SHOAL OF DEFINITIONS

A – Z ECONOMIC TERMS & DEFINITIONS BY ALIM MOHAMED

AUGUST 25, 2015

+9607938640
aail25myanjel@gmail.com
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# # TERMS DEFINITIONS

When a country is able to produce a good or a service with

1 Absolute advantage more quantity with lower cost of production than other

country.

Type of poverty that exist when people are unable to fulfill

2 Absolute poverty their basic needs of food, shelter & clothing or people living

less than 1$ a day.

A type of import tax levied as a percentage of the value of the

3 Ad valorem tax
item such VAT.

Administrative Time consuming paper work for the importers in order to

4
complexity discourage imports

Age distribution of Distribution of population into different age groups such as

5
A population dependent age groups and working age groups

Increasing the number of elderly people or increasing the

6 Ageing population
average age of a country.

The total demand for final goods and services in an economy

at a given time. It specifies the amounts of goods and services

7 Aggregate demand that will be purchased at all possible price levels.(

Consumption +Investment +Government expenditure +Net

exports(Exports –Imports) (X-M)

The total supply of goods and services that firms in a national

economy plan on selling during a specific time period. It is the

8 Aggregate supply
total amount of goods and services that firms are willing and

able to sell at a given price level in an economy.

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Increasing the value of one currency against another currency

Appreciation of due to either a rise in demand or reduction in supply of that

9
currency particular currency. For example changing 1$=15.42MVR to

1$=14.24MVR is appreciation of MVR

A document required by registrar of companies by limited

Articles of
10 companies which involves internal information of the
association
company.

11 Average cost The total cost per one unit

12 Average fixed cost The total fixed cost per one unit

13 Average profit The total profit generated per one unit

14 Average revenue The total revenue per one unit

Average variable
15 The total variable cost per one unit
cost

It is a graphical device showing a situation in which, as "real"

Backward bending or inflation-corrected wages increase beyond a certain level,

16
supply curve people will substitute leisure (non-paid time) for paid work-

time

17 Balance of payment An aim of government where they try to reduce the gap

stability between imports and exports

B
18 Balance of A financial statement which shows a country’s economic

payment(BOP) transactions with the rest of the world.

19 Balance of trade The difference between exports and imports of goods.

20 It is when money is withdrawn from a bank account and the

Bank overdraft available balance goes below zero. In this situation the account

is said to be "overdrawn".

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21 These are obstacles that make it difficult to enter a given

Barriers to entry
market. For example set up cost, economies of scale etc.

22 Barter A system of exchanging goods for goods

23 A feature of Consumer Price Index (CPI) calculation which

Base year
indicates the year in which index began.

24 A feature of Consumer Price Index (CPI) calculation which

Basket of goods indicates the list of goods and services required to measure the

rate of inflation.

25 Total number of live births per thousands of population.

Birth rate
𝑡𝑜𝑡𝑎𝑙 𝑛𝑜. 𝑜𝑓 𝑙𝑖𝑣𝑒 𝑏𝑖𝑟𝑡ℎ𝑠
𝐵𝑖𝑟𝑡ℎ 𝑟𝑎𝑡𝑒 = 𝑥1000
𝑡𝑜𝑡𝑎𝑙 𝑝𝑜𝑝𝑢𝑙𝑎𝑡𝑖𝑜𝑛
26 An incentive used to persuade employees to work harder, for

Bonus example to meet targets such as given production or sales

figure

27 Boom A period of positive growth of Gross Domestic Product

28 Receiving money from a bank or an individual with an

Borrowing
obligation of repayment with or without interest

29 A point which indicates no profit or loss. Total revenue equals

Breakeven point
total costs

30 A financial statement which shows estimated revenue and

expenditure for the coming year in a given period of time.

There are 3 types of budget. Deficit

Budget
budget(Expenditure>Revenue) , Surplus

budget(Expenditure<Revenue), Balanced

budget(Expenditure=Revenue)

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31 A factor of production. Man-made resource used for the

Capital production of other goods and services such as machinery,

tools and equipment’s. Reward is interest.

32 When a business use more machines than labours in the

Capital intensive
production process.

33 Census An official count of the population

34 A national bank that provides financial and banking services

for its country's government and commercial banking system,

Central bank as well as implementing the government's monetary policy

and issuing currency. For example Maldives Monetary

Authority of Maldives.

35 Selection of goods and services in order to satisfy human

C Choice
wants

36 Collective Negotiation of wages and other conditions of employment by

bargaining an organized body of employees.

37 A bank that offers services to the general public and to

Commercial bank
companies.

38 Commission Payment made as a percentage of sales a salesperson makes.

39 Circular flow of The circular flow of income is a neoclassical economic model

income depicting how money flows through the economy

40 Commercial business that can be a private, public limited or

Company
government company.

41 Comparative When a country is able to produce a good or a service with

advantage lower opportunity cost than other country.

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42 Goods which have joint demand or supply. These are goods

Complementary that has to be demanded or supplied together. Example of

goods complementary demand is DVD and DVD player. Example of

complementary supply is cow and milk.

43 Tradeoff between different government aims. For example full

Conflict of aims
employment and price stability is an example of a conflict.

44 Joining together of two firms which is entirely producing

Conglomerate
different products. For example a bookshop taking over a
integration
restaurants

45 Corporation tax Tax taken on company’s profits.

46 Conservation of
Saving the resources for the future use
resources

47 Goods which gives direct satisfaction for the consumers. For

Consumer goods
example food.

48 Consumer Price These are instruments used to measure the rate of inflation.

Index(CPI) or Retail This involves selecting basket of goods, base year and

Price Index(CPI) attaching weights.

49 Consumer The situation in an economy where the desires and needs of

sovereignty consumers control the output of producers

50 Consumption Using up of goods and services to satisfy human wants.

51 Contraction of A decrease in quantity demanded (movement up the demand

demand curve) due to increase in price.

52 Contraction of A decrease in quantity supplied (movement down the supply

supply curve) due to decrease in price.

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53 A business organization operated in the private sector formed

Co-operatives
by group of members.

54 Inflation caused by an increase in cost of production such as

Cost push inflation increase in raw material costs, labour cost etc. This reduce the

aggregate supply and push up the prices.

55 A card issued by commercial banks that can be used to make

Credit card
payments. Credit card can be used to purchase items on credit.

56 Creeping inflation Low rate of inflation

57 The current account balance is one of two major measures of a

Current account of country's foreign trade which includes four sections namely

BOP trade in goods, services , income flows and current transfer

flows

58 The combined value of the debit (outflow) balances of the four

Current account sections of current accounts greater than the credit (inflow)

deficit balances of the four sections. It is when imports are greater

than exports

59 The combined value of the credit (inflow) balances of the four

Current account sections of current accounts greater than the debit (outflow)

surplus balances of the four sections. It is when exports are greater

than imports

60 A section of a current account of balance of payment which

Current transfers mainly records inflow and out flow of the value of donations

and aids exchanged from one country to another.

61 Total number of registered deaths per thousand of population

D Death rate
𝑡𝑜𝑡𝑎𝑙 𝑛𝑜. 𝑜𝑓 𝑟𝑒𝑔𝑖𝑠𝑡𝑒𝑟𝑒𝑑 𝑑𝑒𝑎𝑡ℎ𝑠
𝐷𝑒𝑎𝑡ℎ 𝑟𝑎𝑡𝑒 = 𝑥1000
𝑡𝑜𝑡𝑎𝑙 𝑝𝑜𝑝𝑢𝑙𝑎𝑡𝑖𝑜𝑛

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62 A card issued by commercial bank in order to make payments.

Debit card
Debit cards cannot be used to make payments on credit.

63 A shift of demand curve to the left due to change in non-price

Decreasing demand
factor.

64 A shift of supply curve to the left due to change in non-price

Decreasing supply
factor.

65 Persistent fall in general price level of goods and services over

Deflation
time.

66 Desire, willingness and ability to buy a product at a given

Demand
price.

67 A curve which shows an inverse relationship between price

Demand curve
and quantity demanded.

68 A function of commercial bank. A type of deposit known as

Demand deposit
current account usually with no interest

69 A concept that describes the amount of demand for labor that

Demand for labor an economy or firm is willing to employ at a given point in

time.

70 An inflation that is caused due to rise in aggregate demand

Demand pull more than aggregate supply. Aggregate demand rises due to

inflation rise in consumption, investment, government expenditures or

net exports.

71 A table which shows inverse relationship between price and

Demand schedule
quantity demanded.

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72 Refers to the transition from high birth and death rates to low
Demographic
birth and death rates as a country develops from a pre-
transition
industrial to an industrialized economic system.

73 The ratio of the number of dependents(who are not

economically active) and the number of people in the working

Dependency ratio
population

𝑁𝑜. 𝑜𝑓 𝑑𝑒𝑝𝑒𝑛𝑑𝑒𝑛𝑡𝑠
𝐷𝑒𝑝𝑒𝑛𝑑𝑒𝑛𝑐𝑦 𝑟𝑎𝑡𝑖𝑜 = 𝑥100
𝑤𝑜𝑟𝑘𝑖𝑛𝑔 𝑝𝑜𝑝𝑢𝑙𝑎𝑡𝑖𝑜𝑛
74 A reduction in the value of a fixed asset in it’s useful life over
Depreciation
time, due in particular to wear and tear

75 A decrease in the value of a particular currency against

another currency due to either decreasing demand for that

Depreciation of
particular currency or increase in supply of that particular
currency
currency. For example 1$=15.42MVR to 1$=18MVR is

depreciation of MVR

76 A demand for a commodity, service, etc. which is a

Derived Demand consequence of the demand for something else. For example

labour demanded is derived from the demand for goods.

77 Fixing the value of a currency at a lower value rate by central

Devaluation of
bank. For example central bank changing 1$=15.42MVR to
currency
1$=18MVR is devaluation of MVR

78 A country with high living standards, long life expectancy,

high savings ratio, high levels of education, high levels of

Developed country health care, a high proportion of workers employed in the

tertiary

Sector and high productivity

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79 A country with relatively lower living standards, low life

expectancy, low savings ratio, low levels of education, low

Developing country
levels of health care, a high proportion of workers employed in

the primary sector and high productivity

80 An arrangement made with a bank that allows a third party to

Direct debit transfer money from a person's account on agreed dates,

typically in order to pay bills.

81 Tax imposed on income and wealth of the people and

Direct tax
businesses. For example income tax

82 Diseconomies of Disadvantages of large scale production that results due to a

scale rise in long run average costs

83 Disequilibrium Prices fixed by the government namely minimum and

price maximum prices.

84 The amount of income taken home for spending after the

Disposable income deductions such as income tax or additions such as social

security benefits are considered.

85 The process of making a product or service available for use or

Distribution consumption by a consumer or business user, using direct

means, or using indirect means with intermediaries.

86 A process where an individual, firm, region or a country

Diversification
concentrate in producing wide variety of goods and services.

87 A part or percentage of profit given to shareholders as a

Dividends
reward for their investment.

88 A technique of breaking down the production into a large

Division of labor
number of specialized tasks.

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89 It occurs when manufacturers export a product to another

Dumping country at a price either below the price charged in its home

market or below its cost of production.

90 Goods which can be long lasting. For example bricks,

Durable goods
refrigerators

91 Goods which are not available free and goods which has a cost
Economic goods
of production.

92 An increase the total output (Gross Domestic Product) over

Economic growth
time.

93 Measures used to record the changes in economic

Economic indicators
performances. For example GDP, Inflation etc.

94 An economic system is a system of production and exchange of

goods and services as well as allocation of resources in a

Economic system
society. A system that answer the basic economic questions of

E what, how and for whom to produce?

95 External value of a The value of a currency expressed in terms of another currency

currency or the exchange rate.

96 Advantages of large scale production as a result of fall in the

Economies of scale
long run average costs

97 Economizing Making the most of what we have.

98 The complete ban of imports entering into a particular

Embargoes
country.

99 The duties of an entrepreneur such as organizing other factors

Enterprise
of production or taking risks.

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100 A person responsible for enterprising (organizing other factors

Entrepreneur
of production or taking risks.)

101 Price determined by market forces of demand and supply

Equilibrium price
where quantity demanded exactly equal’s quantity supplied.

102 Equity The value of shares issued by a company

103 The official currency of countries in the European Union (EU)

Euro
€

104 The economic region formed by those member countries of the

Eurozone
European Union that have adopted the euro.

105 This arise when government fix maximum price. This means
Excess demand
demand is greater than supply known as shortages

106 This arise when government fix minimum price. This means
Excess supply
supply is greater than demand known as surplus

107 A type of trade restriction where government restrict the

Exchange control amount of foreign currency available for importers so that

importers find difficult to import.

108 The value or the rate of one currency expressed in terms of

Exchange rate
another currency. For example 1$= 15.42MVR

109 An inland tax on the sale, or production for sale, of specific

Excise duty goods or a tax on a good produced for sale, or sold, within a

country or licenses for specific activities.

110 Exploitation of Using the available resources or utilizing the available

resources resources

111 Extension of An increase in quantity demanded (movement down the

demand demand curve) due to a fall in price of the product.

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112 An increase in quantity supplied (movement up the demand

Extension of supply
curve) due to a rise in price of the product.

113 External economies Fall in long run average cost or Advantages experienced by a

of scale firm due to the growth of the industry.

114 Benefit gained by third parties (people who are not directly

External benefit involved in the activity) as a result of consumption or

production of a good or a service.

115 Costs incurred by third parties (people who are not directly

External cost involved in the activity) as a result of consumption or

production of a good or a service.

116 External
Rise in long run average cost or disadvantages experienced by
diseconomies of
a firm due to the growth of the industry.
scale

117 The value printed or depicted on a coin, banknote, postage

Face value
stamp, ticket, etc.

118 The idea that as prices rise (or incomes decrease) consumers
Factor substitution
will replace more expensive items with less costly alternatives.

119 Factors of Resources used for the production of goods and services. For

F production example land, labour, capital and enterprise

120 Fertility rate The average number of babies born per women overtime

121 A demand side policy which involves taxation and government

spending to influence an economic activity. When government

Fiscal policy
increase tax and reduce spending, it is known as using

contractionary fiscal policy. When government increase

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spending and reduce taxation, it is known as using

expansionary fiscal policy.

122 Cost of fixed factors which do not vary with the changes in
Fixed cost
output. For example rent, insurance, salary.

123 A function of commercial bank. A type of deposit known as

time deposit usually with high interest. This usually for those
Fixed deposit
people who want to keep large amount of money for certain

time period.

124 A type of exchange rate system where central bank fix a rate
Fixed exchange rate
against other currencies.

125 Fixed income group A group of people which receives earnings as fixed payment

126 A type of exchange rate system where the rate is determined

Floating exchange
collectively by the market forces of demand and supply of a
rate
particular currency.

127 Goods which have no cost of production. For example water,

Free goods
air etc.

128 Exchange of goods and services between different countries

Free trade
without any trade restrictions.

129 The region encompassing a trade bloc whose member

countries have signed a free trade agreement (FTA). Such

Free trade area agreements involve cooperation between at least two countries

to reduce trade barriers—import quotas and tariffs— and to

increase trade of goods and services with each other.

130 Frictional A type of unemployment caused when people move between

unemployment two jobs.

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131 An extra benefit supplementing an employee's money wage or

Fringe benefits
salary, for example a company car, private health care, etc.

132 An aim of government policy which means a situation where

Full employment
people actively seeking for work remain employed.

133 This is the total value of goods and services produced with in a

GDP per capita country divided by total population over time. This is known

as average income of a country.

134 Results when the overall demand for goods and services in an

General/cyclical/gen economy cannot support full employment. It occurs during

eral unemployment periods of slow economic growth or during periods of

economic contraction(recession)

135 Geographical
Distribution of population into different regions such as urban
distribution of
or rural areas.
population

136 G Geographical
Movement of labor from one place to another place
mobility of labor

137 A paper item, in a standard format, addressed to a bank

Giro credit branch instructing it to credit a specified sum of money to a

named account at that branch.

138 An economic intervention is an action taken by a government

Government or international institution in a market economy in an effort to

intervention impact the economy beyond the basic regulation of fraud and

enforcement of contracts and provision of public goods.

139 Refers to unequal treatment or perceptions of individuals

Gender imbalance
based on their gender.

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140 Government Bonds or other promissory certificates issued by the

securities government.

141 A sum of money given by a government or other organization

Grant
for a particular purpose

142 Gross Domestic Total value of goods and services produced with in the country

Product(GDP) in a given period of time

143 Goods and Service Tax levied on most goods and services sold for domestic

Tax(GST) consumption.

144 Gross National Total value of goods and services produced in a country plus

Product(GNP) the net property income from abroad.

145 Total pay before any deductions for federal taxes or other
Gross wage
reductions.

146 Habit forming goods Type of goods which have negative externalities to the society

147 Joining together of two firms in the same stage of production

Horizontal
producing same type of products. For example joining of two
integration
banks.

148 Household
Total number of people living in one house
population
H
149 The Human Development Index (HDI) is a statistical tool used

Human to measure a country's overall achievement in its social and

Development economic dimensions. It measures a country’s income level

Index(HDI) through gross national income, health through life expectancy

and education through number of years of schooling.

150 Hyper inflation Monetary inflation occurring at a very high rate.

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151 A license given by government for those who import goods and
Import licensing
services.

152 Action taken by employees of a company as a protest,

Industrial action
especially striking or working to rule.

153 Inflation caused due to a rise in the price of goods and services
Imported inflation
imported into a country.

154 Income tax Tax imposed on income and wealth of the people.

155 Tax incidence is said to "fall" upon the group that ultimately
Incidence of tax
bears the burden of, or ultimately has to pay

156 Money received, especially on a regular basis, for work or

Income
through investments.

157 Section of current account of BOP which mainly includes

I income from employment( wages, overtime, bonus,

Income flows
commissions, salaries) and income from

investment(dividends, profits, interest)

158 A shift of demand curve to the right due to a change in a non-

Increasing demand
price factor

159 A shift of supply curve to the right due to a change in a non-

Increasing supply
price factor

160 Tax on spending on goods and services. For example GST,

Indirect tax
VAT.

161 Total quantity of goods and services consumed by an

Individual demand
individual consumer at a given price.

162 Total quantity of goods and services supplied by an individual

Individual supply
supplier at a given price.

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163 Inequality of income

Rise in the gap between rich and poor
and wealth

164 A new industry, which in its early stages experiences relative

Infant industry difficulty or is absolutely incapable in competing with

established competitors abroad.

165 Average Number of babies dyeing before their first birthday

Infant mortality rate
overtime

166 A type of good whose demand decline when income rises. For
Inferior goods
example match box

167 A persistent rise in the general price of goods and services

Inflation
overtime

168 The rate at which the general price level of goods and services
Inflation rate
are rising.

169 Input Resources used for the production

170 The proportion of a loan that is charged as interest to the

borrower, typically expressed as an annual percentage of the

Interest rate
loan outstanding or the cost of borrowing and benefits of

saving.

171 Internal Disadvantages of large scale production experienced by a firm

diseconomies of due to its own growth when long run average costs starts to

scale rise

172 Internal economies Advantages of large scale production experienced by a firm

of scale due to its own when long run average costs starts to rise

173 International trade Exchanging goods and services between different countries

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174 The value of the materials used for making a particular

Intrinsic value
commodity.

175 Investment Increase in the real stock of capital goods

176 A section of current account of BOP which involves trade in

Invisible trade
services.

177 The simultaneous output of two or more products from a

Joint supply
single process or material. For example cows and milk
J
178 A commercial enterprise undertaken jointly by two or more
Joint venture
parties which otherwise retain their distinct identities.

179 A human resource factor of production which includes all

Labor
human efforts in production process

180 When a firm employs more labors than machines in their

Labor intensive
production process.

181 A natural resource factor of production which includes all the

Land natural resources extracted from the nature such as coal, oil,

fish etc. The reward is rent

182 Other things remains same, more goods and services will be
L Law of demand
demanded at lower prices than higher prices.

183 Other things remains same, more goods and services will be
Law of supply
supplied at higher prices than lower prices.

184 Coins or banknotes that must be accepted if offered in

Legal tender
payment of a debt.

185 A function of a central bank, that offers loans to banks or other

Lender of last resort eligible institutions that are experiencing financial difficulty or

are considered highly risky or near collapse.

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186 Life expectancy The average period that a person may expect to live.

187 The condition by which shareholders are legally responsible

Limited liability for the debts of a company only to the extent of the nominal

value of their shares.

188 Refers to the level of wealth, comfort, material goods and

Living standard necessities available to a certain socioeconomic class in a

certain geographic area.

189 A thing that is borrowed, especially a sum of money that is

Loan
expected to be paid back with interest.

190 Money required to run a business which is raised from loans

Loan capital
rather than shares.

191 A period of time in which all factors of production and costs

are variable. In the long run, firms are able to adjust all costs,
Long run
whereas in the short run firms are only able to influence prices

through adjustments made to production levels.

192 Loss An amount of money lost by a business or organization.

193 A type of exchange rate that fluctuate from day to day, but

Managed floating central banks attempt to influence their countries' exchange

exchange rate rates by buying and selling currencies. It is also known as a

dirty floating

194 M A regular gathering of people for the purchase and sale of

Market
provisions, livestock, and other commodities.

195 It is the aggregate valuation of the company based on its

Market
current share price and the total number of outstanding
capitalization
stocks.

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196 The total of what everybody in the market wants to buy at a

Market demand
given price.

197 A system where all the economic activities are owned and
Market economic
controlled by private individuals with no government
system
intervention.

198 A situation where market economy fails deliver an efficient

Market failure
allocation of resources.

199 The total of what everybody in the market wants to sell at a

Market supply
given price.

200 A price fixed by the government below the equilibrium price in

order to support consumers as they experience difficulty in

Maximum price
buying the goods at market price. This is known as price

ceiling.

201 A function of money which indicates that goods and services

Measure of value can be expressed in terms of money. This is also called unit of

account.

202 A function of money which indicates people accept the money

Medium of exchange that we use today as a means of payment for goods and

services

203 A document needed by registrar of companies from the limited

Memorandum of
companies which includes the external information of the
association
company.

204 Merger Joining together of two or more firms

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205 Type of good needed by public usually provided by the

Merit goods government- if not, private sector will be under provided. Such

as education or healthcare

206 Microbusiness A business that operates on a very small scale.

207 A price fixed by the government above the equilibrium price in

order to support producers as they experience difficulty in

Minimum price
selling the goods and covering their costs at market price. This

is known as price floor.

208 Minimum wage The lowest wage permitted by law or by a special agreement.

209 Mixed economic An economic system where both private and public sector

system exists side by side and operate for the welfare of the people.

210 It occurs when central banks print too much fiat currency. Too

Monetary inflation much of anything devalues the existing supply and thus it is

with money.

211 Regulation of interest rates, money supply and exchange rate

by the central bank to influence an economic activity. When

central bank raise interest and reduce money supply, it’s

Monetary policy
known as contractionary monetary policy and when they raise

money supply and decrease interest, it is called expansionary

monetary policy.

212 Current medium of exchange in the form of coins and

Money
banknotes; coins and banknotes collectively.

213 The exclusive possession or control of the supply of or trade in

Monopoly
a commodity or service. It is a type of market structure.

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214 A legal agreement by which a bank, building society, etc. lends

money at interest in exchange for taking title of the debtor's

Mortgage
property, with the condition that the conveyance of title

becomes void upon the payment of the debt.

215 Multi-national Companies operate and produce in different countries with

corporation headquarters in one country. For example Coca-Cola.

216 It refers to the increase in final income arising from any new

Multiplier effect injection of spending. The size of the multiplier depends upon

household's marginal decisions to spend

217 Non-Accelerating Inflation Rate Of Unemployment - NAIRU'

The specific level of unemployment that exists in an economy

that does not cause inflation to increase. The non-accelerating

NAIRU
rate of unemployment (NAIRU) often represents an

equilibrium between the state of the economy and the labor

market.

218 The total amount of money which a country's government has

National debt
borrowed.
N
219 A process of changing ownership from private sector to public
Nationalization
sector.

220 Natural increase in This is calculated by finding the difference between birth rate

population and death rate.

221 It is a monopoly that exists because the cost of producing the

product (i.e., a good or a service) is lower due to economies of

Natural monopoly
scale if there is just a single producer than if there are several

competing producers.

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222 Require (something) because it is essential or very important

Needs rather than just desirable. For example food, shelter and

clothing

223 It is a cost that is suffered by a third party as a result of an

Negative Externality
economic transaction. For example noise pollution.

224 The difference of immigrants and emigrants of an area in a

period of time, divided (usually) per 1,000 inhabitants

(considered on midterm population). A positive value

Net migration rate
represents more people entering the country than leaving it,

while a negative value means more people leaving than

entering it.

225 The total value of goods produced and services provided in a

Net National
country during one year, after depreciation of capital goods
Product(NNP)
has been allowed for.

226 The amount of wages that remains after deductions and

Net wage
additions are considered.

227 Goods that are immediately consumed in one use or ones that
Non-durable goods
have a lifespan of less than 3 years.

228 Non -wage factors are factor that are granted without

Non-wage factors payments by the employer. For example food, housing,

company car.

229 Normal profit When total revenue equals to total costs

230 Nominal GDP GDP expressed in current prices

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231 The distribution of population into different sectors( primary

Occupational
sector- extracting industry for example fishing, secondary
distribution of
sector- processing industry for example fish canning and
population
tertiary sector- service industries for example selling)

232 Occupational
Movement of labors from one job to another job.
mobility of labor

233 Opportunity cost The next best alternative forgone

234 Optimum Refers to the size of a population that produces the best results

population according to chosen end targets.

235 A share entitling its holder to dividends which vary in amount

O
Ordinary shares and may even be missed, depending on the fortunes of the

company.

236 The amount of something produced by a person, machine, or

Output
industry.

237 It is when the number of individuals are greater compared to

the relevant resources, such as the water and essential

Over population nutrients they need to survive. It can result from an increase in

births, a decline in mortality rates, an increase in immigration,

or an unsustainable biome and depletion of resources.

238 Overtime Time worked in addition to one's normal working hours.

239 A business organization with unlimited liability operated in

Partnership private sector formed by more than one partners (usually 2 to

P 20 partners)

240 A document containing an agreement that details the rights

Partnership deed
and obligations of each partner participating in a venture.

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241 Pattern of
Structure of employment statistics in a country.
employment

242 A type of market structure where there are many buyers and
Perfect competition
sellers selling homogenous products

243 At a fixed price, people are prepared to buy all that they can

obtain. They would buy an infinite amount if it were

Perfectly elastic
obtainable. Demand is said to be perfectly elastic. In this case,
demand
the more the individual firm produces the more revenue will

be earned.

244 Supply is said to be perfectly elastic when the sellers are ready
Perfectly elastic
to supply infinite quantity at a particular price. Elasticity of
supply
supply = Infinity.

245 Demand is said to be perfectly inelastic when the quantity

Perfectly inelastic demanded does not respond to any change in price. The more

demand the price rises, the bigger will be the level of consumer

expenditure. The value is 0

246 Perfectly Inelastic Supply is a situation where a change in

Perfectly inelastic price has no effect on the quantity supplied. The amount

supply offered for sale is the same at all prices. Elasticity of supply is

equal = 0

247 Planned(command) A type of economic system where all the economic activities

economic system are owned and controlled by government.

248 Population Total number of people living in a particular area overtime.

249 Population density A measurement of population per unit area or unit volume

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250 A diagram which shows male and female of different age

Population pyramid
groups of population in a country overtime.

251 These are external benefits. Benefit gained by third parties

Positive Externality (people who are not directly involved in the activity) as a result

of consumption or production of a good or a service.

252 A share which entitles the holder to a fixed rate of dividend,

Preference shares whose payment takes priority over that of ordinary share

dividends.

253 The amount of money expected, required, or given in payment

Price
for something

254 These are economy-wide wage and price controls, most

Price and income
commonly instituted as a response to inflation, and usually
policy
seeking to establish wages and prices below free market level.

255 Percentage change in quantity demanded is more than the

percentage in price. Elasticity is more than one. Example:

Price elastic demand
Demand for Air conditioner is elastic. In this case firm’s

revenue will increase if there is a fall in its price. PED>1

256 Supply is elastic when the percentage change in the quantity

Price elastic supply
supplied is greater than the percentage change in price. PES>1

257 The responsiveness of quantity demanded due to change in

Price elasticity of
price.
demand
% 𝑐ℎ𝑎𝑛𝑔𝑒 𝑖𝑛 𝑄𝑢𝑎𝑛𝑡𝑖𝑡𝑦 𝑑𝑒𝑚𝑎𝑛𝑑𝑒𝑑
𝑃𝐸𝐷 =
% 𝑐ℎ𝑎𝑛𝑔𝑒 𝑖𝑛 𝑝𝑟𝑖𝑐𝑒
258 The responsiveness of quantity supplied due to change in
Price elasticity of
price.
supply
% 𝑐ℎ𝑎𝑛𝑔𝑒 𝑖𝑛 𝑄𝑢𝑎𝑛𝑡𝑖𝑡𝑦 𝑠𝑢𝑝𝑝𝑙𝑖𝑒𝑑
𝑃𝐸𝑆 =
% 𝑐ℎ𝑎𝑛𝑔𝑒 𝑖𝑛 𝑝𝑟𝑖𝑐𝑒

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259 Percentage change in quantity demanded is less than the

Price inelastic percentage change in price. Elasticity is less than one.

demand Example: - The demand for petrol is inelastic. In this case

firm’s revenue will increase if there is a rise in price. PED<1

260 Price inelastic Supply is inelastic when the percentage change in the quantity

supply supplied is less than the percentage change in price. PES<1

261 A characteristic of a monopoly market structure which means

Price maker monopolist is able to set price for its products due to no

competition.

262 A principle of price determination in market economy by the

Price mechanism
forces of demand and supply

263 Government macroeconomic aim which means government

Price stability
try to keep the price of goods and services low or stable

264 A characteristic of a perfectly competitive market structure

which means no firm in this market structure is able to set

Price taker
price because they are too small to influence the market. As a

result each firm accepts market price.

265 First stage of production where raw materials are extracted

Primary sector
from the nature such fishing , mining etc.

266 A benefit gained by a consumer or producer due to a

Private benefit
consumption or production of goods and services.

267 A cost incurred by a consumer or producer due to a

Private cost
consumption or production of goods and services.

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268 Spending by private firms and individuals with the aim of

Private expenditure maximizing the profits and personal satisfaction. For example

private investment

269 Private limited This is often a small business such as an independent retailer

company in a market town. Shares do not trade on the stock exchange.

270 A part of the economy where economic activities are owned

Private sector
and controlled by private individuals

271 Change in the ownership of an organization from government

Privatization
to private sector.

272 Producer(capital) Goods which are used to produce other goods and services.

goods For example machines.

273 The action of making or manufacturing from components or

Production
raw materials, or the process of being so manufactured.

274 Production A curve which shows combination of two goods that a country

possibility curve can produce using its available resources and technology

275 The effectiveness of productive effort, especially in industry, as

Productivity
measured in terms of the rate of output per unit of input.

276 Reward of an entrepreneur which is calculated by finding the

Profit
positive difference between total revenue and total cost.

277 A principle of increase in the total profit by maximizing the

Profit maximization
difference between total costs and total revenue

278 A type of tax where % of tax increases with an increase in

Progressive tax
income. These are usually direct tax like income tax.

279 Proportional tax A type of tax where % of tax paid is same for all income levels.

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280 A public sector business organization owned, controlled and

Public corporation
funded by government with the aim of public service.

281 Spending by government with the aim of public service. For

Public expenditure
example spending on education.

282 A commodity or service that is provided without profit to all

Public goods members of a society, usually by the government. For example

roads, street lights etc.

283 A large company operated in private sector owned by

Public limited
shareholders , controlled by board of directors which issue
company
shares to general public through stock exchange

284 A part of the economy where economic activities are owned

Public sector
and controlled by government.

285 The standard of health, comfort, and happiness experienced

Quality of life
by an individual or group.
Q
286 A type of trade barrier which means physical limitation on the
Quotas
quantity of goods imported into a country.

287 It is a macroeconomic measure of the value of economic

Real GDP
output adjusted for price changes (i.e., inflation or deflation).

288 It is the income of individuals or nations after adjusting for

Real income inflation. It is calculated by subtracting inflation from the

R
nominal income.

289 Refers to wages that have been adjusted for inflation, or,

Real wage equivalently, wages in terms of the amount of goods and

services that can be bought.

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290 Re-allocation of
This is when factors of productions are put in different uses.
resources

291 A period of economic downturn where there is a negative

Recession
growth of GDP

292 Redistribution of A macroeconomic aim of the government which means

income reducing the gap between rich and poor.

293 Regional A process where a particular region concentrate in producing a

specialization certain good or service.

294 A type of tax where the % of income paid as tax falls when
Regressive tax
income rises. They are indirect taxes like GST.

295 A rule or directive made and maintained by an authority to

Regulation
influence businesses and individuals.

296 A type of poverty that explains those people who are poor
Relative poverty
relative to other people due to difference in their incomes.

297 Resource allocation Distribution of resources into various sectors of an economy.

298 Factor inputs used for the production of goods and services.

Resources For example factors of production land labor capital and

enterprise.

299 The act of returning an act. An argument against trade

Retaliation barriers. When one country impose restrictions, other country

will also do the same.

300 Revaluation of This is when the central bank deliberately increases the value

currency of their currency against another currency.

301 The money one has saved, especially through a bank or official
S Saving
scheme. The amount of income which is not spent.

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302 Saving accounts are accounts maintained by retail financial

Saving account institutions that pay interest but cannot be used directly as

money in the narrow sense of a medium of exchange

303 Scarce This means limited or finite

304 The inability to satisfy unlimited(infinite) wants using the

Scarcity
limited (finite)resources

305 A type of unemployment which occurs when people are

unemployed at certain times of the year, because they work in

Seasonal industries where they are not needed all year round. Examples

unemployment of industries where demand, production and employment are

seasonal include tourism and leisure, farming, construction

and retailing.

306 Second stage of production where raw materials are converted

Secondary sector into finished or semi-finished products. For example

manufacturing.

307 Sex distribution of

Distribution of population into male and female
population

308 One of the equal parts into which a company's capital is

Shares
divided, entitling the holder to a proportion of the profits.

309 It is the concept that within a certain period of time, in the

Short run
future, at least one input is fixed while others are variable.

310 Social benefit A sum of private benefit and external benefit

311 Social cost A sum of private costs and external costs

312 A type of small business with unlimited liability operated in

Sole trader
private sector owned and controlled by a single person

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313 A process where an individual, firm, region or a country

Specialization concentrate on producing certain specific goods and services

in which they have an advantage.

314 It is a tax that is defined as a fixed amount for each unit of a

Specific tax
good or service sold, such as cents per kilogram.

315 The act of predicting (in relation with exchange rate, it is

Speculation predicting the value of the exchange rate and exchange rate

fluctuate as a result.)

316 This is known as consumption which means using up of goods

Spending
and services.

317 Standard for A function of money which indicates that payments for goods

deferred payment and services can be made in future

318 An instruction to a bank by an account holder to make regular

Standing order
fixed payments to a particular person or organization.

319 A market for buying and selling of shares and government

Stock exchange
securities

320 A function of money which indicates that money can be saved

Store of value
or stored for future without losing its value.

321 An industry that a country considers very important for its

Strategic industry
economic development

322 Unemployment resulting from industrial reorganization,

Structural
typically due to technological change, rather than fluctuations
unemployment
in supply or demand of a particular product.

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323 A financial grant given by government to domestic firms in

Subsidy order to reduce their costs of production and prices. Subsidies

are given to consumers also.

324 Goods which can be used instead of other goods such as tea
Substitute good
and coffee

325 It is also called economic profit, and abnormal profit, and is

Supernormal profit
earned when total revenue is greater than the total costs.

326 The total quantity of goods and services that a supplier is

Supply
willing and able to sell at a given price.

327 A curve which shows direct relationship between price and

Supply curve
quantity supply

328 The total hours that workers wish to work at a given real wage
Supply of labor
rate.

329 A table which shows direct relationship between price and

Supply schedule
quantity supply

330 These are government attempts to increase productivity and

Supply side policy shift Aggregate Supply (AS) to the right. For example

subsidies, tax incentives, privatization etc.

331 The rate of growth which can be maintained without creating

Sustainable
other significant economic problems, especially for future
economic growth
generations

332 An act of assuming control of something, especially the buying

Takeover
out of one company by another.
T
333 A tax imposed on imports in order to protect domestic firms
Tariff
and discourage importers.

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334 Compulsory payment imposed by the government from the

Tax
people and businesses.

335 Technological Technological unemployment is the loss of jobs caused by

unemployment technological change.

336 The ratio of an index of a country's export prices to an index of

Terms of trade
its import prices.

337 Third stage of production where all kind of services are

Tertiary sector
provided such as transportation, banking etc.

338 The amount of money received by the sales calculated by

Total revenue
multiplying selling price and quantity.

339 It is a wide ranging tax, tariff and trade treaty that often
Trade agreement
includes investment guarantees.

340 Regional grouping of countries in order to promote free trade

Trade blocs
among member countries such as EU.

341 The removal or reduction of restrictions or barriers on the free

Trade liberalization
exchange of goods between nations.

342 Trade
This is the deliberate attempt to limit imports or promote
protection/barriers/
exports by putting up barriers to trade
restriction

343 An association of workers joined together to promote the

Trade union interest of their members mainly through collecting

bargaining.

344 It arise when there are few people compared with the
U Under population
resources.

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345 A situation where people actively seeking for work remains

Unemployment
jobless.

346 The unemployment rate is a measure of the prevalence of

unemployment and it is calculated as a percentage by dividing

Unemployment rate
the number of unemployed individuals by all individuals

currently in the labor force

347 Unitary elastic It is a type of elasticity of demand when the % of change in

demand demand is equals to % change in price

348 Unitary elastic It is a type of elasticity of supply when the % of change in

supply demand is equals to % change in price

349 Unemployment Payment made by the state or, in the US, a trade union, to an

benefit unemployed person.

350 If the business is unable to meet any financial obligations or

Unlimited liability settle any outstanding liabilities, the owner's personal assets

can be seized to satisfy the debts.

351 Cost of variable factor which vary with the change in output.
Variable cost
For example wages.

352 Vertical integration Joining together of two firms in different stages of production

353 Joining together of one firm to another firm which is in the

Vertical integration
V later stage of production. For example oil refining factory buys
forward
a patrol station.

354 Joining together of one firm to another firm which is in the

Vertical integration
earlier stage of production. For example oil refining factory
backward
buys oil extracting company.

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355 A section of current account of BOP which includes trade in

Visible trade goods. It is calculated by finding the difference between

exports of goods and import of goods.

356 This is a consumption tax added to a product's sales price. It

Value Added Tax
represents a tax on the "value added" to the product
(VAT)
throughout its production process.

357 It is a situation when a person is unemployed not due to

Voluntary
unavailability of jobs in the economy, but because of not being
Unemployment
able to find employment of his/her own choice.

358 These are earnings employees receive in the form of money

Wage factors
such as basic pay, overtime, bonus and commission.

359 The wage gap is expressed as a percentage and is calculated by

Wage gap dividing the median annual earnings for women by the median

annual earnings for men.

360 These are goods which is have a desire to possess or things

Wants which is not necessary for the survival. For example Mobile

phone.
W
361 Wealth These are stock of assets which have money value.

362 Working population The total number of people of who are economically active.

363 A price index (plural: “price indices” or “price indexes”) is a

Weighted price normalized average (typically a weighted average) of price

index relatives for a given class of goods or services in a given region,

during a given interval of time.

364 Allowance or adjustment made in order to take account of

Weighting
special circumstances. For example when calculating inflation,

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weightings are given in order to consider household spending

pattern.

365 The World Trade Organization (WTO) is the only global

World Trade
international organization dealing with the rules of trade
Organization
between nations.

366 Wealth tax A tax levied on personal capital or property

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