agglomeration- when several producers in the same or related industries group themselves together.

Aggregate- the total of something formed by combining several separate elements.

Aggregate demand- total demand for economic output.

Allocate- to share out.

Appreciation- the currency gains value against other currencies.

Average cost- cost person unit.

Average fixed cost- fixed cost per unit of output.

Average product- total output divided by the number of units of a variable factor of production.

Average revenue- total revenue divided by the quantity sold.

Average utility- satisfaction per unit costumed.

Average variable cost- variable cost per unit of output.

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B

Barter- a way of swooping one item for another.

Bills of exchange- a document that promises payment to a specific person or assignee.

Black market- an unauthorized market with transactions that defaults the government laws.

Bonds- used for companies, municipalities, states, and the government to borrow funds for a specified period at a fixed interest rate.

Budget deficit- a situation where government expenditure is greater than government income.

Budget surplus- a condition where government income is greater than government expenditure.

Business cycle- the cycle of the ups and downs that affect the business world.

Bracket creep- (fiscal drag) a situation whereby employees who receive salary increases to keep up with inflation move into higher tax brackets.

C

Capital- those items that go into producing other things e.g. machinery, tools, and equipment.

Capital flight- a loss of confidence in an economy resulting in an overflow of financial capital and the sale of the currency.

Capital goods- machinery and equipment used for production.

Cash crop- crops produced for their commercial value rather than for the use of the grower.

Census- a study of the number of people living in an area.

Commodity- any goods that can be bought and sold.

Competitive demand- when two products are substitutes.

Competitive supply- when an increase in the output of a product will reduce the output of another product.

Complementary- products that are used together.

Complements- products which are bought to be used together.

Composite demand- when a product can be used for more than one purpose.

Construction- building.

Consumer sovereignty- the ability for a consumer to make demands determining what is produced.

Construction in demand- a fall in demand caused by rising in the price of the product, shown by a movement along the demand curve.

Contraction in supply- a fall in supply caused by the decrease in the price of the product, shown by a movement along the supply curve.

Convergence theory- the view that less rich countries tend to catch up with rich countries.

Correlation- a relationship or connection between two or more things.

Cost-effective- effective or productive in relation to its cost.

Cost-push inflation- occurs from the supply side of the economy when prices rise as a direct result of a rise in production cost or inputs( such as wage increase or oil price rises). Increase bin such unit costs are passed on to consumers in the form of higher prices.

Currency- the money used in a country.

Current transfers- transfers of money to and from household firms and governments in different countries.

Credit Crunch- a shortage of bank loans and other forms of credit which makes it difficult for firms and households to borrow.

Crude- is a natural or pure state; not yet processed.

Cynical unemployment- unemployment caused by a lack of aggregate demands.

D

Data- facts, and statistics collected together for reference or analysis.

Debt burden- the amount of borrowed money that a country must payback.

Debt buys back- the repurchase by a debtor of its own debt, discounted or at the original value.

Debt relief- cancellation of all of part of financial debt.

Decrease in demand- a fall in demand caused by any influence on-demand other than a change in the price of the product itself, shown by a shift to the left of the demand curve.

Decrease in Supply- a fall in supply caused by any influence other than a change in the price of the product, shown by a shift to the left of the sup curve.

Deficit- occurs when the government spends more than is received.

Deflation- a continuous fall in the general price level over a prolonged period(the opposite of inflation).

Deindustrialization- a fall in the size of a country’s manufacturing section.

Demand curve- a graph showing how the demand of a commodity or service varies with changes in its price.

Demand-pull Inflation- a type of inflation that occurs when aggregate spending in the economy increases faster than production.

Demand schedule- a table showing the amounts that would be demanded at different prices.

Demand-side-  a set of activities designed to affect demand and supply.

Demographic- relating to the structure of populations.

Deposit- money put into bank account.

Depreciation- when a currency’s value lessens and becomes inferior to other currencies.

Derivatives- a financial product (such as a future, option, or warrant) whose value derives from an independent on the value of an underlying asset.

Derived demand- when demand for one product depends on the demand for another product.

Devaluation- a fall in the value of fixed exchange rate.

Diminishing returns- when the addition of a variable factor combined with a fixed factor causes total output to increase at a decreasing rate.

Diaspora- the inhabitants of a country whole lives outside of his country.

Direct bartering- when two people agree to swap goods.

Discount markets- firms that buy, sell, and discount bills of exchange or promissory notes.

Diseconomies of scale- the disadvantages of producing on a larger scale in the form of higher long-run average cost.

Disequilibrium- an imbalance. A disequilibrium price is a price at which demand and supply are not equal.

Distribution channel- method but which goods travel from producers to end consumer.

Disutility- dissatisfaction.

Diversity- to spread into different activities.

Division of labour- the breaking up of the production process into a series of different tasks set to be carried out by different workers.

Double counting- when the value of an input is counted more than once.

Duopoly- a market with two sellers.

Dutch disease- the harmful effects on other industries arising from the sale of a natural resource.

E

Economic development-  an increase in economic welfare.

Economic growth- an increase in a country’s output, usually measures by an increase in real GDP.

Economies of scale- the benefits from producing on a larger scale in the form of lower long-run average cost.

Efficiency- the best use of resources.

Elastic demands- when the quantity demanded changes by a greater percentage than the price change.

Elastic supply- when the quantity supplied changes by a greater percentage than the price change.

Emerging economies- economics experiencing rapid economic growth and industrialization.

Enterprise- the ability to combine land and capital to produce an output.

Equilibrium- the Point at which sellers and buyers agreed upon a price.

Equity- shares in Company.

Expenditure- money spent by the government.

Extension in demand- a rise in demand caused by a fall in the price of the product, shown by a movement along the demand curve.

Extension in supply- a rise in supply caused by an increase in the price of the product, shown by a movement along the supply curve.

F

Factory- a building or group of buildings, where large amounts of goods are produced.

Firm- an individual business.

Food security- the production of enough food to feed the national.

Footloose industries- industries that do not need to tie themselves to a specific geographic location.

Franchisee- a person buying the right to operate a franchise.

Franchisor- the owner of the whole business which is divided into franchises.

Free enterprise economy- an economy in which decisions are made by households and Firms.

Free market- an economic system with no government intervention.

Frequency- the rate at which something occurs over a particular period or in a given sample.

Frequency polygon- a graph made by joining the middle top points of the columns of a frequency history chart.

Frictional unemployment- This type of unemployment arises when workers are in-between jobs.

Fund- a pool of money that is professionally managed to achieve the best possible return for investors.

Geographical labour mobility- the ease with which workers can move from one part of the country to another.

G

Goods- products.

Government bonds- long-term debt securities by the central government to obtain funds to finance long-term fiscal deficits.

Gross domestic product- the total value of all goods and services produced in a country in a given time.

Gross national income- the total value of all income earned by the citizens of a country in a given time.

Hyperinflation-  an extremely rapid and substantial change in the overall level of prices, in excess of 50 percent per month.

I

Income- money received from the government.

Increase in demand- a rise in demand caused by any influence on-demand other than a change in the price of products itself, shown by a shift to the right of the demand curve.

Increase in supply- a rise in supply caused by any influence on supply other than a change in the price of products itself, shown by a shift to the right of the supply curve.

Indirect tax- a tax on goods and services.

Industrial estate- a geographical area that has been specially planned for a lot of tactics.

Inelastic demand- when the quantity demanded changes by a smaller percentage than the price change.

Inelastic supply- when the quantity supplied changes by a smaller percentage than the price change.

Inferior goods- products that decrease in demand when income falls.

Inflation- a continuous price rise.

Infrastructure- roads, railways, airports, etc.

Inputs- resources used in the production process.

Interest- money earned from savings.

J

Joint demand- when two products are brought to be used together.

Joint supply- when the output of one product results in the output of another product.

K

Kerosene- a light fuel oil obtained by distilling petroleum, used especially in jet engines and domestic heating boilers.

Kinked demand curve- a curve that suggests that an oligopolist thinks that its rivals will follow any price decrease it makes but not any price increase.

L

Labour- the human physical and intellectual abilities used in the production of the finished product.

Limit pricing- charging a price below the maximum profit level to discourage the entry of new firms.

Land- all the natural resources available to a society

Linear equation- a linear equation is an algebraic equation in which each term is either a constant or the product of a constant and a single variable.

Liquidation- When a business or firm I terminated or bankrupt, its assets are sold and the proceeds pay creditors.

M

Macroeconomy- the economy of a whole country.

Manufacturing-  the processing of natural resources into components, machinery, and finished goods.

Marginal cost- the cost of producing one more unit.

Marginalized-  the shut-out from economic growth opportunity.

Marginal products- the change in the total output resulting from producing one more unit.

Marginal revenue- the extra revenue earned when one more unit is sold.

Marginal utility- the carb in satisfaction arising from changing one more unit.

Marginal variable cost- the change in the total variable cost resulting from producing one more unit. It I equivalent to marginal cost.

Market concentration ratio- the percentage of sales, output, assets, or employment of the largest firms in the market.

Market demand- the total demand for a product or service.

Maximum price- a price ceiling set by the government.

Market structure- the level of competition in a market.

Mean- the arithmetic average of a set of numbers

Median- the number in the middle of a set of numbers.

Middlemen- intermediaries in the supply chain. Acting between producers and consumers or retailers.

Minimum efficient scale of output- the lowest level of output at which average cost is minimized.

Minimum price- a price floor set by the government.

Mode- the value that occurs most often.

Money- any item generally used as a way of recording value.

Monopoly- this occurs when there is only one business in as secure of the economy.

N

National budget- a planned income and expenditure by the state for a given year.

National minimum wage- the lowest wage rate all workers are entitled to according to the law.

Natural monopoly- a market where a monopoly would achieve lower average costs than would be possible if there were competing firms.

NecessitiNecessities- items needed for survival.

Negative gradient- the curve slopes backward in response to rising prices.

Net exports- export revenue minus import expenditure.

Nominal- prices that have not been adjusted for the effect of inflation.

Normal goods- products that increase in demand when income rises.

Normal profit- the minimum level of profits for a firm to stay in the market. It is earned where average revenue is equal to average cost.

NSE- The Nigerian Stock Exchange.

O

Occupation labor mobility- the ease with which workers can change occupations.

Oil- a liquid derived from petroleum, especially for use as a fuel or lubricant.

Oligopoly- a market dominated by a few firms.

Opportunity cost- the cost Of one good in terms of another that we can no longer have.

Optimum- best.

Orally- by words of mouth.

Organized bartering- when bartering is done as a market.

P

Pecuniary- relating to money.

Perfect competition- a market with a very large number of cutters and sellers.

Perfectly elastic demand- when a change in price causes an infinite change in demand.

Perfectly elastic supply – when a change in price causes an infinite change in supply.

Perfectly inelastic demand- when the quantity in demand remains unchanged even when the price changes.

Perfectly inelastic supply- when the quantity in supplied remains unchanged even when the price changes.

Phenomena- an unusual, significant,  or unaccountable fact or occurrence.

Planned economy- and economy I’m which economic decisions are made by the government.

Plant- a factory that has a specialized activity.

Plantation crops- crops that are Farmer on a large scale.

Population- people living in an area

Positive- a desirable action.

Potential economic growth- an increase in the productive capacity of an economy

Predatory pricing- setting price below a cost to drive rival firms out of the market.

Preventative- and action take to avoid something from happening.

Price discriminations- charging different consumers, different prices for the same product.

Price elasticity in demand- a measure of the responsiveness of quantity demanded It a change price

Price elasticity in supply- a measure of the responsiveness of quantity supplied at a change price.

Price leadership- a pricing strategy in an oligopolistic in a market where one firm changes the price and the other follow the price change.

Price marker- a firm whose output influences price.

Price system- the method by which prices of products are determined.

Price taker- a firm with an output too small to influence the market price

Private sector-  the part of the economy that consists of firms owned by private individuals or shareholders.

Production- the process by which factors of production are used to convert raw materials into finished goods.

Production possibility curve- a curve showing the maximum combination of two types of products that can be produced with given resources and technology.

Productively efficient- producing at the lowest possible average cost.

Productivity- the level of output that is achieved from a specific amount of input.

Progressive- the amount of tax paid increases as income increases.

Promissory note- a written agreement promising to pay back money owed.

Proportional- The number of taxes paid is always the same percentage of income.

Public sector-the part of the economy that is occupied by the government.

Q

Quarterly- four times a year.

R

Rationing- limiting the amount of a product that people can buy.

Real- prices that have been adjusted for the effects of inflation to compare against a base year.

Recession- a decline in an economy’s output for six months or more.

Refineries- an individual installation where the substance can be refined.

Regulated- controlled by a set of rules and regulations.

Relative poverty- a situation where people are poor compared to other people in the country.

Relied on- To depend on with full trust and confidence.

Remittance- money paid by a person or business to another person or business.

Resources-assets used in production.

Retail- sells to the public e.g a shop.

S

Scarcity- not enough.

Sector- a part of the economy concerned with a specific activity.

Securities- a financial instrument that represents an ownership position in a publicly-traded company.

Services- skills that are offered.

Skewness- a statistical distribution that is not in balance.

Specialization- the division of labor process whereby each worker concentrates on a simple, Specialized task to improve the efficiency of the production process.

Stimulant- to try to increase economic activity.

Stock exchange- a market in which shares and other securities are traded

Structural unemployment- unemployment caused by changes in the pattern of demand and supply for in am economy.

Substitutes- products that can be put in place of others.

Subsistence farming- growing enough for your use only.

Supernormal profit- normal profit earned in excess.

Supply schedule-  a table showing the amounts that would be supplied at different prices.

Surplus- excess money.

Sustained economic growth- economic growth which is in line with the growth of productive capacity.

T

Tax base- the sources of tax revenues.

Technology- scientific advances that create more output from the same input.

The balance of payments- a record of economic transactions between the country’s citizens and other countries’ citizens.

The law of diminishing marginal utility-the view that as more units of a product are consumed, the satisfaction gained declines.

The law of variable proportion- when more units of a variable factor of production are added to a fixed factor of production a point would come when the extra output added by the variable factor would decline.

Total revenue- the total earnings a firm gets from selling a given quantity of products over a given period.

Total utility- total satisfaction gained from consuming a product.

Trade-in goods balance- export of goods minus import of goods.

Trade-in service- export of services minus import of service.

Trade union- an organization that represents the interest of a group of workers.

Traders- people who make a living but buying and selling.

Transaction- the process of changing from one state to another.

Treasury bills- short-term debt securities issued by the central government to obtain funds to finance short-term financial deficits.

Trends- a general direction in which something is developing or changing.

U

Unemployment- a situation where people ate actively seeking work but without jobs.

Unitary PED- when the quantity demanded changes by the same percentage as price.

Unlimited liability- the owners are responsible for all debts.

Utility- satisfaction.

Utils- units of satisfaction.

V

Value-added- the extra-financial value added to a good or service.

Variables- an element, feature, or factor that is liable to vary or change.

Wants- the economic term for items we desire.

W

Welfarism- the provision not state benefits and health care.

Withdrawal- money is taken out of a bank.

Workers remittance- money transferred by people working in a foreign country to their relative at home.

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