Economics Glossary Review

These flashcards cover key vocabulary and concepts in economics.

Absolute advantage

A country is able to produce more output than other countries using the same input of factors of production.

Absolute poverty

Measured in terms of the basic need for survival; the income required to stay alive.

Actual growth

Occurs when previously unemployed factors of production are brought into use, shown by movement towards the production possibilities curve (PPC).

Adverse selection

Occurs when a buyer and seller do not have the same information, leading to uneven transaction terms.

Aggregate demand

Total spending in an economy consisting of consumption, investment, government expenditure, and net exports.

Allocative efficiency

The level of output where marginal cost equals average revenue; the socially optimum level of output.

Anti-monopoly regulation

Policies intended to regulate the market share of individual companies to enforce competition.

Appreciation

An increase in the value of one currency in terms of another in a floating exchange rate system.

Asymmetric information

One party in a transaction has better or more information than the other party.

Business cycle

A diagram showing periodic fluctuations in economic activity, including phases of recovery, boom, slowdown, and recession.

Capital

The factor of production derived from investment in physical and human capital.

Consumer confidence

An economic indicator measuring the optimism of consumers regarding the economy and their financial situation.

Demand

The willingness and ability of consumers to purchase a quantity of a good or service.

Economic development

Improvements in standards of living, poverty reduction, and increased freedom and economic choice.

Equilibrium

A state where economic forces are balanced, typically can be used in reference to supply and demand.

Market failure

The failure of markets to produce at the point where community surplus is maximized.

Substitutes

Goods that can be used in place of each other.

Universal basic income

A regular cash payment given to all individuals without means testing or work requirements.

Welfare loss

A loss of economic efficiency when the equilibrium for a good or service is not allocatively efficient.

Monetary policy

A demand-side policy using changes in the money supply or interest rates to achieve economic objectives.