IGCSE 0455 ECONOMICS

Welcome to IGCSE Economics, 0445 Cambridge syllabus

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IGCSE Economics key terms list (no nonsense)!

What you are about to read is the greatest IGCSE economics key terms list ever written! No textbook can match it! Why? Because, as you read, you’ll see that the definitions don’t always give you what you need! This will help you learn the vocabulary, but actually understand the meaning behind the key terms you’re reading! Prepare for IGCSE economics greatness! Bonza

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Getting an A* on IGCSE Economics

Getting an A* on IGCSE Economics is all about knowledge and language. And that starts here! Getting to know the key terms using this list can help you start! Whenever you’re ready, you can explore the other course resources for IGCSE Economics and take your learning to the next level!

Unit	Key term	Definition	In English?
Unit 1	Capital	The equipment and machinery used to produce goods and services	Think spanner or digger! Thought to be more useful than consumption of things like crisps and cheese! The can speed up the production (making of things)!
Unit 1	Consumption	The use of goods and services by individuals or households.	Consumers like you love to consumer as it increases your utility (pleasure or benefit) in economics
Unit 1	Consumer goods	Goods that are wanted because they provide satisfaction to their owner	Goods that are used by individuals for personal satisfaction, such as food, clothing, and electronics.
Unit 1	Demerit goods	Goods that are harmful to individuals or society, often over-consumed because their negative effects are not fully understood, like cigarettes or junk food.	We love to consume these even though they're not useful for us (or society). Governments also love to regulate or tax them!
Unit 1	Economy	The system of production, distribution, and consumption of goods and services within a country or region.	The economy is often measured in terms of GDP or the total value of goods and services produced and exchanged within a country in a certain time frame!
Unit 1	Enterprise	The ability to organize the other factors of production (land, labor, capital) to create goods or services. There is a risk in enterprising	We love successful entrepreneurs as generally they're risk takers who have managed to organise the other factors and are making 'fat stacks'!
Unit 1	Exchange	The process of trading goods and services between buyers and sellers
Unit 1	Factors of production	The inputs used in the production of goods and services, (land, labor, capital, and enterprise) or CELL (for short)	Countries encourage the 'best' use of 'CELL' to allow the economy to grow and people to enjoy life!
Unit 1	Fixed capital	Long-term physical assets used in production, like machinery, buildings, and equipment, that don't change frequently
Unit 1	Free goods	Goods that are abundant and not scarce, meaning they are available without any cost, like air. So, obtainable without opportunity cost or payment!	They're free and limitless!
Unit 1	Goods	Physical products that satisfy human wants or needs, such as food, clothing, and cars. They are physical (tangible)	You can hit your head on them!
Unit 1	Labour	The human effort used in the production of goods and services, including physical and mental work.
Unit 1	Land	Natural resources used in production, including agricultural land, forests, water, and minerals.	Don't forget, land includes anything above or below the surface (including the sea)!
Unit 1	Markets	Places or systems where buyers and sellers interact to exchange goods, services, or resources.	Stock market, fish market, e-bay , really any type of market!
Unit 1	Merit goods	Goods that are perceived to provide positive externalities (a spillover that is beneficial to society). Often under-consumed if left to the free market, like education and healthcare.	The opposite of demerit goods!
Unit 1	Needs	Basic requirements essential for survival, such as food, shelter, and clothing.	You can now debate whether wifi is a need!
Unit 1	Opportunity cost	The cost of the next best alternative that is foregone when a decision is made.	You go to school and miss a lot of high quality sleeping time!
Unit 1	Production possibility curve	Production Possibility Curve: a curve that represents possible output if the factors of production are used efficiently. Also known as the 'opportunity cost curve' as it can be used to show the opportunity cost of producing different products/quantities)	Normally drawn with 'capital' and 'consumer' goods! You can think about why economies that produce more 'capital' goods often perform better!
Unit 1	Public goods	Goods that are non-excludable and non-rivalrous, meaning they are available to everyone and consumption by one person does not reduce availability for others, like street lighting or national defense. Provided by the government and paid for by taxpayers!	Taxpayers are your parents!
Unit 1	Resources	Items that are needed/ useful for consumption or the production of other items	Think 'CELL'!
Unit 1	Scarcity	Limited availability of resources (ones that will run out eventually), not enough to satisfy all the wants	As they become more scarce, their price will rise!
Unit 1	Services	Non-physical goods that satisfy human wants or needs, such as healthcare, education, and transport.
Unit 1	Wants	Desires for goods and services that are not essential for survival but improve quality of life, like entertainment or luxury items.	Want are 'insatiable'. We always want more stuff
Unit 2	Complementary goods	Goods that are often purchased together because they are used together, like petrol and cars.	Basically, stuff you need together to make the magic happen—like chips and ketchup. You can’t have one without the other!
Unit 2	Contraction in demand	A decrease in the quantity of a product demanded due to an increase in its price, shown by a movement left along the demand curve.	When prices go up, you’re like, “Nah, not worth it,” and stop buying as much. Your wallet protests!
Unit 2	Contraction in supply	A decrease in the quantity of a product supplied due to a decrease in its price, shown by a movement left along the supply curve.	Producers don’t wanna sell for less, so they cut back—less money, less motivation to make more!
Unit 2	Cross elasticity of demand	A measure of how the demand for one product changes in response to a price change of another product.	If the price of butter shoots up, does everyone rush to buy margarine instead? Cross elasticity checks how much the two products affect each other.
Unit 2	Demand	The desire and ability of consumers to buy a product at different prices.	Basically, how much you really want something, and whether you’ve got the cash to back it up.
Unit 2	Diminishing Marginal utility	The decrease in satisfaction or usefulness as more units of a product are consumed.	You know when you eat that first slice of pizza, and it’s glorious, but by the fourth one you’re like, “Ugh, too much”? That’s diminishing marginal utility!
Unit 2	Effective Demand	The desire to buy a product coupled with the financial ability to purchase it.	It’s like having the dream to buy a new phone… but you’re stuck with last year’s model because, you know, bills.
Unit 2	Elasticity	The degree to which the quantity demanded or supplied changes in response to a change in price, income, or other factors.	Basically, how easily do people freak out when prices change? A little or a lot?
Unit 2	Equilibrium	The price and quantity at which the supply and demand curves intersect, where the quantity supplied equals the quantity demanded.	The sweet spot where everything balances out—like finding the perfect amount of chocolate in your cake batter.
Unit 2	Excess Demand	A situation where the quantity demanded of a product is greater than the quantity supplied at a given price.	When everyone wants it, but there just isn’t enough—hello, Black Friday chaos!
Unit 2	Excess Supply	A situation where the quantity supplied of a product is greater than the quantity demanded at a given price.	Too much of something no one wants—think of those leftover fruitcakes after Christmas!
Unit 2	Extension in demand	An increase in the quantity of a product demanded due to a decrease in its price, shown by a movement right along the demand curve.	When things get cheaper, you’re like, “Okay, I’ll grab a few more!” Your wallet gets happier!
Unit 2	Extension in supply	An increase in the quantity of a product supplied due to an increase in its price, shown by a movement right along the supply curve.	When prices rise, producers are like, “Yes, please!”—time to make more to cash in.
Unit 2	External costs	The negative side effects of production or consumption that affect people who are not directly involved in the transaction, such as pollution.	When a factory pumps out smoke, but you’re the one breathing it in—thanks, but no thanks!
Unit 2	External benefits	The positive side effects of production or consumption that benefit people outside the transaction, like improved public health from widespread vaccination.	When something good happens and you’re not even the one who paid for it—like your neighbor’s garden cleaning the air for you!
Unit 2	Individual Demand	The quantity of a product that a single consumer is willing and able to purchase at different prices.	How much you’d buy if you had all the options, from a student on a budget to someone with deep pockets.
Unit 2	Inferior goods	Goods for which demand decreases as incomes rise, because consumers switch to higher-quality alternatives.	It’s like when you graduate from instant noodles to gourmet pasta—it’s all about moving up in life!
Unit 2	Marginal Utility	The additional satisfaction or pleasure gained from consuming one more unit of a product.	That last bite of cake—delicious, but is it still worth it after the first few?
Unit 2	Market Demand	The total quantity of a product that all consumers in the market are willing to buy at different prices.	Add up how much everyone wants, from the first customer to the last—now you’ve got total demand.
Unit 2	Price elastic demand	A situation where the percentage change in quantity demanded is greater than the percentage change in price.	When a small price change causes people to go wild for it, like a huge sale on your favorite shoes.
Unit 2	Price inelastic demand	A situation where the percentage change in quantity demanded is smaller than the percentage change in price.	When a price increase doesn’t really scare you off, like with must-have luxury items.
Unit 2	Price elastic supply	A situation where the percentage change in quantity supplied is greater than the percentage change in price.	When a price hike gets producers to crank out even more—everybody loves higher profits!
Unit 2	Price inelastic supply	A situation where the percentage change in quantity supplied is smaller than the percentage change in price.	When producers can’t increase supply that much, even if prices go up—like trying to make more ice cream in a heatwave.
Unit 2	Private costs	The costs that a firm or individual directly pays to produce a good or service, like wages or raw materials.	The bills you gotta pay to make stuff happen—think rent, wages, and raw materials.
Unit 2	Private benefits	The benefits received by a firm or individual from producing or consuming a good or service, such as profits or satisfaction.	The good stuff you get out of it, whether it’s money in your pocket or a happy stomach.
Unit 2	Social costs	The total costs of production, including both private costs and external costs, like pollution.	It’s not just the bills the company pays, but the mess it leaves for everyone else to clean up—ugh.
Unit 2	Social benefits	The total benefits of production or consumption, including both private benefits and external benefits, like improved public health.	The good vibes that spill over to everyone, like free public goods from a company’s success.
Unit 2	Substitute goods	Goods that can be used in place of another product, such as butter and margarine.	When you can swap one thing for another—like choosing Pepsi over Coke (or vice versa!).
Unit 2	Supply	The amount of a product that producers are willing and able to sell at different prices.	How much stuff a company is ready to sell at different prices—simple as that.
Unit 2	Unitary elasticity	A situation where the percentage change in quantity demanded or supplied is exactly equal to the percentage change in price.	When a price change results in a perfect balance between supply and demand—no surprises here!
Unit 2	Utility	The satisfaction or pleasure derived from consuming a product or service.	It’s the "Yum!" factor—how good does it feel to enjoy your favorite snack or service?
Unit 3	Barter	System of trade through swapping items.	It’s like swapping your old phone for your mate’s old laptop—straight trade, no money involved.
Unit 3	Cash	Notes, coins, and debit cards.	Cash is king! It’s the physical stuff you can hold or swipe—coins, notes, and those little plastic cards.
Unit 3	Central bank	The government's bank, responsible for issuing money, setting interest rates.	The big boss bank of the country that decides how much money is in circulation and what the interest rates should be.
Unit 3	Checking account	Instant access account, see current account.	Your go-to account for buying lunch, paying bills, or transferring money right now!
Unit 3	Commercial bank	High St bank (HSBC etc) offering a range of accounts to individuals and businesses.	High Street banks that handle your everyday banking needs, like savings accounts or loans, from places like HSBC or Barclays.
Unit 3	Credit card	Electronic payment card that allows users to make purchases with borrowed money that can be paid at a later date.	The magic card that lets you buy stuff and pay later, but don’t forget—if you don’t pay it back, it’ll cost you more.
Unit 3	Current account	Instant access account used for routine/regular transactions.	The account you use to handle your daily spending, like paying for that takeaway or your Netflix subscription.
Unit 3	Debit card	Electronic payment card linked to current/checking account that has the funds to make the transaction.	A card that pulls money straight from your bank account, so no need to borrow or owe anyone—just swipe and pay.
Unit 3	Disposable income	The money available after paying taxes that you can choose how to use.	The leftover cash after taxes that you can spend however you want—treat yourself!
Unit 3	Liquidity	The ability for an item/asset to be exchanged for cash with no loss of value.	How quickly you can turn an item into cash, with no price drop, like selling your bike on eBay without losing value.
Unit 3	Money	Commodity that is universally accepted for payment for all goods and services.	The stuff everyone agrees is worth something—money that gets you anything, from your morning coffee to a new phone.
Unit 3	Money supply	The sum of the notes, coins, and deposits in banks & financial institutions.	All the cash floating around in the economy—notes, coins, and all the money in the bank accounts.
Unit 3	Piece rate	Payment based on quantity produced (fruit picking etc).	Pay by the unit, not by the hour. So, the more you pick, the more you make—fruit picking, anyone?
Unit 3	Salary	Annual payment total that is paid monthly.	The yearly pay split into monthly chunks—your guaranteed paycheck for the year.
Unit 3	Specialisation	Working on specific stage/stages of production in the aim of increasing productivity & lowering costs.	When you focus on one job or part of production, so you get really good at it and make stuff faster (or cheaper!).
Unit 3	Stock exchange	Organisation that facilitates the buying and selling of shares in Public & Private Limited Companies.	Where companies list their shares for buying and selling—kind of like a giant stock market shopping mall.
Unit 3	Trades union	Organisation of workers that negotiate wages, working conditions & hours. Collective bargaining.	A club where workers come together to make sure they get fair wages and decent working conditions—solidarity!
Unit 3	Wage	Hourly rate for labour, often calculated weekly.	Your hourly rate for work—get paid for every hour you grind, often weekly.
Unit 3	Wealth	Collection of assets (houses, land, shares in companies, money saved in bank accounts).	All the things you own that have value—your house, your car, your stocks—basically, your personal treasure chest.
Unit 3	Average cost	The total cost of producing a good or service divided by the number of units produced.	How much it costs to make each thing you produce—divide your total costs by the number of products you make, easy math!
Unit 3	Average fixed costs	The fixed costs (costs that don’t change with production levels) divided by the number of units produced, which decreases as more units are made.	As you make more stuff, the fixed costs (like rent) get spread out, so each unit costs less!
Unit 3	Average revenue	The total revenue (money from sales) divided by the number of products or services sold.	How much money you make from selling stuff before anything is taken out, like the full ticket sales from a concert.
Unit 3	Average variable costs	The costs that change with the level of output, like materials or labor, divided by the number of units produced. It falls with more output, but eventually rises again.	At first, it gets cheaper to make things as you get better at it, but then it costs more once you’re making loads.
Unit 3	Break-even Point	The level of output where total revenue equals total costs, meaning the business makes neither a profit nor a loss.	That magical point where you make exactly enough money to cover your costs—no profit, no loss. Talk about break-even!
Unit 3	Cartel	A group of firms that work together to set prices and limit competition, usually to keep prices high. This is often illegal.	A secret club of big companies that agree to keep prices high so they all make more cash. (Usually not allowed!)
Unit 3	Co-operative	An organization owned and operated by its workers, who share the profits and decision-making.	An organisation run by its workers, so everyone shares the profits. Everyone’s a boss!
Unit 3	Costs	The money a business spends to produce goods or provide services, including materials, labor, and overheads.	The money you need to make stuff—like paying for your materials, your workers, or your office coffee.
Unit 3	Diseconomies of scale	When a company becomes too large, and its average costs start rising instead of falling due to inefficiencies in production.	When bigger production leads to higher costs—like when you hire too many staff and things get chaotic!
Unit 3	Diminishing returns to labour	As more workers are hired, each additional worker contributes less to total output, especially if there aren’t enough tools or space.	When you keep adding workers, but they just get in each other's way and aren’t really helping that much anymore.
Unit 3	Division of labour	Splitting up the production process into smaller tasks so workers can specialize in specific areas, making production more efficient.	Giving each worker a specific job so they don’t waste time figuring out what to do next—one person makes the dough, another shapes the bread!
Unit 3	Economies of scale	When producing more of a product reduces the cost per unit, often because of bulk buying or more efficient use of resources.	The magic of making more stuff and getting cheaper at it—like buying in bulk at a discount!
Unit 3	Factory	A building or facility where goods are produced on a large scale, often using machinery and assembly lines.	Where all the actual work happens—the factory floor where the goods are made!
Unit 3	Firm	A business or company that produces goods or services, and may own one or more factories.	The company that runs the show, whether they’ve got one factory or 20. The big boss in charge.
Unit 3	Fixed costs	Costs that do not change regardless of the level of output, such as rent or salaries.	The costs you can’t escape, like rent or loan repayments—whether you’re making stuff or not!
Unit 3	Horizontal integration	When two or more firms at the same level of production (e.g., two car manufacturers) combine to form a larger company.	When companies at the same level of production team up—no competition, just collaboration!
Unit 3	Increasing returns to labour	When adding more workers leads to a greater increase in output per worker, due to improved efficiency.	When more workers means they get better at their jobs and you produce even more—good vibes!
Unit 3	Industry	A group of companies that produce similar or related products, such as the automobile industry or the tech industry.	A group of companies all making similar stuff—like the whole fast-food industry with burgers and fries.
Unit 3	Marginal cost	The extra cost incurred from producing one more unit of a good or service.	The extra cost to make one more product. It’s like the ‘one more slice of pizza’ scenario.
Unit 3	Marginal Product/productivity	The additional output produced when one more worker is added, showing how much extra work that worker contributes to total production.	The extra stuff you get from hiring another worker. You get more done, but is it worth the extra pay?
Unit 3	Marginal revenue	The extra revenue gained from selling one more unit of a good or service.	The extra cash you make from selling one more product. Ka-ching!
Unit 3	Monopoly	When one firm controls all or nearly all of the market supply of a good or service, with no competitors.	When one company is the only one selling a product, and they can charge whatever they want because there’s no competition.
Unit 3	Multinational Company (MNC)	A company that has production or outlets in more than one country, often listed on stock exchanges.	A company that has shops or factories in different countries. They’re going global and taking over!
Unit 3	Normal Profit	The minimum level of profit required for a business to remain in operation; enough to cover opportunity costs.	The smallest profit you can make to keep a business going, just enough to stay in the game.
Unit 3	Oligopoly	When only a few large companies control a market, leading to limited competition.	When only a few big companies control a whole market—like the “cool” clique of the business world.
Unit 3	Partnership	A business owned and run by two to 20 individuals, who share the profits and risks.	When two or more people share a business, they split the profits and the work—teamwork makes the dream work!
Unit 3	Primary Industry	Industries that involve the extraction or harvesting of natural resources like agriculture, fishing, forestry, and mining.	The industry that digs up all the raw materials—think mining, fishing, or farming.
Unit 3	Private Limited Company (Ltd)	A company owned by shareholders, but whose shares are sold privately and not on the stock exchange.	A company that’s privately owned by a few shareholders, and they keep their shares to themselves—no public stock here!
Unit 3	Productivity	The amount of output produced by each worker, often used to measure efficiency.	How much each worker produces in a certain amount of time. The more they make, the better the company does!
Unit 3	Profit	The remaining income after total costs are subtracted from total revenue; essentially the business's profit.	The leftover cash after you’ve paid all your bills. It’s the reward for your hard work!
Unit 3	Public Limited Company (plc)	A company that is publicly listed, where shares are sold to the public on the stock exchange.	A company that sells shares to the public, and those shares are available for anyone to buy!
Unit 3	Revenue	The total money a business receives from selling its goods or services before any costs are deducted.	The total money a company gets from selling its goods or services, before any costs or deductions.
Unit 3	Secondary Industry	Industries that produce goods, such as factories and construction companies, which transform raw materials into products.	The industry that turns raw materials into finished products—factories, builders, carpenters, you name it.
Unit 3	Sole-trader	A business owned by one person, often small scale, where the owner is in full control.	The business run by just one person—small scale, big dreams!
Unit 3	Super-normal Profit	When demand increases, leading businesses to make more than usual profits.	When demand goes through the roof and businesses make more money than they expected—bonus profits!
Unit 3	Tertiary Industry	Industries that provide services to individuals or businesses, such as banking, education, healthcare, and legal services.	The service providers—banks, schools, doctors, and the like, helping people and making cash in return.
Unit 3	Total costs	The total of fixed and variable costs incurred in the production of goods or services.	All your costs added up, fixed and variable—basically, what it costs you to run the business.
Unit 3	Total Revenue	The total money a business receives from selling products, calculated by multiplying price by output.	The total amount of money you make from selling your products, before anything is deducted.
Unit 3	Transnational Company (TNC)	A multinational company that operates in more than one country, with business activities spanning several nations.	A company with branches in many countries, working globally, crossing borders like it’s no big deal.
Unit 3	Variable costs	Costs that vary with production levels, such as raw materials or labor costs that increase with more output.	Costs that depend on how much you produce—like the materials you use or paying your workers more if you need more hands on deck.
Unit 3	Vertical Integration	When firms merge at different stages of production, creating a unified company that controls the entire process from raw material to finished product.	When companies merge to control every part of the production process—from raw materials to the final product.
Unit 4	Aggregate Demand	The total demand in the economy, which includes consumption expenditure, investment, government spending, and exports.	It’s like adding up everything people want to buy in the economy—consumers, businesses, the government, and exports all come together for the total demand.
Unit 4	Aggregate Supply	The total supply in the economy, which refers to the amount of goods and services produced by businesses.	This is everything the economy makes! All the stuff and services that businesses produce to meet people’s needs.
Unit 4	Balanced Budget	A situation where the government’s income from taxes is equal to its expenditure in a given period.	It’s like balancing your checkbook, but for the government: they don’t spend more than they make in a year.
Unit 4	Budget	The amount of money the government receives through taxes and the amount it spends during a one-year period.	The government’s budget—what they plan to spend and what they expect to bring in from taxes for the year.
Unit 4	Budget deficit	A situation where the government’s expenditure is greater than its income during the year, leading to borrowing or debt.	When the government’s spending goes over their income. It’s like your expenses on snacks being higher than your allowance—uh-oh, time to borrow!
Unit 4	Budget surplus	A situation where the government’s income from taxes exceeds its expenditure in a given year, leading to a surplus.	The government makes more money than it spends! It’s like putting more in your savings account than you’re spending on takeout.
Unit 4	Circular flow of income	A model that shows how money, factors of production (like labor and capital), and goods/services move around the economy between households, firms, and the government.	Picture a model where money is like a river, flowing between businesses, workers, and the government. Everything’s connected!
Unit 4	Direct taxes	Taxes that are levied on income and wealth, including income tax, corporation tax, inheritance tax, and capital gains tax.	Taxes taken straight from your paycheck or your wealth—like when they take a chunk out of your salary for income tax.
Unit 4	Fiscal policy	The use of government spending and taxation to influence the economy’s overall performance, such as controlling inflation or encouraging growth.	The government decides to play with the economy’s tools—raising taxes or spending more to get things moving or slow them down.
Unit 4	Indirect taxes	Taxes that are applied to the purchase of goods and services, such as value-added tax (VAT), excise duties, and import taxes.	Taxes you pay when you buy stuff—like VAT or a sneaky extra charge when you buy a bottle of soda.
Unit 4	Interest Rates	The cost of borrowing money or the reward for saving, which is influenced by the central bank’s base interest rate, with commercial banks typically setting their rates slightly higher.	It’s like when the government changes the price of borrowing money or adjusts how much cash is floating around to help the economy grow or cool down.
Unit 4	Monetary policy	The use of interest rates or controlling the money supply to influence the economy, typically by central banks to manage inflation or stimulate economic activity.	The total amount of cash available to spend or save in the economy—basically, how much money is in circulation.
Unit 4	Money supply	The total amount of money available in an economy at a given time, including currency, deposits, and other financial instruments.	When the government spends money, and that money gets passed around to others, creating even more economic activity. It’s like a snowball effect—bigger and bigger!
Unit 4	Multiplier effect	The economic process where an initial increase in spending leads to a larger increase in national income, as the money circulates through the economy.	When the government or businesses spend money, it doesn't just disappear; it keeps circulating and creates more income and spending throughout the economy, like a chain reaction!
Unit 4	Progressive taxes	A type of tax that takes a higher percentage of income from higher-income earners than from lower-income earners, designed to be more equitable.	A fairer way of taxing people: richer folks pay a bigger chunk of their income in taxes, while lower-income earners pay less.
Unit 4	Regressive taxes	A type of tax that takes a higher percentage of income from lower-income earners than from higher-income earners, often associated with indirect taxes like sales tax.	These taxes are the opposite—poorer people end up paying more of their income, usually from things like sales tax.
Unit 4	Taxation	A method by which the government raises money through charges on income, wealth, or spending, either through direct or indirect taxes.	The government’s way of collecting money from us—whether it’s a tax on income, wealth, or spending, they’re all ways the government fills its piggy bank!
Unit 4	Consumer Price Index (CPI)	A measure of inflation that tracks the change in prices of a fixed set of goods and services commonly purchased by households. It is similar to the Retail Price Index but is increasingly used by governments for policy decisions.	It’s like keeping track of how much the stuff you buy at the store costs over time—how much more do you pay now compared to before?
Unit 4	Cyclical unemployment	Unemployment that occurs due to fluctuations in the economy, particularly the boom and bust cycles, where people lose jobs during a downturn.	When the economy goes through a rough patch, people lose jobs because businesses aren’t doing so well—think of it like the economy throwing a tantrum!
Unit 4	Frictional unemployment	Unemployment that happens when individuals are temporarily between jobs or searching for a better position.	You know when you quit one job and start looking for another? That’s frictional unemployment, when you're just in between gigs.
Unit 4	Full employment	A situation where everyone who is willing and able to work is employed, meaning the economy is using its full labor potential.	This is when everyone who wants to work has a job—no one’s left hanging. Full house, full workforce!
Unit 4	Gross Domestic Product (GDP)	The total value of all goods and services produced in a country within a given time period, typically measured annually or quarterly.	The total value of everything a country makes, like counting all the products and services it produces in a year—if the country was a factory, how much did it make?
Unit 4	GDP per Capita	The total value of goods and services produced by a country, divided by its population. This measure is useful for comparing living standards between countries and tracking changes in population size.	How much a country produces per person—divide the total stuff made by the number of people. It helps you figure out if people are getting richer or poorer over time.
Unit 4	Gross National Product (GNP)	The total value of goods and services produced by a country, including income from abroad, but excluding income earned by foreign companies within the country.	The total value of everything a country produces, including what it makes abroad. It’s like counting the money you make, even if it’s from other countries.
Unit 4	GNP per Capita	The total value of goods and services produced by a country, divided by its population, giving a per-person measure of national income.	Like GDP per person—how much money each person in the country is responsible for producing. It shows if a country is doing better or worse.
Unit 4	Human Development Index	An index that combines various socio-economic indicators, such as life expectancy, education, and income levels, to measure and compare the development of countries on a scale from 0 to 1.	A number that helps you measure how developed a country is. The closer to 1, the more developed it is, with higher life expectancy, better education, and income.
Unit 4	Net National Product (NNP)	The total value of goods and services produced by a country, minus the depreciation of capital, showing the net output after accounting for wear and tear on capital goods.	What’s left after considering how much stuff has lost value (depreciation)—it’s like how much stuff your country really has after accounting for wear and tear.
Unit 4	Real GDP	A version of GDP that removes the effects of inflation, showing the true value of output in constant prices over time.	The value of the country’s total output after removing the effects of inflation—so we can see if we’re actually making more stuff, or just paying more for the same stuff!
Unit 4	Retail Price Index	A weighted index that tracks price changes as a percentage for a hypothetical basket of goods and services commonly purchased by households, often used to measure inflation.	A tool used to measure how prices change for things people buy often, like groceries or clothes. It helps show how much more (or less) we’re paying over time.
Unit 4	Seasonal unemployment	Unemployment that occurs when the demand for labor is influenced by the seasons, such as agricultural work or tourism jobs, where work is not available year-round.	The kind of unemployment you get when the work is only available during certain times of the year—think fruit-picking in summer or working at a ski resort in winter.
Unit 4	Structural unemployment	Unemployment that results from a mismatch between the skills of the labor force and the needs of industries, often due to technological changes or shifts in market demand.	Unemployment that happens when people don’t have the skills the job market wants anymore—like when robots take over jobs that humans used to do.
Unit 4	Unemployment	The condition where individuals in the labor force are willing and able to work but are unable to find employment.	When people want to work but can’t find a job—basically, the economy’s not giving out enough work to match all the people who need it.
Unit 5	Demography	The study of population characteristics, including factors such as birth rates, death rates, and migration patterns.	It’s basically studying how many people are in a country, how old they are, where they live, and why they move around—like people-watching with a purpose!
Unit 5	Dependency ratio	A measure that shows the proportion of the population that is dependent on others, typically calculated by dividing the dependent population (young and elderly) by the working-age population.	Think of it like the percentage of people who aren't working—young kids and the elderly who depend on those who are working to take care of them.
Unit 5	Human Development Index (HDI)	An index used to measure the quality of life in a country, based on indicators like life expectancy, education, and income. It is expressed as a number between 0 and 1, with higher values indicating higher development.	A score that tells you how good life is in a country—higher scores mean people are living longer, learning more, and making more money!
Unit 5	Less Developed Country (LDC)	A country with a lower standard of living, lower income levels, and lower human development indicators, often with a large proportion of the population living in poverty.	Countries that aren’t doing so hot in terms of wealth, healthcare, and living standards—usually have a lot of poverty and fewer opportunities.
Unit 5	More Developed Country (MDC)	A country with a high standard of living, high income levels, and advanced infrastructure, typically characterized by a well-developed economy and high human development indicators.	Wealthy countries with great healthcare, education, and opportunities—think of places where people enjoy high living standards and comfy lifestyles!
Unit 5	Old dependents	Individuals who are typically over the age of 65 and rely on the working population for economic support, usually through pensions and social services.	The older folks who don’t work anymore and rely on younger people to help pay for their needs, like pensions and healthcare.
Unit 5	Optimum population	The ideal population size that can be supported by the available resources and technology, leading to the highest standard of living without overuse of resources.	The "Goldilocks" population—just the right number of people to make the best use of resources and still have a decent standard of living.
Unit 5	Over-population	A situation where the population exceeds the available resources, leading to a decline in living standards due to insufficient food, housing, or other essential services.	When there are too many people for the resources available—like trying to fit 100 people in a 10-person car. Something’s gotta give!
Unit 5	Primary industry	Industries involved in extracting raw materials from the Earth, such as mining, fishing, or farming, to be used in further production processes.	The “digging stuff out of the ground” industries—think mining, fishing, and farming, all those raw materials we need to make products.
Unit 5	Population pyramids	A graphical representation of the age and sex structure of a population, showing the proportion of individuals in different age groups and their gender.	A chart that shows how old people are and whether they’re male or female—basically, the demographics of a country in a pretty picture.
Unit 5	Purchasing Power Parity (PPP)	A method of comparing the value of currencies between countries, based on the amount of goods and services that can be purchased with a given amount of money in each country.	It’s like comparing the price of a Big Mac in different countries—but instead of burgers, it compares what money can buy across the world!
Unit 5	Secondary industry	Industries involved in manufacturing or construction, such as factories, carpenters, and builders, that transform raw materials into finished goods or structures.	The "making stuff" industries—where raw materials get turned into things like clothes, cars, or buildings.
Unit 5	Tertiary industry	Industries that provide services rather than goods, such as education, healthcare, finance, and public services like fire departments and law enforcement.	The "helping people" industries—where you’re not making things, but providing services like teaching, banking, or putting out fires.
Unit 5	Under-population	A situation where a country has fewer people than it needs to fully utilize its resources, leading to underuse of labor or capital and possibly affecting economic growth.	When there aren’t enough people to use all the resources available—imagine having tons of space, but no one to fill it!
Unit 6	Absolute advantage	When a country can produce more of a particular product than another country using the same amount of resources or labor.	When one country can make way more of something than another, using the same amount of effort. Think of it as the “super-producer” of the group!
Unit 6	Balance of payments	The total of the current, financial, and capital accounts, which track a country's trade and financial transactions with the rest of the world.	It’s like a country’s financial report card—showing how much they’re buying and selling with other countries and all their other money stuff.
Unit 6	Balancing item	A residual figure used to balance any discrepancies in the balance of payments, representing the difference between the total debits and credits.	It’s the accounting magic that makes sure the books add up, even when you can’t fully explain some of the numbers.
Unit 6	Comparative advantage	The ability of a country to produce a good or service at a lower opportunity cost than another country, even if it is less efficient overall.	Even if a country isn’t the best at making everything, it’s still better at making certain things with fewer sacrifices than others. The “jack-of-all-trades” but better at one thing!
Unit 6	Current account	The account that tracks a country’s exports and imports of goods and services, as well as international financial transfers such as government aid payments.	The section that tracks all the stuff a country buys and sells, plus any international aid or transfers. Think of it as the “trade diary” of the country.
Unit 6	Embargo	A complete ban on importing certain products from specific countries, often for political or economic reasons.	It’s like telling another country, “Nope, you can’t send your stuff here anymore”—a total product ban, usually for reasons beyond just price.
Unit 6	Exchange rate	The rate at which one currency can be exchanged for another currency, representing the relative value of two currencies.	It’s how much your money is worth when swapping it with someone else’s currency—like trading baseball cards, but with money.
Unit 6	Exports	Goods and services that are sold to another country in exchange for money, helping to generate income for the exporting country.	When a country sends stuff to others in exchange for cash—basically, selling your goods to make some extra cash.
Unit 6	Financial & capital accounts	Government accounts that record the movement of money into and out of the country, including investments and financial assets, but excluding the sale of goods.	The money that comes in and out of a country that isn’t for trading goods—more like investments and assets moving across borders.
Unit 6	Fixed exchange rate	A system where a country's currency value is fixed or pegged to the value of another major currency, such as the US dollar.	A currency that’s locked to another country’s money, like setting your watch to someone else’s time.
Unit 6	Floating exchange rate	A system where the value of a country's currency is determined by market forces and can fluctuate based on supply and demand.	A currency that can change its value, bouncing up and down depending on how much people want it—like a stock price but for money.
Unit 6	Free trade	Trade between countries without restrictions or tariffs, allowing goods and services to flow freely across borders.	No rules, no restrictions—just trading goods and services freely across countries like one big market.
Unit 6	Imports	Goods and services brought into a country from abroad in exchange for money, contributing to a country’s import spending.	When stuff comes in from abroad—like all the cool things you buy online from other countries.
Unit 6	Infant industries	New industries that are in the early stages of development, often needing protection from international competition to grow and establish themselves.	Brand-new industries just starting out—think of them like “startups” that need a bit of help to get going.
Unit 6	Internal trade	Trade that happens within the boundaries of a single country, between individuals, businesses, and government entities.	Trading within your own country—no passports required!
Unit 6	International trade	Trade that takes place between two or more countries, involving the exchange of goods, services, and capital.	Trading across borders—like ordering food from another country, but for everything.
Unit 6	Protectionism	Economic policies and strategies aimed at restricting imports and boosting domestic production by protecting local industries from foreign competition.	When a country makes it hard for foreign products to enter, often with rules, tariffs, or other ways to keep competition out.
Unit 6	Quotas	Limits set on the quantity of specific goods that can be imported into a country, often used to control the market and protect local industries.	Limits on how many of a product can come in from another country—kind of like having a “no entry” sign on a specific item.
Unit 6	Reserve assets	Assets held in foreign currencies or foreign investments, often used by central banks to stabilize their economy or currency.	The extra stash of money or valuable assets that a country holds from foreign deals, like having a secret backup savings account.
Unit 6	Subsidies	Financial assistance provided by the government to businesses or industries to make them more competitive or to encourage their development.	When the government helps businesses by giving them money to grow or stay competitive—think of it like a financial boost!
Unit 6	Tariffs	Taxes placed on imported goods, making them more expensive to protect domestic producers and reduce foreign competition.	Extra charges on stuff that comes in from abroad, making it more expensive so people might choose local goods instead.

Getting an A* requires time and progress!

How I used to write before learning the vocabulary!

“Supply is when businesses make things for people. It is how much of a thing there is.”

Basic! Not great! I can’t even master the key term, let alone write it into sentences!

“Supply is the amount of goods and services that producers are willing and able to sell at a given price in a market. It is influenced by costs of production, taxes, and subsidies. When costs go up, supply decreases. The law of supply states that as the price increases, supply increases.”

Okay, this is getting better. I included some important words like “willing and able” and “law of supply,” but I feel like there’s more to learn, especially about how supply interacts with demand and the overall economy.

“Supply works through the mechanism of the market, where prices are determined by supply and demand. If supply increases, prices usually fall, and if supply decreases, prices rise. Governments can influence supply using subsidies, which lower costs for producers and encourage more production. Supply is affected by productivity, natural disasters, and technological changes.”

Now I see how supply fits into the bigger picture! Using the key terms list is bringing me closer to convincing the examiner that I know what I’m talking about! This is helping to move me closer to getting an A* on IGCSE Economics! How much better can I make my use of language ?

“Aggregate supply is the total output of goods and services that producers in an economy are willing and able to supply at different price levels. It differs from individual supply, which applies to one firm or industry. Aggregate supply is influenced by factors such as wages, exchange rates, and government policies like subsidies and taxation. The mechanism of the market ensures that resources are allocated efficiently based on supply and demand.”

Understanding these key terms is crucial for anyone aiming to get an A* in IGCSE Economics!. These are a nice starting place! Don’t forget, language is everything!