Economic Terms

How much of their income consumers are prepared to save.

A legal document confirming ownership and the terms of ownership of a property.

When consumers buy a good or service they usually acquire property rights which means that they have exclusive rights to use or benefit from consumption of the good. However, there are situations where external benefits may dilute these property rights.

When a change in one variable is accompanied by a change in another variable and this proportionate change remains the same regardless of the values. 

A simpler alternative to direct and progressive taxes which apply the same single rate of tax on all the income and wealth of all taxpayers.

Is a type of regulation that focuses on ensuring that economic agents such as depositors and taxpayers are protected from unnecessary risk taking in the financial sector. This type of regulation often takes the form of lender of the last resort facilities and deposit protection (which can in turn lead to more moral hazard problems though).

 

Resposnsible for the supervision of individual financial institutions, to ensure the individual risks are managed appropriately. Ensuring failure does not lead to contagion effects elsewhere in the financial sector. Therefore they mainly specialise in macro prudential regulation.

Below is an illustration of the UK regulatory structure of the financial sector.

 

Is the debt that is owned by the government of a country. A high level of public sector debt can be argued to be positive and negtaive for the economy depending on the person's inclined way of thinking. It can increase economic growh by fostering more investment in infrastructure or it can decreae economic growth via crowding-out effects.

Below is a graphic to show that if the government runs up a significant budget deficit then it accumlates the level of public national debt for a country. This is why government's are under pressure to not consistently run a budget deficit, so that the burden of debt can be be shaved off. As the more indebted a country becomes the lower their creditworthiness is i.e. credit rating deterioriates.

 

 

The expenditure undertaken by the government to provide things like welfare benefits, public services and infrastructure.

Below is a breakdown of the main sectors that public expenditure has been allocated to by the government in 2014/15. With current spending attracting the biggest percentage of this expenditure as this represents the ongoing costs of maintaining government services.

A good that is non-excludable (it is not possible to exclude non-consumers from the benefit of a good or service i.e free rider problem) and non-rival (the consumption of a good by one consumer does not diminish the supply available to other consumers) e.g. armed forces, police, street lighting, flood defences