RBSE SS Economics flashcards
RBSE SS Economics · Build recall with a focused review session.
32 cards. Read the term and the definition here. The deck at the top of this page is optional.
- Scarcity
- The fundamental economic problem that human wants are unlimited while resources available to satisfy them are limited and have alternative uses, forcing choices.
- Opportunity cost
- The value of the next best alternative forgone when a resource is used for one purpose rather than another; it reflects the true economic cost of a choice.
- Production possibility frontier
- A curve showing the maximum combinations of two goods that an economy can produce with given resources and technology, illustrating scarcity, choice, and opportunity cost.
- Law of demand
- The inverse relationship between price and quantity demanded of a good, other factors remaining constant, so the demand curve slopes downward.
- Price elasticity of demand
- The degree of responsiveness of quantity demanded to a change in the good's own price, measured as percentage change in quantity divided by percentage change in price.
- Income elasticity of demand
- The responsiveness of demand to a change in consumer income, calculated as percentage change in quantity demanded divided by percentage change in income; positive for normal goods.
- Law of diminishing marginal utility
- As a consumer consumes more units of a good, the additional satisfaction from each extra unit declines, causing total utility to rise at a decreasing rate.
- Law of variable proportions
- In the short run, adding more units of a variable factor to fixed factors initially raises marginal product, then lowers it, and eventually makes it negative.
- Marginal cost
- The addition to total cost from producing one more unit of output; it cuts average cost at the minimum point of the average cost curve.
- Price elasticity of supply
- The responsiveness of quantity supplied to a change in price, measured as percentage change in quantity supplied divided by percentage change in price.
- Producer's equilibrium
- The output level at which a producer maximises profit, occurring where marginal revenue equals marginal cost and marginal cost is rising.
- Perfect competition
- A market structure with many buyers and sellers, homogeneous products, free entry and exit, and perfect knowledge, where firms are price takers facing horizontal demand curves.
- Monopoly
- A market with a single seller of a product having no close substitutes, strong barriers to entry, and the firm acting as a price maker.
- Monopolistic competition
- A market with many sellers offering differentiated products, free entry and exit, and some price-setting power, where each firm faces downward-sloping demand.
- Oligopoly
- A market dominated by a few large firms whose decisions are interdependent, often leading to price rigidity and strategic behaviour.
- GDP at market price
- The total value of all final goods and services produced within a country's domestic territory during a year, valued at current market prices.
- National income
- The net national product at factor cost, representing the sum of factor incomes earned by normal residents of a country in a year.
- GDP deflator
- A price index measuring the average price of all goods and services included in GDP, calculated as nominal GDP divided by real GDP multiplied by 100.
- Money multiplier
- The ratio of total money supply to high-powered money, or the reciprocal of the reserve ratio, showing how deposits create credit in the banking system.
- Repo rate
- The rate at which the central bank lends short-term funds to commercial banks against government securities, used as a tool to control money supply.
- Cash reserve ratio
- The percentage of net demand and time liabilities that commercial banks must keep as cash reserves with the central bank, limiting credit creation.
- Consumption function
- The relationship between consumption expenditure and income, expressed as C = a + bY, where a is autonomous consumption and b is the marginal propensity to consume.
- Investment multiplier
- The ratio of change in equilibrium income to change in investment, equal to 1 divided by one minus the marginal propensity to consume.
- Marginal propensity to consume
- The fraction of an additional unit of income spent on consumption, calculated as change in consumption divided by change in income.
- Fiscal deficit
- The excess of total government expenditure over total receipts excluding borrowings, indicating the total borrowing requirement of the government.
- Revenue deficit
- The excess of revenue expenditure over revenue receipts, showing that the government is borrowing to meet routine spending.
- Primary deficit
- Fiscal deficit minus interest payments, showing the government's borrowing requirement excluding the burden of past debt.
- Balance of payments
- A systematic record of all economic transactions between residents of a country and the rest of the world during a year, comprising current and capital accounts.
- Foreign exchange rate
- The price of one country's currency expressed in terms of another country's currency, determined by demand and supply in the foreign exchange market.
- Devaluation
- A deliberate official reduction in the value of a country's currency in terms of other currencies under a fixed exchange rate system.
- Liberalisation
- The removal or reduction of government controls and restrictions on economic activities, including licensing, tariffs, and investment, to promote market forces.
- Human Development Index
- A composite measure of development based on life expectancy, education, and per capita income, used to compare countries' well-being.