Economics Terms Series Part 7 – Wealth, Salary, Utility, Miscellaneous

WEALTH

The stock of financial and non-financial assets a person or a household owns that have monetary value.

SALARY

An annual rate of pay, often paid to employees in professional and other non-manual occupations.

DISPOSABLE INCOME

Personal income remaining to spend or save after direct income taxes have been deducted from it.

SAVING

Deferred consumption or the accumulation of wealth.

DISSAVING

Withdrawing or spending from savings, for example to meet living expenses when income is not sufficient.

SAVINGS RATIO

Total savings in an economy as a percentage of total disposable income.

INVESTMENT

The purchase of productive assets by firms or individuals.

DIVERSIFICATION

Producing a range of different products for different home and/or overseas markets to spread market risks or buying different types of assets to minimize risk.

MEDIUM OF EXCHANGE

Any good or commodity generally accepted and used as a money in exchange for other goods or services.

VELOCITY OF CIRCULATION

The number of time the fixed amount of notes and coins in an economy are exchanged between different people and firms on average over a given period of time.

UTILITY

The satisfaction a person gains from consuming a good or service.

NEEDS

Human requirements for life and survival.

MORTGAGE

A long-term loan for buying property.

MULTIPLIER EFFECT

An effect in economics in which a change in spending produces a subsequent change in output and income greater and more widespread than the initial change in expenditure.

DEFAULT

A term used to describe a situation when a person, firm or government fails to meet their loan repayments on time.

INSOLVENT

A term referring to people or organizations unable to pay off their debts.

DEREGULATION

The simplification or removal of complex, old or even unnecessary laws and regulations to reduce burdens on business organizations.

EMBARGO

A ban introduced by one or more countries on the importation of a specific product or all products from another country.

SPECIALIZATION

Production involving employees or organizations each concentrating their productive efforts on limited range of tasks or products.

PROTECTIONISM 

The use of trade barriers by governments to protect their domestic industries and employment from global competition.

BREAK-EVEN LEVEL OF OUTPUT

That volume of output which, if completely sold, would raise a total revenue exactly equal to the total cost of its production.

DIVISION OF LABOUR

The separation of a production process into a series of tasks, with each one completed by a different worker or group of employees.

PRODUCTION POSSIBILITY CURVE

A graph of the combined maximum possible output of two products an economy can produce efficiently with existing resources and technology. It shows how much of one product must be given up to produce more of the other.

PRODUCTS

The outputs from productive activities, and an economics term also used to collectively describe goods and services.

TRANSFER PAYMENTS 

Payments made by a government to individuals, usually through a social welfare programme, including unemployment benefits, disability allowances and old-age pensions. They are ‘transfers’ because they do not involve payment for goods or services and are paid to people who are not engaged in productive activities from tax revenues paid by people and businesses that are economically active.