Economics (manual vers.)

Definitions

Absolute poverty

People living below the minimum income necessary to satisfy basic physical needs (food, clothing, and shelter); as of October 2015, the World Bank international poverty line is set at US$1.90 PPP per day.

Appropriate technology

Technology that relies mostly on the relatively abundant factor an economy is endowed with.

Bilateral trade agreement

An agreement between two countries to phase-out or eliminate trade-related barriers.

Circular flow of income

A simplified illustration that shows the flows of income and expenditures in an economy.

Customs union

An agreement between countries to phase out or eliminate tariffs and other trade barriers and establish a common external barrier toward non-members.

Development aid

Aid aimed at assisting developing countries in their development efforts. Includes project aid, program aid and debt relief. It is concessional meaning there are low interest rates and long repayment periods.

Economically least developed countries (ELDCs)

According to the UN these are low-income countries facing severe structural constraints to sustainable development, with low levels of human assets, highly vulnerable to economic and environmental shocks.

Economic development

A multidimensional concept involving a sustained increase in living standards that implies higher levels of income and thus greater access to goods and services, better education and health, a better environment to live in as well as individual empowerment.

Economic growth

Refers to increases in real GDP over time.

Economic integration

Economic interdependence between countries usually involving agreements between two or more countries to phase-out or eliminate trade and other barriers between them.

Economics

Economics is the study of how to make the best possible use of scarce or limited resources to satisfy unlimited human needs and wants.

Exports

Goods and services produced in one country and purchased by consumers in another country.

Export promotion

Growth policies aiming at expansion of export revenues as the vehicle of economic growth; often contrasted to import substitution.

Factors of production

Resources used in the production of goods and services; include land (natural resources), labour, capital and entrepreneurship.

Firms

Productive units that transform inputs (factors of production) into output (goods and services), usually aiming at earning profits.

Foreign aid

Refers to flows of grants or loans from developed to developing countries that are non-commercial from the point of view of the donor and for which the terms are concessional (that is, the interest rate is lower than the market rate and the repayment period longer).

Free trade

International trade that is not subject any kind of trade barriers, such as tariffs or quota.

Free trade area/agreement

An agreement between two or more countries to phase-out or eliminate trade barriers between them; members of the agreement are free to maintain their own trade policy towards non-members.

Government spending (G)

Refers to all spending by the government that is distinguished into current expenditures, capital expenditures and transfer payments.

Gross domestic product (GDP)

The value of all final goods and services produced within an economy over a period of time, usually a year or a quarter.

Growth in production possibilities

When the production possibilities of a country increase because of more/better resources and/or better technology becoming available; illustrated by a shift outwards of the PPC.

Household indebtedness

The money that households owe.

Households

Groups of individuals in the economy who share the same living accommodation, who pool their income and jointly decide the set of goods and services to consume.