GCSE-readyGeo 2026: Economic activity key words
Start here. These are the key words from your revision notes. Learn them exactly: definition questions are easy marks.
The economy
Economic activity: any action that involves the production, distribution and consumption of goods and services.
Economic development: the improvement of living standards and the economic health of a country through industrial growth, infrastructure and income.
GDP (gross domestic product): the total value of goods and services produced within a country in a year.
Employment structure: the proportion of people employed in each economic sector in a country or region.
Economic development: the improvement of living standards and the economic health of a country through industrial growth, infrastructure and income.
GDP (gross domestic product): the total value of goods and services produced within a country in a year.
Employment structure: the proportion of people employed in each economic sector in a country or region.
Formal and informal
Formal economy: economic activity that is officially recorded, regulated and taxed by the government.
Informal economy: economic activity that is not officially recorded or regulated, such as street vending and unregistered work.
Industrialisation: a country developing its secondary sector, shifting from farming to manufacturing.
Deindustrialisation: the decline of manufacturing industry, often because of automation, globalisation or a shift to services.
Informal economy: economic activity that is not officially recorded or regulated, such as street vending and unregistered work.
Industrialisation: a country developing its secondary sector, shifting from farming to manufacturing.
Deindustrialisation: the decline of manufacturing industry, often because of automation, globalisation or a shift to services.
A connected world
Globalisation: the increasing interconnection of economies and societies through trade, investment, technology and culture.
Transnational corporation (TNC): a large company that operates in many countries, such as Apple, McDonald's or Nike.
Outsourcing: a company moving production or services to another country to cut costs.
Multiplier effect: an initial investment or rise in spending leads to more economic activity and jobs.
Sustainability: meeting the needs of the present without harming the ability of future generations to meet theirs.
Transnational corporation (TNC): a large company that operates in many countries, such as Apple, McDonald's or Nike.
Outsourcing: a company moving production or services to another country to cut costs.
Multiplier effect: an initial investment or rise in spending leads to more economic activity and jobs.
Sustainability: meeting the needs of the present without harming the ability of future generations to meet theirs.
Explained step by step
The hardest key word to use well is the multiplier effect, because it describes a chain of events, not a single thing.
What it means: one new investment creates more economic activity than the original spending on its own.
Why it happens: money keeps moving. A new factory pays wages, workers spend those wages in local shops, and the shops then need more staff. Suppliers open nearby to sell parts to the factory, creating even more jobs. The government collects more tax, which it can spend on roads and schools, making the area more attractive to other firms.
Concrete example: when Nissan opened its car factory in Sunderland, parts suppliers located close by, so jobs were created well beyond the factory gates.
It can also work in reverse: a negative multiplier happens when a big employer closes, so spending falls and other jobs are lost too.
What it means: one new investment creates more economic activity than the original spending on its own.
Why it happens: money keeps moving. A new factory pays wages, workers spend those wages in local shops, and the shops then need more staff. Suppliers open nearby to sell parts to the factory, creating even more jobs. The government collects more tax, which it can spend on roads and schools, making the area more attractive to other firms.
Concrete example: when Nissan opened its car factory in Sunderland, parts suppliers located close by, so jobs were created well beyond the factory gates.
It can also work in reverse: a negative multiplier happens when a big employer closes, so spending falls and other jobs are lost too.
Common mistakes and exam tips
Mixing up GDP and income per person: GDP is the total value of goods and services produced in a country in a year, not what one person earns.
Saying the informal economy is illegal: the key idea is that it is not officially recorded, regulated or taxed; street vending is informal, not a crime.
Confusing outsourcing with globalisation: outsourcing is one company moving work abroad to cut costs; globalisation is the wider process of the world becoming more connected.
Vague definitions: learn the wording from your notes exactly, because a precise definition is a quick 1 or 2 marks.
Forgetting the future in sustainability: always mention not harming the ability of future generations to meet their needs.
Saying the informal economy is illegal: the key idea is that it is not officially recorded, regulated or taxed; street vending is informal, not a crime.
Confusing outsourcing with globalisation: outsourcing is one company moving work abroad to cut costs; globalisation is the wider process of the world becoming more connected.
Vague definitions: learn the wording from your notes exactly, because a precise definition is a quick 1 or 2 marks.
Forgetting the future in sustainability: always mention not harming the ability of future generations to meet their needs.
The fine print in your notes' definitions
Two definitions in your revision notes contain extra detail that is easy to miss.
Informal economy: your notes list street vending, unregistered labour and black-market transactions. A black-market transaction is the illegal buying and selling of goods or services, hidden from the government, such as selling smuggled goods. Most informal work is not like this: a street vendor or waste picker is doing legal work that is simply not registered or taxed. So in an exam, define the informal economy as unrecorded and unregulated work, and only mention the black market as one small part of it.
Sustainability: your notes add that it is particularly about economic development and environmental protection. So a sustainable choice lets the economy grow and people's lives improve without damaging the environment for future generations.
GDP is measured in a given year, and employment structure can describe a country or a region.
Informal economy: your notes list street vending, unregistered labour and black-market transactions. A black-market transaction is the illegal buying and selling of goods or services, hidden from the government, such as selling smuggled goods. Most informal work is not like this: a street vendor or waste picker is doing legal work that is simply not registered or taxed. So in an exam, define the informal economy as unrecorded and unregulated work, and only mention the black market as one small part of it.
Sustainability: your notes add that it is particularly about economic development and environmental protection. So a sustainable choice lets the economy grow and people's lives improve without damaging the environment for future generations.
GDP is measured in a given year, and employment structure can describe a country or a region.
Define the multiplier effect and give an example.
- Definition: an initial investment leads to a bigger overall increase in economic activity and jobs.
- Example: a new car factory employs workers.
- The workers spend their wages in local shops, and suppliers open nearby, creating more jobs.
Answer: Investment creates jobs, the wages are spent locally and more jobs follow.
Learn these exactly: economic activity, economic development, GDP, formal and informal economy, employment structure, industrialisation, deindustrialisation, globalisation, TNC, outsourcing, multiplier effect and sustainability.
- Informal economy
- Work that is not officially registered or taxed, such as street selling.
- Deindustrialisation
- The decline of manufacturing industry in a place.
- Globalisation
- The growing connection between countries through trade, investment, people and information.
- TNC
- Transnational corporation: a large company that operates in many countries.
- Negative multiplier
- A downward spiral: job losses mean less spending, so more businesses close and more jobs are lost.
- Sustainable
- Meeting the needs of people today without harming the ability of future generations to meet their needs.
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Which is the correct definition of GDP (gross domestic product)?
- The average wage earned by one worker
- The total value of goods and services a country produces in a year
- The total value of goods a country buys from abroad
- The number of factories in a country
Show the answer
Answer: The total value of goods and services a country produces in a year
GDP adds up the value of all goods and services produced within a country in one year.
Which job is the best example of the informal economy?
- A nurse employed by a state hospital
- A waste picker selling recyclables for cash without registering
- An office worker with a written contract
- A soldier in the national army
Show the answer
Answer: A waste picker selling recyclables for cash without registering
Informal work is not officially recorded, regulated or taxed, such as unregistered waste picking.
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Checked by the GCSE-ready editorial team, 23 October 2026. Last updated 2 October 2026. Spotted a mistake? Tell us and we will fix it.