O level

all definition on economics paper of O level

Basic Economic Concepts

1. Economics: The study of how individuals, businesses, governments, and societies make
choices to allocate limited resources to satisfy unlimited wants.
2. Scarcity: The limited availability of resources relative to unlimited wants.
3. Opportunity Cost: The next best alternative foregone when making a choice.
4. Factors of Production:
o Land: Natural resources used in production.
o Labour: Human effort used in production.
o Capital: Man-made resources used to produce goods and services.
o Enterprise: The risk-taking ability to organize the other factors of production.
5. Production Possibility Curve (PPC): A curve showing the maximum combinations of
goods and services an economy can produce with its available resources.

Microeconomics
6. Demand: The quantity of a good or service consumers are willing and able to buy at a
given price in a given time period.
7. Supply: The quantity of a good or service producers are willing and able to sell at a given
price in a given time period.
8. Equilibrium Price: The price at which quantity demanded equals quantity supplied.
9. Elasticity:
o Price Elasticity of Demand (PED): The responsiveness of quantity demanded to a
change in price.
o Income Elasticity of Demand (YED): The responsiveness of quantity demanded to a
change in income.
o Cross Elasticity of Demand (XED): The responsiveness of quantity demanded of one
good to a change in the price of another good.
10. Market Structures:
o Perfect Competition: A market with many buyers and sellers, homogeneous
products, and no barriers to entry.
o Monopoly: A market with a single seller and high barriers to entry.
o Oligopoly: A market dominated by a few large firms.
o Monopolistic Competition: A market with many firms selling differentiated products.

Macroeconomics
11. Gross Domestic Product (GDP): The total value of goods and services produced in a
country in a year.
12. Inflation: A sustained increase in the general price level of goods and services.
13. Unemployment: The number of people willing and able to work but unable to find jobs.
14. Balance of Payments: A record of all financial transactions between a country and the
rest of the world.
15. Exchange Rate: The price of one currency in terms of another.

Government and Economics

 16. Fiscal Policy: Government use of taxation and spending to influence the economy.
17. Monetary Policy: Central bank use of interest rates and money supply to control inflation
and stabilize the economy.
18. Taxation:
o Direct Tax: Tax on income or profits (e.g., income tax).
o Indirect Tax: Tax on goods and services (e.g., VAT).
19. Subsidy: Government payment to reduce the cost of production and encourage
consumption of a good or service.

International Trade
20. Specialization: Focusing on producing a limited range of goods or services to increase
efficiency.
21. Comparative Advantage: The ability of a country to produce a good at a lower
opportunity cost than another country.
22. Free Trade: Trade without barriers such as tariffs or quotas.
23. Protectionism: Government policies to restrict trade to protect domestic industries (e.g.,
tariffs, quotas, subsidies).

Development Economics
24. Economic Growth: An increase in a country's real GDP over time.
25. Economic Development: Improvement in living standards, reduction in poverty, and
increased well-being of a population.
26. Sustainable Development: Meeting the needs of the present without compromising the
ability of future generations to meet their own needs.
27. Poverty: A condition where individuals lack the resources to meet basic needs such as
food, shelter, and clothing.

Labour Market
28. Wage Rate: The price of labour per unit of time.
29. Trade Union: An organization of workers formed to protect their rights and interests.
30. Minimum Wage: The lowest legal wage rate that can be paid to workers.

Financial Sector
31. Money: A medium of exchange, store of value, and unit of account.
32. Central Bank: The institution responsible for managing a country's money supply and
monetary policy.
33. Commercial Bank: A financial institution that accepts deposits and provides loans.

Market Failure and Government Intervention

34. Market Failure: When the market fails to allocate resources efficiently, leading to a loss of
social welfare.
35. Externalities: Costs or benefits of production or consumption experienced by third parties
(e.g., pollution).
 36. Public Goods: Goods that are non-excludable and non-rivalrous (e.g., street lighting).

These denotations are essential for understanding and analyzing economic concepts in O Level
Economics. Make sure to apply these definitions in context when answering exam questions!

plz more

Certainly! Below are additional denotations and explanations for key terms and concepts in O
Level Economics, expanding on the previous list. These will help you gain a deeper understanding
of the subject:

Microeconomics (Expanded)
1. Utility: The satisfaction or benefit derived from consuming a good or service.
2. Marginal Utility: The additional satisfaction gained from consuming one more unit of a
good or service.
3. Law of Demand: As the price of a good falls, the quantity demanded rises, ceteris paribus
(all other things being equal).
4. Law of Supply: As the price of a good rises, the quantity supplied rises, ceteris paribus.
5. Complementary Goods: Goods that are used together (e.g., printers and ink cartridges).
6. Substitute Goods: Goods that can replace each other (e.g., tea and coffee).
7. Price Mechanism: The system where prices adjust to allocate resources based on supply
and demand.
8. Consumer Surplus: The difference between what consumers are willing to pay and what
they actually pay.
9. Producer Surplus: The difference between the price producers receive and the minimum
price they are willing to accept.

Macroeconomics (Expanded)
10. Aggregate Demand (AD): The total demand for goods and services in an economy at a
given price level.
11. Aggregate Supply (AS): The total supply of goods and services in an economy at a given
price level.
12. Economic Cycle: The fluctuation of economic activity between periods of growth (boom)
and contraction (recession).
13. Deflation: A sustained decrease in the general price level of goods and services.
14. Stagflation: A situation where inflation and unemployment rise simultaneously.
15. National Debt: The total amount of money a government owes to its creditors.
16. Budget Deficit: When government spending exceeds revenue in a given year.
17. Budget Surplus: When government revenue exceeds spending in a given year.

International Trade (Expanded)

18. Tariff: A tax on imported goods to make them more expensive and protect domestic
industries.
19. Quota: A physical limit on the quantity of a good that can be imported.
20. Trade Bloc: A group of countries that agree to reduce trade barriers among themselves
(e.g., EU, ASEAN).
21. Globalization: The increasing interconnectedness of economies through trade,
investment, and technology.
 22. Foreign Direct Investment (FDI): Investment by a company in a foreign country, such as
building a factory.

Development Economics (Expanded)

23. Human Development Index (HDI): A measure of development based on life expectancy,
education, and income per capita.
24. Absolute Poverty: When individuals cannot afford basic necessities like food, shelter, and
clothing.
25. Relative Poverty: When individuals have a lower income compared to the average in their
society.
26. Infrastructure: The basic physical and organizational structures needed for an economy to
function (e.g., roads, schools, hospitals).
27. Primary Sector: Economic activities involving the extraction of natural resources (e.g.,
farming, mining).
28. Secondary Sector: Economic activities involving the processing of raw materials into
finished goods (e.g., manufacturing).
29. Tertiary Sector: Economic activities involving the provision of services (e.g., retail,
tourism).

Labour Market (Expanded)

30. Labour Force: The total number of people employed and unemployed in an economy.
31. Underemployment: When workers are employed in jobs that do not fully utilize their skills
or provide enough hours.
32. Productivity: Output per unit of input (e.g., output per worker).
33. Collective Bargaining: Negotiations between employers and trade unions to agree on
wages and working conditions.

Financial Sector (Expanded)

34. Interest Rate: The cost of borrowing money or the return on savings.
35. Inflation Targeting: A monetary policy strategy where the central bank aims to keep
inflation within a specific range.
36. Liquidity: The ease with which an asset can be converted into cash without losing value.
37. Stock Market: A market where shares of companies are bought and sold.
38. Bond: A fixed-income instrument representing a loan made by an investor to a borrower
(usually a government or corporation).

Market Failure and Government Intervention (Expanded)

39. Merit Goods: Goods that are under-consumed in a free market because individuals do not
fully appreciate their benefits (e.g., education, healthcare).
40. Demerit Goods: Goods that are over-consumed in a free market because individuals do
not fully appreciate their harms (e.g., cigarettes, alcohol).
41. Asymmetric Information: When one party in a transaction has more information than the
other, leading to market failure (e.g., used car sales).
42. Regulation: Government rules to control or influence economic activity (e.g.,
environmental standards).
43. Price Control: Government-imposed limits on how high or low a price can be (e.g.,
minimum price for alcohol, maximum rent for housing).
Economic Policies (Expanded)
44. Supply-Side Policies: Policies aimed at increasing the productive capacity of the economy
(e.g., tax cuts, investment in education).
45. Demand-Side Policies: Policies aimed at influencing aggregate demand (e.g., fiscal and
monetary policies).
46. Progressive Tax: A tax where the tax rate increases as income increases.
47. Regressive Tax: A tax where the tax rate decreases as income increases (e.g., sales tax).

Miscellaneous Concepts
48. Circular Flow of Income: A model showing the flow of goods, services, and money
between households and firms in an economy.
49. Leakages: Withdrawals from the circular flow of income (e.g., savings, taxes, imports).
50. Injections: Additions to the circular flow of income (e.g., investment, government
spending, exports).
51. Multiplier Effect: The process by which an initial change in spending leads to a larger
change in national income.
52. Crowding Out: When increased government spending reduces private sector investment.

Environmental Economics
53. Sustainable Development Goals (SDGs): A set of 17 global goals set by the United
Nations to achieve sustainable development by 2030.
54. Renewable Resources: Resources that can be replenished naturally (e.g., solar energy,
wind energy).
55. Non-Renewable Resources: Resources that cannot be replenished once depleted (e.g.,
coal, oil).
56. Carbon Tax: A tax on carbon emissions to reduce pollution and encourage cleaner energy
sources.

“A” level
All definition on economics paper “A” level
1. Scarcity

 Definition: The basic economic problem that arises because resources are limited, while human wants are
unlimited.
 Implication: Scarcity forces individuals and societies to make choices about how to allocate resources
efficiently.

2. Opportunity Cost

 Definition: The value of the next best alternative forgone when making a decision.
 Implication: Every choice involves an opportunity cost, as resources are limited.

3. Supply and Demand

 Definition: The fundamental model in economics that explains how the price and quantity of goods and
services are determined in a market.
o Supply: The quantity of a good or service that producers are willing and able to sell at different
prices.
o Demand: The quantity of a good or service that consumers are willing and able to buy at different
prices.
 Implication: The interaction between supply and demand determines the equilibrium price and quantity in a
market.

4. Elasticity

 Definition: A measure of how much the quantity demanded or supplied of a good responds to changes in
price or income.
o Price Elasticity of Demand (PED): The responsiveness of quantity demanded to a change in price.
o Price Elasticity of Supply (PES): The responsiveness of quantity supplied to a change in price.
o Income Elasticity of Demand (YED): The responsiveness of demand for a good to changes in
consumer income.
 Implication: Understanding elasticity helps predict how changes in prices or income will affect supply,
demand, and revenue.

5. Market Equilibrium

 Definition: The point where the quantity demanded equals the quantity supplied, resulting in a stable
market price.
 Implication: At equilibrium, there is no tendency for the price to change unless an external factor shifts
demand or supply.

6. Microeconomics vs. Macroeconomics

 Microeconomics: The study of individual economic agents, such as households, firms, and markets, and their
decision-making processes.
 Macroeconomics: The study of the economy as a whole, focusing on broader issues like inflation,
unemployment, national income, and economic growth.

7. Gross Domestic Product (GDP)

 Definition: The total value of all goods and services produced within a country’s borders over a specified
period, usually a year or a quarter.
 Implication: GDP is a key indicator of a country's economic health and performance.

8. Inflation
  Definition: The rate at which the general level of prices for goods and services rises, eroding purchasing
power.
 Implication: Inflation can affect the cost of living, interest rates, and overall economic stability.

9. Unemployment

 Definition: The condition where people who are capable of working, are actively seeking work, but are
unable to find employment.
 Implication: Unemployment has significant social and economic consequences, including lower national
income and reduced consumer spending.

10. Fiscal Policy

 Definition: The use of government spending and taxation to influence the economy.
 Implication: Fiscal policy can be used to stimulate economic growth, reduce inflation, or address
unemployment.

11. Monetary Policy

 Definition: The process by which a country's central bank controls the money supply and interest rates to
achieve specific economic goals.
 Implication: It aims to manage inflation, control unemployment, and stabilize the currency.

12. Trade Balance

 Definition: The difference between the value of a country's exports and imports.
o Trade Surplus: Occurs when exports exceed imports.
o Trade Deficit: Occurs when imports exceed exports.
 Implication: A trade imbalance can affect a country's currency value and overall economic stability.

13. Monopoly

 Definition: A market structure where a single firm dominates the market and is the sole producer of a good
or service.
 Implication: Monopolies can lead to inefficiencies, higher prices, and a lack of consumer choice.

14. Market Failure

 Definition: A situation where the allocation of goods and services by a free market is not efficient, leading to
a loss of economic welfare.
 Implication: Causes of market failure include externalities, public goods, and information asymmetry.

15. Externalities

 Definition: The unintended side effects or consequences of economic activities that affect third parties,
either positively or negatively.
o Positive Externality: Benefits to others, e.g., education or public health.
o Negative Externality: Costs to others, e.g., pollution or congestion.
 Implication: Externalities can result in market failure and may require government intervention.

16. Public Goods

 Definition: Goods that are non-excludable and non-rivalrous, meaning no one can be excluded from using
them, and one person’s use does not reduce availability for others (e.g., clean air, national defense).
  Implication: Public goods are often underprovided in a free market, which may require government
provision or funding.

17. Perfect Competition

 Definition: A market structure characterized by many firms, homogeneous products, perfect information,
and ease of entry and exit.
 Implication: In perfect competition, firms are price takers, and the market is efficient, with no firm able to
influence prices.

18. Monetary and Fiscal Policy Tools

 Monetary Policy Tools: Includes changes in interest rates, open market operations, and reserve
requirements.
 Fiscal Policy Tools: Involves government spending, taxation, and borrowing.

These are just a few of the key concepts that could appear on an A-Level economics paper. Understanding
these terms, as well as how they interact within the larger economic framework, is essential for students
preparing for their exams.

19. Aggregate Demand (AD)

 Definition: The total demand for goods and services in an economy at a given overall price level and during a
given period.
 Implication: Aggregate demand consists of consumption, investment, government spending, and net exports
(exports minus imports). A shift in any of these components will shift the AD curve.

20. Aggregate Supply (AS)

 Definition: The total supply of goods and services that producers in an economy are willing and able to
supply at different price levels in a given period.
 Implication: Short-run and long-run aggregate supply curves show the relationship between total output and
price levels in the economy.

21. Short-Run vs. Long-Run in Economics

 Short-Run: The period during which at least one factor of production (such as capital) is fixed, and firms
cannot fully adjust all inputs.
 Long-Run: A period where all factors of production can be adjusted, and firms can enter or exit the market.

22. Business Cycle

 Definition: The natural rise and fall of economic growth that occurs over time, typically divided into
expansion, peak, recession, and trough phases.
 Implication: Understanding the business cycle helps to predict changes in economic activity and inform
decisions on fiscal and monetary policies.

23. Investment

 Definition: The expenditure on capital goods that will be used for future production, such as machinery,
buildings, and infrastructure.
 Implication: Investment is crucial for economic growth because it increases productive capacity and helps
improve productivity.

24. Government Borrowing

  Definition: The process through which the government borrows funds, typically by issuing bonds, to finance
its expenditure beyond its revenue.
 Implication: Excessive government borrowing can lead to higher national debt and may impact future
economic stability.

25. National Debt

 Definition: The total amount of money that a government owes to external creditors and domestic lenders.
 Implication: High national debt levels may constrain government spending and affect the economy's long-
term health.

26. Monetary Policy Transmission Mechanism

 Definition: The process through which changes in the central bank’s policy rate affect the economy,
including output, inflation, and employment.
 Implication: It includes interest rate changes, the credit channel, and exchange rates, and plays a key role in
influencing economic activity.

27. Interest Rates

 Definition: The cost of borrowing or the reward for saving, typically expressed as a percentage of the
amount borrowed or saved.
 Implication: Interest rates affect consumer spending, business investment, and overall economic activity.
Central banks adjust interest rates to control inflation and stimulate or slow down economic growth.

28. Real vs. Nominal Variables

 Real Variables: Adjusted for inflation, representing the actual value (e.g., real GDP).
 Nominal Variables: Not adjusted for inflation, representing the raw value (e.g., nominal GDP).

29. Balance of Payments

 Definition: A record of all economic transactions between residents of a country and the rest of the world
during a specific time period.
 Implication: The balance of payments includes the current account (trade balance), the capital account, and
the financial account. A deficit in the current account suggests a country is importing more than it exports.

30. Currency Depreciation and Appreciation

 Currency Depreciation: A decrease in the value of a currency relative to another currency.

 Currency Appreciation: An increase in the value of a currency relative to another currency.
 Implication: Depreciation makes exports cheaper and imports more expensive, while appreciation makes
exports more expensive and imports cheaper.

31. Cost-Push Inflation

 Definition: Inflation caused by an increase in the cost of production, such as rising wages or raw material
prices, which leads to higher prices for goods and services.
 Implication: Cost-push inflation can slow down economic growth and increase unemployment.

32. Demand-Pull Inflation

 Definition: Inflation caused by an increase in aggregate demand for goods and services, pushing up prices.
 Implication: Demand-pull inflation is often associated with periods of strong economic growth and can be
managed by controlling aggregate demand.
33. Stagflation

 Definition: A situation in which an economy experiences high inflation and high unemployment
simultaneously, typically with stagnating growth.
 Implication: Stagflation presents a challenge for policymakers because the usual tools to reduce inflation
(raising interest rates) can worsen unemployment.

34. Capitalism

 Definition: An economic system characterized by private ownership of the means of production and the
operation of market forces.
 Implication: In a capitalist economy, firms seek to maximize profits, and resources are allocated based on
market mechanisms rather than central planning.

35. Socialism

 Definition: An economic system in which the means of production are owned and controlled by the state or
the public, and the wealth produced is distributed more equally.
 Implication: Socialism aims to reduce inequality by redistributing wealth and ensuring access to basic goods
and services for all.

36. Market Structure

 Definition: The organizational characteristics of a market, which influence the behavior of firms and the level
of competition.
o Perfect Competition: Many firms, identical products, no barriers to entry.
o Monopolistic Competition: Many firms, differentiated products, some barriers to entry.
o Oligopoly: Few firms, interdependent decisions, significant barriers to entry.
o Monopoly: One firm, unique product, high barriers to entry.

37. Price Mechanism

 Definition: The system through which the forces of supply and demand determine the prices and quantities
of goods and services in an economy.
 Implication: The price mechanism helps allocate resources efficiently by signaling where there is a surplus or
shortage of goods.

38. Price Discrimination

 Definition: The practice of charging different prices to different consumers for the same good or service.
 Implication: Price discrimination can occur in monopolistic and oligopolistic markets and is often used to
maximize profits.

39. Cost of Production

 Definition: The total expense incurred by a firm in the production of goods or services, including fixed and
variable costs.
 Implication: Understanding the cost of production is crucial for pricing decisions, profit margins, and the
firm's overall financial health.

40. External Economies of Scale

 Definition: Cost advantages that firms experience as a result of external factors, such as improvements in
infrastructure, skilled labor, or technology, which benefit all firms in the industry.
  Implication: External economies of scale can reduce costs for businesses and improve industry-wide
productivity.

41. Internal Economies of Scale

 Definition: The cost advantages that a firm experiences as it increases its production, leading to a reduction
in average costs.
 Implication: Firms can achieve economies of scale through factors like bulk buying, specialization, and
spreading fixed costs over larger outputs.

42. Consumer Surplus

 Definition: The difference between the price a consumer is willing to pay for a good or service and the price
they actually pay.
 Implication: Consumer surplus represents the benefit consumers receive from participating in the market.

43. Producer Surplus

 Definition: The difference between the price at which a producer is willing to sell a good or service and the
price they actually receive.
 Implication: Producer surplus reflects the benefit producers receive from selling at a price higher than their
minimum acceptable price.

These are some of the key economic terms that will help you better understand the concepts tested in an A-
Level economics exam. By grasping these denotations, you’ll have a solid foundation for answering a
variety of questions related to economic theory and application!

Of course! Here are even more key terms and denotations you might encounter in an A-Level economics
paper:

44. Utility

 Definition: The satisfaction or pleasure derived from consuming a good or service.

 Implication: Consumers make choices based on the utility they expect to gain, and the goal is typically to
maximize their total utility.

45. Marginal Utility

 Definition: The additional satisfaction or benefit gained from consuming one more unit of a good or service.
 Implication: The law of diminishing marginal utility suggests that as more of a good is consumed, the
marginal utility decreases.

46. Law of Demand

 Definition: The principle that, all else being equal, as the price of a good or service decreases, the quantity
demanded increases, and vice versa.
 Implication: The demand curve typically slopes downward, reflecting this negative relationship between
price and quantity demanded.

47. Law of Supply

 Definition: The principle that, all else being equal, as the price of a good or service increases, the quantity
supplied increases, and vice versa.
 Implication: The supply curve typically slopes upward, reflecting the positive relationship between price and
quantity supplied.
48. Market Disequilibrium

 Definition: A situation where the quantity demanded does not equal the quantity supplied, resulting in
either a shortage or surplus.
 Implication: Disequilibrium often leads to price adjustments to restore equilibrium.

49. Price Floor

 Definition: A minimum price set by the government or authorities, below which a good or service cannot be
sold (e.g., minimum wage).
 Implication: If the price floor is set above the equilibrium price, it can create a surplus.

50. Price Ceiling

 Definition: A maximum price set by the government, above which a good or service cannot be sold (e.g.,
rent control).
 Implication: If the price ceiling is set below the equilibrium price, it can lead to a shortage.

51. Perfectly Competitive Market

 Definition: A market structure where there are many buyers and sellers, all firms sell identical products, and
there are no barriers to entry or exit.
 Implication: Firms are price takers, meaning they cannot influence the market price, and there is perfect
information.

52. Monopolistic Competition

 Definition: A market structure with many firms that sell differentiated products, and there are low barriers
to entry.
 Implication: Firms have some control over their prices due to product differentiation, but the market still
remains relatively competitive.

53. Oligopoly

 Definition: A market structure in which a few large firms dominate the market, and each firm’s actions
influence the others.
 Implication: Oligopolists may engage in price wars, collusion, or non-price competition.

54. Natural Monopoly

 Definition: A market where a single firm can supply the entire market at a lower cost than multiple
competing firms could.
 Implication: Natural monopolies often arise in industries with high fixed costs, like utilities, and are usually
regulated by the government.

55. Labour Market

 Definition: The market where workers sell their labour to employers in exchange for wages or salaries.
 Implication: Factors like wages, unemployment, and immigration can affect the functioning of the labour
market.

56. Wage Rate

 Definition: The amount of money a worker is paid per unit of time, typically per hour or per week.
  Implication: The wage rate is influenced by the demand for labour, supply of labour, and productivity of
workers.

57. Human Capital

 Definition: The skills, knowledge, and experience possessed by an individual or workforce.

 Implication: Investment in human capital, such as education and training, increases productivity and
economic output.

58. Capital Goods

 Definition: Physical assets like machinery, tools, and factories used in the production of goods and services.
 Implication: The accumulation of capital goods is a key factor in economic growth as it increases productive
capacity.

59. Productivity

 Definition: The measure of the efficiency with which goods and services are produced, often expressed as
output per unit of input.
 Implication: Higher productivity leads to increased economic output and growth.

60. External Economies of Scale

 Definition: Cost reductions that occur as a result of external factors such as improvements in infrastructure,
technology, or industry-wide knowledge.
 Implication: These economies benefit all firms in the industry and contribute to overall economic efficiency.

61. Dis economies of Scale

 Definition: The rising per-unit costs that firms experience as they grow too large and become less efficient.
 Implication: Dis economies of scale can occur when a company experiences inefficiencies due to
management issues, bureaucracy, or logistics problems.

62. Income Distribution

 Definition: The way in which the total income of a country is shared among its population.
 Implication: Unequal income distribution can lead to economic inequality and may require policy
intervention to promote fairness.

63. Lorenz Curve

 Definition: A graphical representation of income or wealth distribution within a country.

 Implication: The closer the Lorenz curve is to the diagonal line (representing perfect equality), the more
evenly income is distributed.

64. Gini Coefficient

 Definition: A measure of income inequality, ranging from 0 (perfect equality) to 1 (perfect inequality).
 Implication: The Gini coefficient provides a quantitative measure of income or wealth distribution, helping
policymakers assess inequality.

65. Progressive Tax

 Definition: A tax system in which the tax rate increases as the taxpayer's income increases.
  Implication: Progressive taxes are designed to reduce income inequality by taking a larger proportion of
income from wealthier individuals.

66. Regressive Tax

 Definition: A tax system in which the tax rate decreases as the taxpayer's income increases.
 Implication: Regressive taxes can increase income inequality because they take a larger percentage of
income from low-income earners.

67. Proportional Tax

 Definition: A tax system in which the tax rate is constant, regardless of the income level.
 Implication: Proportional taxes treat all taxpayers equally in terms of tax rate, but their effect may still differ
depending on income levels.

68. Subsidy

 Definition: A payment made by the government to producers or consumers to encourage the production or
consumption of a particular good.
 Implication: Subsidies can lower the cost of goods, increase supply, or make products more affordable for
consumers, but they can distort market outcomes.

69. Price Controls

 Definition: Government-imposed limits on the prices charged for goods and services.
o Price Ceiling: A maximum price (often used in rent control).
o Price Floor: A minimum price (often used in minimum wage laws).
 Implication: Price controls can lead to market inefficiencies, such as shortages or surpluses, if set above or
below the equilibrium price.

70. Public Choice Theory

 Definition: The study of how government decisions are made, often focusing on the behavior of politicians,
voters, and bureaucrats.
 Implication: Public choice theory applies economic analysis to political behavior, recognizing that politicians
and officials may act in their own self-interest.

71. Globalization

 Definition: The process by which economies, societies, and cultures become interconnected through trade,
communication, and technology.
 Implication: Globalization can increase efficiency and economic growth but may also lead to inequalities,
cultural homogenization, and environmental degradation.

72. Exchange Rate

 Definition: The price of one currency in terms of another.

 Implication: Exchange rates influence trade balances, inflation, and the competitiveness of a country's goods
and services in international markets.

73. Keynesian Economics

 Definition: An economic theory that emphasizes the role of government intervention in stabilizing the
economy, especially during recessions.
  Implication: Keynesians advocate for increased government spending and lower taxes during economic
downturns to stimulate demand and reduce unemployment.

74. Supply-Side Economics

 Definition: An economic theory that argues that economic growth can be most effectively created by
lowering taxes and reducing government regulation to encourage production.
 Implication: Supply-side policies are often aimed at improving productivity and incentivizing businesses to
invest and expand.

75. Trade Liberalization

 Definition: The removal or reduction of trade barriers, such as tariffs and quotas, to encourage international
trade.
 Implication: Trade liberalization can increase competition, lower prices, and lead to greater efficiency but
may also harm domestic industries unable to compete.