Assam ASSEB HS Class 11-12 Economics key terms

The value of the next best alternative forgone when a choice is made. Because resources are scarce, every decision to use them one way means giving up the benefit of the option not chosen.

The situation in which available resources are limited relative to the unlimited wants of people. Scarcity forces choice and is the central problem that economics studies.

A curve showing the maximum combinations of two goods an economy can produce with given resources and technology. Points inside the curve show underuse of resources; its downward slope reflects opportunity cost.

The branch of economics that studies individual units such as a consumer, a firm or a single market. It examines how prices and quantities are determined for particular goods and services.

The branch of economics that studies the economy as a whole, dealing with aggregates such as national income, general price level, total employment and overall output.

The statement that, other things remaining constant, quantity demanded of a good rises when its price falls and falls when its price rises, giving an inverse price-quantity relationship.

A graph showing the quantity of a good consumers are willing and able to buy at each price, other factors held constant. It normally slopes downward, reflecting the law of demand.

A movement of the entire demand curve caused by a change in a factor other than the good's own price, such as income, tastes, or prices of related goods.

A good whose demand increases when consumers' income rises, other things equal. Most goods are normal; inferior goods behave in the opposite way.

A good whose demand falls when consumers' income rises, other things equal, because buyers switch to better substitutes as they become richer.

Goods that can be used in place of each other to satisfy the same want. A rise in the price of one increases demand for the other.

Goods that are consumed together, so that a rise in the price of one reduces demand for the other. Examples include cars and petrol.

The percentage change in quantity demanded divided by the percentage change in price. It measures how responsive buyers are to a price change and is usually negative.

The percentage change in quantity demanded divided by the percentage change in consumer income. Positive values indicate normal goods and negative values inferior goods.

The short-run principle that as more units of a variable input are added to fixed inputs, marginal product first rises, then falls, and may eventually become negative.

The addition to total output resulting from employing one more unit of a variable input, other inputs held constant. It is the change in total product divided by the change in input.

The behaviour of output when all inputs are increased in the same proportion in the long run. Output may rise more than proportionately, less than proportionately, or exactly proportionately.

The addition to total cost from producing one more unit of output. It equals the change in total cost divided by the change in quantity produced.

Total cost divided by the number of units produced. It is typically U-shaped, falling at first with greater output and rising later as capacity becomes strained.

The statement that, other things constant, quantity supplied of a good rises when its price rises and falls when its price falls, giving a direct price-quantity relationship.

A graph showing the quantity of a good producers are willing to sell at each price, other factors held constant. It normally slopes upward, reflecting the law of supply.

The percentage change in quantity supplied divided by the percentage change in price. It shows how responsive sellers are to a price change and is usually positive.

A market structure with many small buyers and sellers, a homogeneous product, free entry and exit, and perfect information, so that each firm is a price taker.

A market structure with a single seller of a good that has no close substitutes, with strong barriers preventing new firms from entering the industry.

A market structure with many sellers offering differentiated products that are close substitutes, where each firm has some limited power over its own price.

The situation in a market where quantity demanded equals quantity supplied at a particular price. At this price there is neither excess demand nor excess supply.

The total money value of all final goods and services produced by a country's normal residents during an accounting year, measured at market prices or factor cost.

The market value of all final goods and services produced within a country's domestic territory during a year, regardless of who owns the factors of production.

The difference between factor income earned by a country's residents from abroad and factor income earned by non-residents within the country. Added to GDP it gives GNP.

The total stock of money held by the public at a point of time. It is commonly measured in aggregates such as M1, which includes currency with the public and demand deposits.

The process by which commercial banks expand deposits, and hence money supply, by lending out a fraction of the deposits they receive while keeping reserves.

The proportion of a bank's total deposits that must be held as cash reserves with the central bank. Raising it reduces the banks' capacity to create credit.

The rate at which the central bank lends short-term funds to commercial banks against government securities. It is a key policy rate used to influence liquidity and inflation.

The use by the central bank of instruments such as policy rates, reserve ratios and open market operations to regulate money supply, credit and the general price level.

The number by which an initial change in investment is multiplied to give the final change in national income. It equals one divided by one minus the marginal propensity to consume.

The fraction of an additional unit of income that households spend on consumption. It lies between zero and one and determines the size of the multiplier.

A situation where aggregate demand falls short of the aggregate supply needed for full employment, causing unemployment and downward pressure on prices in the economy.

The excess of total government expenditure over total receipts excluding borrowings in a financial year. It indicates how much the government must borrow to fund spending.

The use of government taxation and expenditure to influence aggregate demand, output, employment and the distribution of income in the economy.

The excess of revenue expenditure over revenue receipts of the government. It signals that current spending is not covered by current income, forcing borrowing.

A systematic record of all economic transactions between a country's residents and the rest of the world during a year, comprising the current and capital accounts.

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

The price of one country's currency expressed in units of another currency. It is determined by demand and supply in the foreign exchange market or managed by the central bank.

A fall in the value of a country's currency in terms of foreign currencies under a flexible exchange rate system, making exports cheaper and imports dearer.

The process of increasing the knowledge, skills and health of a population through education, training and medical care, raising productivity and future incomes.

The strategy of raising agricultural output in India through high-yielding seed varieties, irrigation, fertilisers and modern techniques, begun in the late 1960s.

Development that meets the needs of the present generation without compromising the ability of future generations to meet their own needs, balancing growth with environmental protection.

A method of data collection in which every unit of the population is surveyed. It is accurate and complete but costly and time-consuming for large populations.

A method of data collection in which a representative subset of the population is studied and conclusions are generalised to the whole. It is cheaper and faster than a census.

Data collected directly by the investigator for the first time from the field for the specific purpose of the enquiry, through surveys, interviews or observation.

Data already collected by someone else and available in published or unpublished sources such as government reports, journals or websites, reused for a new purpose.

The difference between a sample estimate and the true population value that arises because only part of the population is observed. It falls as sample size grows.

The sum of all observations divided by their number. It uses every value, is easy to compute, but is strongly affected by extreme values.

The middle value of a series arranged in ascending or descending order. It divides the distribution into two equal halves and is not distorted by extreme values.

The value that occurs most frequently in a data set. A distribution may have one mode, several modes, or no mode at all.

The positive square root of the arithmetic mean of the squared deviations of observations from their mean. It is the most widely used absolute measure of dispersion.

The arithmetic mean of the squared deviations of observations from their mean. Its square root is the standard deviation and it is expressed in squared units.

The ratio of standard deviation to arithmetic mean, usually expressed as a percentage. It compares variability across data sets with different units or averages.

A measure of the strength and direction of linear association between two variables, ranging from minus one through zero to plus one, unaffected by change of units.

A graph plotting paired observations of two variables as points. The pattern of points suggests whether the relationship is positive, negative or absent.