ECONOMICS DEFINITIONS (A2 LVL)

CH50: ECONOMIC DEVELOPMENT

Poverty cycle

The links between, for example, low income, low savings, low investment and low productivity. E.g. a poor family cannot afford education, so stays low-income.

CH50: ECONOMIC DEVELOPMENT

Development traps

Restrictions on the growth of developing economies that arise from low levels of savings and investment. E.g. low income → low savings → low investment → slow growth.

CH50: ECONOMIC DEVELOPMENT

Purchasing Power Parity (PPP)

A method of comparing international living standards by using an exchange rate based on the amount of each currency needed to purchase the same basket of goods and services. For e.g. a big mac that costs US $4 AND UK £3 would give a PPP of $1.33 per £1.

CH50: ECONOMIC DEVELOPMENT

Human Development Index (HDI)

A composite measure of living standards that includes GNI per head, life expectancy and education. E.g. Norway has high GNI per head, long life expectancy, and high education levels, so it has a high HDI

CH50: ECONOMIC DEVELOPMENT

Measurable Economic Welfare (MEW)

A composite measure of living standards that adjusts GDP for factors that reduce living standards and factors that improve living standards. E.g. pollution reduces MEW while more leisure time increases MEW.

CH 50: ECONOMIC DEVELOPMENT

Multidimensional Poverty Index (MPI)

A composite measure of deprivation in terms of the proportion of households that lack requirements for a reasonable standard of living. E.g. a household lacking clean water, education, and healthcare is considered multidimensionally poor.

CH 50: ECONOMIC DEVELOPMENT

Shadow Economy

The output of goods and services hidden from authorities. E.g. a worker paid in cash without paying tax