Studied by 6 people
absolute poverty
Inability of an individual to afford basic goods and services, nationally and internationally determined by the poverty line
actual growth
in the context of the PPC model, growth as a result of reduction in unemployment or improvement in efficiency. movement inside the PPC to the edge
administrative barriers
a type of trade protection countries use to prevent free flow of imports into a company. often considered hidden trade protection
aggregate demand
total quantity of goods and services that all buyers in an economy want to purchase over a period of time
aggregate supply
total quantity of goods and services produced in an economy over a period of time
allocative efficiency
an allocation of resources that results in producing the combination and quantity of goods that is mostly preferred by consumers. MSB = MSC
anti-dumping
excuse for trade protectionism where a country can accuse another of dumping and use tariffs to ‘protect’ themselves
appreciation
increase in the value of a currency in a floating exchange rate system
balance of payments
a record of all the transactions between the residents of a country and the residents if other countries, usually for a year, in the form of debits and credits
barriers to entry
anything that can prevent a firm from entering an industry and beginning production
bilateral trade agreement
any trade agreement involving two trading partners
business confidence
a measure of the degree of optimism among firms in an economy about the future performance of firms and the economy
business cycle
fluctuation in the growth of real output over a period of time
capital
one of the FoP which had to be produced itself
capital account
the inflows minus outflows for capital transfers and use of natural resources
capital flight
the large scale transfer of privately owned financial capital to another country resulting in uncertainty of holding assets
capital gains tax
a tax on profits from financial investments e.g. real estate, stocks
carbon tax
a tax per unit of carbon emissions of fossil fuels
central bank
financial institution responsible for regulating commercial banks and monetary policy
circular economy
idea that goods should be produced in a way that they can be repaired rather than thrown out
circular flow of income
flow of income in the economy where value of output = income produced from production
collective self governance
solution to the use of common pool resources where the users take control of the resources in a sustainable way. Counters the idea of the tragedy of the commons
commercial bank
a financial institution whose main function is to hold deposits for customers, make loans to customers, transfer funds and buy government bonds
common market
type of trading bloc where countries that formed a customs union eliminate all barriers between them and allow for unrestricted movement in the factors of production between them
common pool resources
resources that are not owned by anyone and have no price
complementary goods
two or more goods that are used together
composite indicator
a summary measure of more than one indicator e.g. HDI does edu, health and income
consumer confidence
a measure of the degree of optimism of consumers about their future income and the economy
consumer price index
a measure of the cost of living for the typical household, compares the value of a basket if goods and services in one year with the same basket in the base year
consumer surplus
difference between the highest prices consumers are willing to pay for a good and the price actually paid
corporate income tax
tax on profits of corporations
corporate social responsibility
the practise of some corporations to avoid socially undesirable activities
cost-push inflation
a type of inflation generated by a fall in aggregate supply as a result of increased costs of production
credit rating
an assessment of the ability of a borrower to pay back loans
current account
includes balance of trade, plus inflows minus outflows of income and current transfers
customs union
a type of trading bloc where member countries eliminate trade barriers and adopt a common policy towards all non-member countries
cyclical unemployment
a type of unemployment that occurs during the downturns of the business cycle
debt relief
the cancellation or forgiveness of all or a portion of a country’s debt
debt servicing
the payments that must be made to repay the debt
deflation
a sustained decrease in general price level
demand -pull inflation
a type of inflation caused by an increase in aggregate demand
demerit goods
goods which are considered to be undesirable for consumers
depreciation
a decrease in the value of a currency in a floating exchange rate system
deregulation
policies involving the reduction of gov regulations of the private sector
devaluation
the decrease in teh value of a currency in a fixed exchange system
development aid
foreign aid intended to help economically less developed countries
direct tax
taxes payed directly to the gov
disinflation
a fall in the RATE of inflation
diversification
a change involving greater variety
economic development
rises in the standard of living and wellbeing of population
economic growth
increases in total real output produced by a country
economic integration
the extend of economic interdependence on other nations as a result of trade agreements
entreprenuership
the ability of an individual to innovate and develop new ways of doing things
exchange rate
the rate at which one currency can be exchanged for another
export promotion
a growth strategy where a country attempts to achieve economic growth by expanding its exports
export subsidy
a payment by the gov to a producer per unit of the subsidised export good
financial account
inflows minus outflows of funds due to FDI, portfolio investment, changes in reserve assets and changes in official borrowing
fixed exchange rate
an exchange rate fixed by the central bank of that country and does not change in response to currency demand and supply
floating exchange rate
and exchange rate determined entirely by market forces
foreign aid
transfer of funds or goods to developing countries in order to bring about improvements to economic, social or political conditions
FDI
investment by firms based in one country into another
free trade area/agreement
a type of trading bloc where a group of countries eliminates tarde barriers between them
frictional unemployment
unemployment that occurs when someone is between jobs
gender inequality index
a composite indicator that measures inequalities between genders in reproductive health, empowerment and labour market participation
gini coefficient
summary measure of Lorenz curve
globalisation
economic integration on a global scale involving increasing interconnectedness
GDP
measure of the value of aggregate output within the geographical bounds of an economy produced within a year
GNI
a measure if the total income received by residents of a country over a period of time
Happiness index
measures economic wellbeing
Happy planet index
accounts for environmental sustainability and economic well-being
human capital
skills, abilities and knowledge acquired by people as well as their health
human development index
composite indicator of development whcih measures education, health and income percapita
humanitarian aid
foreign aid extended in regions where there are emergencies caused by violent conflicts or natural disasters to save lives
import substitution
where a country manufactures simple consumer goods to promote domestic industry instead of importing
income effect
as price falls, real income increases causing teh consumer to buy more of the good
income elasticity of demand
measure of the responsiveness of demand to changes in income
indirect taxes
taxes levied on the spending to buy goods
Inequality adjusted HDI
composite indicator with adjusted HDI dimension for inequality
infant industry
a new domestic industry that has not had time to establish itself and achieve efficiencies in production and therefore cannot compete
inferior good
a good for which the demand varies negatively with income, as income decreases, demand increases
inflation
a sustained increase in the price level
inflation targeting
type of monetary policy which focuses on achieving a particular inflation target
inflationary gap
real GDP > potential GDP
informal economy
economy where economic activities are unregistered and unrecorded
interest
a payment per unit of time for the use of borrowed money
international monetary fund
international financial institution which makes short term loans to governments to alleviate debt, stabilise exchange rates etc..
joint supply
the production of two or more goods that are derived from a single product, making one without the other is impossible, e.g. milk and butter
labour union
an association of workers in a particular profession, whose objective is to improve working conditions and defend rights of workers
land rights
a group of property rights that refer to the rights and rules to posses, occupy and use land
law of diminishing marginal returns
as more and more units of a variable input is added to one of more fixed input of production, the marginal product at first increases and then begins to decrease
law of diminishing marginal utility
as the consumption of a goods increases, the marginal utility the consumer recieves, decreases with each additional unit consumed, therefore consumers will only buy more if the price falls
long run (macro)
period of time when prices of resources especially wages change along with changes in the price level
long run (micro)
time period in which all inputs can be changed, there are no fixed inputs
long-term growth trend
in the business cycle diagram, refers to the line that runs through the business cycle, reoresenting average growth over long periods of time
lorenz curve
curve illustrating a degree of equality of income distribution in an economy
luxury goods
goods that are not necessary or essential. they have a PED > 1 and YED > 1
managed exchange rates
exchange rates that are for the most part free to float to their market levels. However over long periods of time central banks periodically intervene to stabilise the exchange rate in the long run
market
any arrangement where buyers and sellers of a particular good, service or resource are linked together to make an exchange
market failure
occurs when the market fails to allocate resources efficiently or to provide the quantity and combination of goods and services mostly wanted by society
merit goods
goods that are desirable for consumers but under provided by the market
Note
Flashcard