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Economic growth
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Gross Domestic Product (GDP)
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GCSE Economics P2
OCR Definitions for Paper 2
| Term | Definition |
|---|---|
| Economic growth | Growth in GDP (value of output). |
| Gross Domestic Product (GDP) | Total value of goods and services produced in an economy in a year. |
| GDP per capita | The total value of goods and services in a country divided by the population. |
| Investment | Spending on capital goods. |
| How changes in technology cause economic growth | Better technology leads to better quality of capital. |
| Size of workforce | A larger workforce means there is more labour (a factor of production). |
| Education and training | An increase in the skills of the workforce will improve the quality of labour. |
| Availability of natural resources | If there is the discovery of more natural resources, it enables an economy to grow. |
| Employment | Use of labour to produce goods and services. |
| Unemployment | When workers are willing and able to work but unable to find employment. |
| Claimant Count | A measure of unemployment counting the number of people who are claiming unemployment benefits. |
| The unemployment rate | The percentage of the workforce who are unemployed. |
| Cyclical unemployment | Unemployment when there is a lack of demand in the economy. |
| Frictional unemployment | Unemployment when workers are in between jobs. |
| Seasonal unemployment | Unemployment when there is a lack of demand during a certain period of the year. |
| Structural unemployment | Unemployment caused by a permanent decline in an industry. |
| Distribution of income | How incomes are shared out between individuals and households. |
| Income | The reward for a service provided by a factor of production. |
| Wealth | A stock of assets at a point in time. |
| Price stability | When the general level of prices stays constant. |
| Inflation | A sustained increase in the general price level. |
| CPI (Consumer price index) | Method used to calculate the rate of inflation. |
| Nominal value | The value of something in money terms. |
| Real value | The value of something when inflation is taken into account. |
| Government spending | Total amount of money spent by the government in a given period of time. |
| Government revenue | A source of revenue for government spending. |
| Direct taxes | A tax on income or wealth. |
| Indirect taxes | A tax on spending. |
| Balanced government budget | When tax revenue is equal to government spending. |
| Budget surplus | When tax revenue is greater than government spending. |
| Budget deficit | When tax revenue is less than government spending. |
| Fiscal policy | Use of government spending and taxation to have an impact on the economy. |
| Progressive taxes | Tax that takes a higher percentage of tax the higher the income. |
| Monetary policy | A policy aimed to control the total money supply in the economy. |
| Supply side policies | Policies that increase the productive potential of an economy. |
| Positive externalities | Beneficial effect of an economic activity on a third party. |
| Negative externalities | Harmful effect of an economic activity on a third party. |
| Incidence of tax | how the burden of tax is divided between consumers and producers. |
| Subsidies | Grant given by government to producers to encourage production of a good. |
| State provision | Expenditure for provision of public goods. |
| Legislation | Laws imposed, meaning action can be taken against those who break the rules. |
| Regulation | Rules to control/reduce negative behaviour by consumers and producers, that are enforced by legislation. |
| Information provision | Ensuring economic agents have access to the information they need. |
| Exports | Goods and services produced in one country and sold to another country. |
| Imports | Good and services that are brought into the country, when they have been produced elsewhere. |
| Free trade agreement | International trade without any restrictions such as trade barriers. |
| European Union | A political and economic union of member states that are located primarily in Europe. |
| Balance of payments | This records all the financial transactions between one country and other countries. |
| Current account deficit | When goods and services that have been imported are greater than those exported. |
| Current account surplus | When goods and services that have been exported is greater than those imported. |
| Exchange rate | The price of one currency in terms of another currency. |
| Currency | The system of money used in a country or group of countries. |
| Globalisation | The increasing integration of economies internationally, an expansion of world trade. |
| Development | The process of improving people’s standard of living and wellbeing over time. |
| Developed country | These are countries with a high GDP per capita and are industrialised. |
| Developing economy | These are countries that rely on labour- intensive industries and have a low GDP per capita. |
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victoria.shaw
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