IGCSE economics

Absolute poverty 

• a severe form of poverty characterized by a person or group's inability to meet their basic human needs for a minimal standard of living. 

• income equal to or less than $1.25 per day.

Appreciation of a currency

• occurs when there is an increase in its value relative to another currency operating in a floating exchange rate system.

Average fixed cost (AFC)

• refers to a firm’s fixed cost per unit of output.

• AFC = Total Fixed Costs / Quantity of Output

Average total cost  (ATC)

• is the cost per unit of output, i.e. the total cost of making one product.

• ATC = Total Cost / Quantity of Output

Average variable cost (AVC)

• refers to the variable cost per unit of output.

• AVC = Total Variable Costs / Quantity of Output 

Balance of payments

• is a financial record of a country’s transactions with the rest of the world for a given time period, usually one year.

• divided into three main components : Current Account,  Capital Account and Financial Account.

Barriers to entry

• are the obstacles that prevent firms from entering a market.

• Some common types of barriers to entry include: economies of scale, large capital requirement, brand loyalty, large advertising budget, intellectual property rights and regulatory barriers.

Bartering

• Bartering is a traditional system of exchange where goods and services are traded directly for other goods and services without the use of money as an intermediary.

• Key characteristics of bartering include: absence of money and double coincidence of wants

Base year

• refers to the starting year when calculating a price index.

Basic economic problem

• is concerned with how best to allocate scarce resources in order to satisfy people’s unlimited needs and wants.

Birth rate

• measures the number of live births per thousand of the population in a year.

Business cycle 

• describes the fluctuations in the economic activity of a country over time, creating a long-term trend of economic growth in the economy.

• consists of four main phases: expansion, peak, contraction and trough.

Capital expenditure

• refers to the funds that a company or organization invests in the acquisition, improvement, or maintenance of long-term assets, such as property, plant, equipment, and technology.

Capital-intensive

• is a term used to describe businesses or industries that require a substantial amount of capital investment in assets, such as property, plant, equipment, and technology, to operate and generate revenue.

• a significant portion of their expenses is related to capital expenditures and ongoing maintenance of physical assets rather than human assets.

Central bank

• is the monetary authority that oversees and manages the economy’s money supply and banking system.

Deflation

• defined as the persistent fall in the general price level of goods and services in the economy, i.e. the inflation rate is negative.

Inflation

• the sustained rise in the general level of prices of goods and services over time, as measured by a consumer price index.

Specific tax

• A tax calculated as an absolute amount per unit of the good or service sold. 

Structural unemployment

• A type of unemployment that occurs as a result of technological changes, changing patterns of demand (causing changes in demand for labour skills), as well as changes in the geographical location of jobs, and labour market rigidities.

Subsidy

• An amount of money paid by the government to firms for a variety of reasons: to prevent an industry from failing, to support producers’ incomes, or as a form of protection against imports. 

Substitute goods 

• Two or more goods that satisfy a similar need, so that one good can be used in place of another. 

Supply 

• the various quantities of a good that fi rms (or a fi rm) are willing and able to produce and sell at different possible prices during a particular time period, ceteris paribus (all other things being equal).

Supply shock 

• Events that have a sudden and strong impact on short-run aggregate supply (SRAS), leading to SRAS curve shifts.

Supply-side policies 

• A variety of policies that focus on aggregate supply, namely factors aiming to shift the long-run aggregate supply (LRAS) curve to the right, in order to achieve long-term economic growth. 

Sustainability

• Refers to maintaining the ability of the environment and the economy to continue to produce and satisfy needs and wants into the future.