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Absolute Advantage
the ability of a party (an individual, or firm, or country) to produce more of a good or service than competitors, using the same amount of resources
Appreciation
the rise in the value of an asset, such as currency or real estate.
Balance of payments
an accounting record of all monetary transactions between a country and the rest of the world. These transactions include payments for the country's exports and imports of goods, services, financial capital, and financial transfers
Bond
A loan to a corporation or a government.
Business cycle
A predictable long-term pattern of alternating periods of economic growth (recovery) and decline (recession)
capital account
a record of the inflows and outflows of capital that directly affect a nation's foreign assets and liabilities
Capital good
physical assets a company uses to produce goods and services for consumers
Comparative advantage
the ability of a person or a country to produce a particular good or service at a lower marginal and opportunity cost over another. Even if one country is more efficient in the production of all goods (absolute advantage in all goods) than the other, both countries will still gain by trading with each other, as long as they have different relative efficiencies
Consumer price index
A measure that examines the weighted average of prices of a basket of consumer goods and services, such as transportation, food and medical care
Current account
one of the two primary components of the balance of payments, the other being capital account. It is the sum of the balance of trade (net earnings on exports minus payments for imports), factor income (earnings on foreign investments minus payments made to foreign investors) and cash transfers.
Depreciation
the gradual decrease in the economic value of the capital stock of a firm, nation or other entity
Economics
the study of how society manages unlimited wants with limited needs
Interest
a fee paid by a borrower of assets to the owner as a form of compensation for the use of the assets. It is most commonly the price paid for the use of borrowed money
GDP
Gross Domestic Product- the total market value of all final goods and services produced annually in an economy
Human Capital
stock of competences, knowledge and personality attributes embodied in the ability to perform labor so as to produce economic value. It is the attributes gained by a worker through education and experience
Inflation
The rate at which the general level of prices for goods and services is rising, and, subsequently, purchasing power is falling
Marginal
small or not very important
Net exports
exports minus imports
Nominal
current
Opportunity Cost
the cost of any activity measured in terms of the value of the next best alternative forgone (that is not chosen). It is the sacrifice related to the second best choice available to someone, or group, who has picked among several mutually exclusive choices
Price ceiling
a price level artificially set below the equilibrium price; leads to a shortage
Price floor
a price set by a government body that is above the equilibrium price; results in a shortage
Real
adjusted for inflation
Recession
A period of general economic decline; typically defined as a decline in GDP for two or more consecutive quarters
Stagflation
A condition of slow economic growth and relatively high unemployment - a time of stagnation - accompanied by a rise in prices, or inflation
Stock
A share of ownership (equity) in a corporation.
Tariff
a tax on imported goods
Transfer payment
a payment of money for which there are no goods or services exchanged
Land
factor of production: natural resources, real estate, livestock, etc.
Deflation
a decrease in the general price level of goods and services
Financial capital
a sustained falling PL, usually due to weakened AD and a constant AS.
Labor
Human effort directed toward producing goods and services
Supply
S
Demand
D
Price
P
Quantity
Q
Equilibrium
E
Consumption
C
Investment
I
Net exports (abbreviation)
n/x
Production possibilities curve
ppc
Government
G
Gross domestic product
GDP
Imports
M
Balance of Payments
BOP
natural rate of unemployment (abbreviation)
nru
exports
X
natural rate of unemployment
4 to 6%
GDP growth rate
3 to 5%
what is good inflation?
less than 2%
