Economic Terms

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

This is the difference between government spending plans and the amount of taxation revenue it raises. As it includes any proceeds from the sale of government assets it represents the amount of money a government needs to borrow to make sure all expenditure is funded.

This is the difference between government spending plans and the amount of taxation revenue it raises excluding any proceeds from the sale of government assets

A concept that helps to compare the difference in the cost of the same good or service in different countries by using exchange rates to convert the price of the good into a single currency. Parity exists if there is no differential.

A market that is un-competitive as it consists of just a single firm. Very few remaining examples in the UK due to the break up and privatisation of the post war state monopolies.

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