DEFINITION OF TERMS A+ LEVEL ECONOMICS EXAM
2025-2026
WITH CLEAR DEFINITIONS OF ALL TERMS, YOU NEED
TO KNOW IN ECONOMICS
Absolute advantage
When a country's output of a product per unit of input is greater than that of any other
country.
Absolute poverty
When a person does not have the income or wealth to fulfil their basic needs.
Aggregate Demand (AD)
The total demand/spending in an economy at a given price level over a given period of time.
Made up of consumption, investment, government spending and net external demand.
Aggregate Supply (AS)
The total amount of goods and services that can be supplied in an economy at a given price
level over a given period of time.
Aid
The transfer of resources from one country to another.
Allocative efficiency
Where the price of a good is equal to the price consumers are willing to pay. This occurs
when all resources are allocated efficiently.
Asymmetric information
Where buyers have more information than sellers in a market, or vice versa.
, Automatic stabilisers
Parts of fiscal policy that automatically react to changes in the economic cycle.
Average Cost (AC)
The cost of production per unit of output.
Average Revenue (AR)
The revenue per unit sold.
Backward vertical integration
Where a firm merges with or takes over a firm further back in the production process.
Balance of payments
A record of the international transactions of an economy.
Bank rate
The official rate of interest set by the central bank (e.g. by the Monetary Policy Committee of
the Bank of England)
Barriers to entry
Potential difficulties that make it hard for firms to enter a market.
Barriers to exit
Potential difficulties that make it hard for firms to leave a market.
Black market
Economic activity that occurs without taxation and government intervention.
Budget deficit
When government spending exceeds tax revenues.
2025-2026
WITH CLEAR DEFINITIONS OF ALL TERMS, YOU NEED
TO KNOW IN ECONOMICS
Absolute advantage
When a country's output of a product per unit of input is greater than that of any other
country.
Absolute poverty
When a person does not have the income or wealth to fulfil their basic needs.
Aggregate Demand (AD)
The total demand/spending in an economy at a given price level over a given period of time.
Made up of consumption, investment, government spending and net external demand.
Aggregate Supply (AS)
The total amount of goods and services that can be supplied in an economy at a given price
level over a given period of time.
Aid
The transfer of resources from one country to another.
Allocative efficiency
Where the price of a good is equal to the price consumers are willing to pay. This occurs
when all resources are allocated efficiently.
Asymmetric information
Where buyers have more information than sellers in a market, or vice versa.
, Automatic stabilisers
Parts of fiscal policy that automatically react to changes in the economic cycle.
Average Cost (AC)
The cost of production per unit of output.
Average Revenue (AR)
The revenue per unit sold.
Backward vertical integration
Where a firm merges with or takes over a firm further back in the production process.
Balance of payments
A record of the international transactions of an economy.
Bank rate
The official rate of interest set by the central bank (e.g. by the Monetary Policy Committee of
the Bank of England)
Barriers to entry
Potential difficulties that make it hard for firms to enter a market.
Barriers to exit
Potential difficulties that make it hard for firms to leave a market.
Black market
Economic activity that occurs without taxation and government intervention.
Budget deficit
When government spending exceeds tax revenues.
