Economic Terms

When there is either an excess of demand or supply.

Below is set of diagrams to illustrate when an excess demand or supply can lead to a disequilibrium, as there is no longer a market price which causes the supply and demand to equalise.

A decrease in the rate of inflation for an economy over time. Disinflation occurs when the increase in the main price index of a country (e.g. UK CPI) slows down from the previous period is measured over.

This should not be confused with the term deflation. Because even if the inflation rate has slowed down from 2.2% to 1.5%, the general prices of everyday goods will still be increasing by 1.5% despite the lower figure.

The amount of income (including state benefits) in any period that remains after the deduction of direct taxes.

The share of profits that is paid to shareholders.

Workers perform individual tasks that contribute to the production of the good or service. This means that a number of workers will work together to produce a unit of a good/service. This helps to achieve greater efficiency as workers specialise in a smaller number of tasks.

This ultimately helps to increase productivity because the longer workers can carry out jobs for, the more efficient and acustomed they become towards carrying out the task in the best possible way. This then ultimately will free up workers time to carry out other tasks.

This is all based on Adam Smith's theory of specialisation regarding workers in a pin factory.

Workers perform individual tasks that contribute to the production of the good or service. This means that a number of workers will work together to produce a unit of a good/service. This helps to achieve greater efficiency as workers specialise in a smaller number of tasks.

Passed as a response to the 2008 financial crisis, it brought the most significant changes to financial regulation in the US. Specifically it focused on ensuring that by 2019 all universal banks had ringfenced their commerical banking activities away from their investment banking activities.

For exchange to occur via barter, both parties must want the products being exchanged and the rate of exchange must be acceptable.

Goods that are not immediately consumed and can be used repeatedly, often over a long period of time e.g. pair of running shoes.

When a firm achieves productive efficiency over a sustained period of time.

Graphically this can be represented by the firms long-run average costs curves falling over time. This is achieved by the firm inventing and innovating new products and more importantly better and more efficient production processes. This type of efficiency will see both the short-run and long-run average cost curves fall over time.