Econ1000- DEFINITIONS

Crowding out

Decrease in private investments from governments borrowing

GDP

Market value of all final goods and services within a country in a given period

GDP Per capita

gdp of a country divided by its population

GNP

Gross National Product, this is the total value of output produced by a country’s citizens for a period.

Real Value

Value of the intrinsic commodity

Inflation

A fall in the value of money overtime

Fiscal Balance

Government revenue less expenditure

Fiscal Surplus

Government is earning more than what their spending

Fiscal Deficit

government spending more than they’re earning

Trade Deficit

Export more than import

Trade balance

Import more than export

Consumer Surplus

Difference between the maximum amount you’re willing to pay and the amount that you actually pay

Production Possibility Frontier

The boundary of all the feasible production possibilities

Opportunity Cost

The best foregone alternative

Nominal Value

Value in terms of money

Market

A meeting between buyer and seller

Law of Diminishing Returns

holding all other factors constant, increase to an input eventually yield a diminishing marginal product

Comparative Advantage

Whatever you are more better or less worse at doing than someone else

Market

A meeting of buyers and seller

Marginal Product

The additional to output that result from employing one additional unit of input

Deadweight loss

The net loss of welfare that results from the impositions of tax

Price Ceiling

An upper limit above which price cannot rise by regulation nor by law

Price Floor

A lower limit , Below which price cannot fall

NEGATIVE EXTERNALITY

when parties other than the buyer and the seller are affected

Excludability

a good or service for which it is possible to prevent access to it

Non Excludability

When you cant make customers pay

Rivalry

a good whose consumption by one prevents consumption by others

Non - Rival

Doesn’t take away the enjoyment of another

Tragedy of the common

Non- excludable and rival goods are used to exhaustion

Screening

ignorant side investigates

Signaling

knowledgeable side demonstrates

External Cost

this is the negative externality accrued to a third party or other members of the society not involved in a transaction.

Private cost

  cost incurred to the parties involved in an economic activity

Social Cost

the total cost due at an economic transaction to the society

Market failure

Quantity Theory of Money

the hypothesis that changes in price correspond to changes in the money supply

Budget Constraint-

what combinations of goods a person can afford to give based on their income available to be spent

Welfare

how well off members of the society are