CSEC Economics key terms

The condition in which people want more goods and services than the limited resources available can produce, forcing choices about how resources are used.

The value of the next best alternative given up when a choice is made, measured by the benefit that could have been gained from that alternative.

The resources used to produce goods and services: land, labour, capital and enterprise. Their rewards are rent, wages, interest and profit respectively.

Manufactured resources such as machinery, tools, buildings and equipment used to produce other goods and services, as distinct from money itself.

The sacrifice of one benefit or goal in order to gain another, arising whenever limited resources must be allocated among competing uses.

A graph showing the maximum combinations of two goods an economy can produce when all resources are fully and efficiently employed, illustrating scarcity and opportunity cost.

An increase in an economy's productive capacity over time, often measured by the rise in real gross domestic product, shifting the production possibility curve outward.

The quantity of a good or service consumers are willing and able to buy at a given price over a period of time, other things being equal.

The quantity of a good or service producers are willing and able to offer for sale at a given price over a period of time, other things being equal.

The market price at which the quantity demanded equals the quantity supplied, so there is no tendency for the price to change.

A measure of how responsive quantity demanded is to a change in price, calculated as the percentage change in quantity demanded divided by the percentage change in price.

The system by which changing prices signal information and create incentives that guide producers and consumers to allocate resources in a market economy.

An economic system in which resources are allocated mainly through the decisions of private buyers and sellers interacting in markets, with limited government direction.

An economic system combining private enterprise and market forces with government ownership, regulation and provision of some goods and services.

A good that is non-rival and non-excludable, meaning one person's use does not reduce availability to others and users cannot easily be excluded.

A cost or benefit arising from production or consumption that falls on third parties not involved in the transaction, and is not reflected in market prices.

A situation in which the free market fails to allocate resources efficiently, producing too much or too little of a good compared with the socially optimal level.

A sustained rise in the general price level of an economy over time, reducing the purchasing power of money.

A measure of the average change over time in the prices paid by households for a representative basket of goods and services.

The situation in which people who are willing and able to work at prevailing wage rates cannot find jobs, usually measured as a percentage of the labour force.

The part of the population aged 15 and over who are either employed or actively seeking work, excluding those not available or not looking for jobs.

The total market value of all final goods and services produced within a country's borders during a given period, usually a year.

The total income earned by a country's residents, including income from abroad, measured as GDP plus net income from foreign sources.

A record of all economic transactions between a country's residents and the rest of the world over a period, comprising the current and capital and financial accounts.

The part of the balance of payments recording trade in goods and services, income flows and current transfers between a country and the rest of the world.

The price of one currency expressed in terms of another, determining how much foreign currency is needed to buy a unit of domestic currency.

A deliberate reduction in the value of a country's currency relative to other currencies under a fixed exchange rate system, making exports cheaper and imports dearer.

A fall in the value of a currency against other currencies caused by market forces under a floating exchange rate system.

The use of government spending and taxation to influence the level of economic activity, redistribute income and manage the public finances.

The use of interest rates, money supply and other tools by a central bank to influence economic activity and control inflation.

The cost of borrowing money or the reward for saving, expressed as a percentage of the amount borrowed or saved over a period.

Spending by firms on capital goods such as machinery, buildings and equipment, or spending on additions to the capital stock.

The shortfall that occurs when a government's expenditure exceeds its revenue from taxes and other sources in a given period.

The total accumulated amount a government owes to lenders as a result of past borrowing, sometimes called the public debt.

The compulsory levies imposed by government on individuals, firms and transactions to raise revenue and influence economic behaviour.

A tax that takes a larger proportion of income from higher-income earners than from lower-income earners, such as income tax with rising marginal rates.

A tax that takes a larger proportion of income from lower-income earners than from higher-income earners, such as a uniform sales tax on essentials.

A payment or benefit given by government to producers or consumers to reduce the cost of a good or service and encourage its production or consumption.