Economics SL vocab

Actual growth

Growth that occurs due to more efficient use of resources, resulting in a movement

of a point inside the PPC closer to the PPC curve.

Administrative barriers

Trade protection measures taking the form of administrative procedures, used to prevent the free flow of imports into a country.

Aggregate demand

The total quantity of goods and services that all buyers in an economy want to buy over a certain period of time, at different price levels, ceteris paribus.

Aggregate supply

The total quantity of goods and services produced in an economy over a particular

time period, at different price levels, ceteris paribus.

Appreciation

An increase in the value of a currency.

Balance of payments

A record of all transactions between the residents of a country and the residents of other countries, showing all payments received from other countries (credits), and all payments made to other countries (debits).

Barriers to entry

Anything that prevents a firm from entering an industry and beginning production,

as a result limits the degree of competition in an industry.

Bilateral trade agreement

Any trade agreement involving two trading partners, usually two countries.

Budget deficit

The situation where government tax revenues are less than government expenditures.

Business cycle

Fluctuations in the growth of real GDP, consisting of alternating periods of expansion and

contraction.

Carbon tax

A tax per unit of carbon emissions, considered by many countries as a policy to deal with the problem of climate change.

Circular flow of income

A flow of income in an economy where the value of output produced is

equal to the total income generated in producing that output.

Collective self governance

A solution to the use of common pool resources where the users take

control of the resources and use them in a sustainable way.

Commercial bank

A financial institution whose main functions to hold deposits for their customers, make loans to their customers, transfer funds from one bank to another, and to buy government bonds.

Common market

A type of trading bloc in which countries that have formed a customs union

which removes tariffs in trade between them; they have a common external policy,

and agree to eliminate all restrictions on movements of factors of production within

them.

Common pool resources

Resources that are not owned by anyone are non-excludable and rivalrous.

Competitive market

A market composed of buyers and sellers acting independently, without the ability to influence the price of the product.

Competitive supply

The production of two goods compete with each other for the same resources.

Complements

Two or more goods that tend to be used together. The increase in price of one will lead to a decrease in price of the other.

Composite indicator

A summary measure of more than one indicator, often used to measure economic

development.

Consumer price index

A measure of the cost of living for the typical household, by comparing the value

of a basket of goods in one year with the value of the same basket in a base year.

Contractionary fiscal policy

A fiscal policy used in an inflation, involving a decrease in government spending or an increase in taxes.

Contractionary monetary policy

A monetary policy used in an inflation, involving an increase in interest rates, intended to lower investment and consumption spending.

Corporate income tax

Tax on the profits of corporations.

Corporate social responsibility

The practice of some corporations to avoid socially undesirable activities.

Cost push inflation

Inflation caused by a fall in aggregate supply, usually resulting from increases in costs of production.

Cost of production

Payments by firms to obtain and use factors of production in their production process.

Customs union

A type of trading bloc, consisting of a group of countries that fulfil the requirements of a free trade area and adopt a common policy towards all non-member countries.

Cyclical unemployment

Unemployment that occurs during the downturns of the business cycle, when the economy is in a recessionary gap.

Deflation

A sustained decrease in the general price level.

Demand

The various quantities of a good that consumers are willing and able to buy at different prices during a particular time period, ceteris paribus.

Demand pull inflation

A type of inflation caused by an increase in aggregate demand.

Demerit goods

Goods that are considered to be undesirable for consumers and are overprovided by the market.

Demand-side policies

Policies that attempt to change aggregate demand in order to achieve full employment and economic growth and minimise the severity of the business cycle.

Depreciation

A decrease in the value of a currency in a floating or managed exchange rate system.