IGCSE 1.2 Fundamentals of Economics

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Microeconomics

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the study of the behaviour and decisions of household and firms, and the performance of individual markets.

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Macroeconomics

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the study of the whole economy

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Market

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an arrangement which brings buyers into contact with sellers

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Economic agents

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those people who undertake economic activities and make economic decisions

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Economic systems

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the institutions, organisations and mechanisms that influence economic behaviour and determine how resources are allocated

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Planned economic system

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an economic system where the government makes the crucial decisions, land and capital are state-owned and resources are allocated by directives

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Mixed economic system

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an economy in which both the private and public sectors play an important role

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Market economic system

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an economic system where consumers determine what is produced, resources are allocated by the price mechanism and land and capital are privately owned

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Price mechanism

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the way the decisions made by households and firms interact to decide the allocation of resources

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Capital-intensive

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the use of a high proportion of capital relative to labour