IEU1 – International Economics – Glossary: What is “The Economy”

Vocabulary flashcards covering 33 key terms from the lecture on International Economics: "What is the Economy?"

Capital resource

Tools, equipment, facilities and machinery used to assist in the production of goods and services.

Circular Flow

The continual movement of resources, goods, services and money between groups and sectors within an economy.

Consumer

An economic participant who purchases goods and services and supplies labour to producers.

Cost-Benefit Analysis

A decision-making process that evaluates whether the benefits of an action outweigh its associated costs.

Developing economy

An economy largely based on traditional agriculture, characterised by low incomes, limited capital resources and slow growth.

Economy (An Economy)

A system for distributing land, labour and capital resources among producers and consumers.

Economic modelling

The use of charts, diagrams or computer simulations to analyse, monitor and predict economic activity.

Economic regulation

Government or agency-imposed laws that control or correct activity within an economy.

Emerging economy

An economy undergoing rapid change, rising mechanisation and urbanisation, with incomes beginning to increase.

Enterprise resource

Human creative thought, initiative and mental activity applied to production; entrepreneurial labour.

Exports

Goods or services produced in one country and shipped abroad for sale or trade.

Financial Services

Sector that lends money to consumers and producers and pays returns on investments.

Government (economic participant)

The body responsible for monitoring and controlling economic activity through policy and regulation.

G.S.T (Goods and Services Tax)

A 10 % tax levied by the government on most purchases.

Imports

Goods or services brought into one country from another for sale or use.

Income Tax

A percentage of an individual’s earnings collected by government as revenue.

Interdependence

A condition in modern economies where specialised producers rely on each other to satisfy needs and wants.

Overseas Sector

Individuals or organisations that import goods into, or export goods from, a country.

Infrastructure

Capital resources such as roads, bridges, ports and communication networks that boost a nation’s productive capacity.

Industrialisation

The process of expanding the range of industries and adopting mechanised production methods.

Producers

Economic participants who manufacture or provide goods and services.

Tariff

A fee or tax paid to a government on imported goods.

Trade

The exchange of goods and services between consumers and producers, often across borders.

Land resource

Natural resources—minerals, water, forests, land, animals, crops—used in production.

Labour resource

Human mental and physical effort, including entrepreneurial initiative, contributing to production.

Mechanisation

The use of large-scale machinery in production, reducing the need for human labour.

Modern economy

A fully developed, highly specialised economy with advanced technology and competitive wages.

Negative Externality

An unfavourable effect suffered by third parties due to an economic decision.

Opportunity Cost

The value of the best alternative foregone when a choice is made.

Subsistence agriculture

Farming aimed at producing enough for the farmer’s own use rather than for sale.

Specialisation

The shift of labour from generalist tasks to focused production of specific goods or services.

Sector

A division of the labour force into industries based on the type of work or output produced.

Urbanisation

The movement of people from rural areas to cities in search of specialised employment.