Economics Lecture Notes Flashcards

Vocabulary flashcards based on economics lecture notes.

Inflation

A sustained increase in the average price level of goods and services over a period of time, reducing the purchasing power of money, or a fall in the value of money; monitored using the Harmonized Index of Consumer Prices (HICP) in the EU.

Consumer Price Index (CPI)

Measures the average change over time in the prices of a fixed basket of goods and services typically purchased by a usual household.

Creeping Inflation

Low, single digit annual increases in price levels.

Walking Inflation

Moderate inflation, typically between 3-10% annually.

Galloping Inflation

Double or triple digit yearly inflation rates.

Hyperinflation

Very rapid, uncontrolled rise in price levels.

Demand-Pull Inflation

Inflation caused by demand exceeding supply.

Cost-Push Inflation

Inflation caused by rising production costs such as wages or oil prices.

Imported Inflation

Inflation resulting from rising prices of imported goods or services.

Desinflation

A reduction in the rate of inflation (e.g., from 4% to 2%).

Deflation

A sustained decrease in the average price level of goods and services, leading to an increase in the value of money.

Deflation Spiral

A dangerous economic cycle where falling prices lead to reduced demand, job cuts, and further price decreases.

Labour force

All people employed or actively seeking a job.

Unemployment Rate

The percentage of the labor force that is unemployed calculated as (Number of unemployed people/Labour Force) x 100.

Gender Pay Gap

The difference between wages earned between men and women.

Frictional Unemployment

Unemployment that occurs when people are between jobs.

Structural Unemployment

Unemployment resulting from a mismatch of skills and available jobs.

Cyclical Unemployment

Unemployment caused by economic recessions.

Seasonal Unemployment

Unemployment linked to seasonal industries or activities, like tourism.

Natural Rate of Unemployment

The baseline rate of unemployment even in a healthy economy, including frictional and structural unemployment.

Business Localization

The process of selecting the best geographical location for business operations.

Globalization

The increasing interconnection of global economies, politics, culture, and technology.

Absolute Advantage

The ability to produce a good or service at a lower average cost per unit than another country.

Comparative Advantage

The ability to produce a good or service at a lower opportunity cost compared to another country.

Closed Economy

A self-sufficient economy that only trades within its borders and has no trade with outside economies.

Open Economy

An economy that trades freely with other countries with no barriers to free market activity.

Tariff

A tax on imports, raising the price of imported goods relative to domestic ones.

Government Subsidy

Financial assistance given by the government to domestic producers to make their goods cheaper.

Quota

A limit on the quantity of a certain type of good that may be imported into a country.

Embargo

A blockade or restriction that limits a foreign country's ability to export or import goods.

Protectionism

Measures taken to limit unfair competition from foreign companies.

Trade Blocs

Agreements between countries to reduce or eliminate trade barriers among themselves (e.g., EU, NAFTA, ASEAN).

WTO

World Trade Organization enforces trade rules and resolves disputes.

IMF

International Monetary Fund offers financial support and monetary cooperation.

Balance of Trade (BOT)

The difference between the value of a country's imports and exports for a given period of time.

Visible Trade

The buying and selling of physically tangible goods between countries.

Invisible Trade

Trade in services between countries.

Terms of Trade (TOT)

Measures the relative prices of exported products in comparison to the cost of imported goods and services.

Exchange Rate

The price of a foreign currency expressed in terms of another currency.

Appreciation

A rise in the value of a currency in relation to other currencies.

Depreciation

A fall in the value of a currency in relation to other currencies.

FOREX

The market in which participants are able to buy, sell, exchange, and speculate on currencies.

International Monetary System (IMS)

The rules and procedures for exchanging national currencies, meant to facilitate international trade and cross-border investment.

Fixed Exchange Rate

A currency value pegged to a specific currency or commodity, like gold.

Floating Exchange Rate

A currency value determined by supply and demand in the market.

Managed Float

A currency system mostly market-driven with some government intervention.