Economic Terminology and Concepts

Economic Concepts and Terms

A

  • Absolute Advantage

  • Definition: When a country can produce a good more efficiently than another country.

  • Mnemonic: "The best at making it."

  • Autocracy

  • Definition: A government system where one person has absolute power.

  • Mnemonic: "One ruler, all power."

B

  • Balance of Payments

  • Definition: A record of all financial transactions between a country and the rest of the world.

  • Mnemonic: "Money in and out of a country."

  • Balance of Trade

  • Definition: The difference between a country's exports and imports.

  • Mnemonic: "Exports vs. Imports."

  • Boom

  • Definition: A period of economic growth with high employment and spending.

  • Mnemonic: "Business is booming!"

  • Business

  • Definition: Activities involved in making, buying, or selling goods or services.

  • Mnemonic: "Making money through goods/services."

  • Business Cycle

  • Definition: The economic pattern of growth and decline (boom, recession, depression, recovery).

  • Mnemonic: "Up and down economy."

C

  • Capitalism

  • Definition: An economic system where businesses are privately owned and driven by profit.

  • Mnemonic: "Private ownership, free market."

  • Comparative Advantage

  • Definition: When a country produces a good at a lower opportunity cost than another.

  • Mnemonic: "Better at making this than something else."

  • Competitive Advantage

  • Definition: Factors that make a business better than competitors.

  • Mnemonic: "What makes us special."

  • Currency

  • Definition: The money used in a country.

  • Mnemonic: "Dollars, euros, yen, etc."

D

  • Democracy

  • Definition: A government where people elect leaders and enjoy freedoms.

  • Mnemonic: "People vote = people rule."

  • Depression

  • Definition: A long and severe economic downturn.

  • Mnemonic: "Super bad economy."

  • Developed Economy

  • Definition: A country with high industrialization, strong infrastructure, and a high standard of living.

  • Mnemonic: "Rich and advanced country."

E

  • Domestic Business

  • Definition: Business activities within one country.

  • Mnemonic: "Only in our country."

  • Economy

  • Definition: The system of producing, buying, and selling goods/services in a country.

  • Mnemonic: "How money moves."

  • Exchange Rate

  • Definition: The value of one currency compared to another.

  • Mnemonic: "Example: $1 CAD = $0.75 USD."

  • Exports

  • Definition: Goods sent to another country for sale.

  • Mnemonic: "Selling abroad."

  • Expansion

  • Definition: When an economy grows with more jobs and higher incomes.

  • Mnemonic: "Business is getting bigger."

F

  • Fiscal Policy

  • Definition: Government decisions on taxes and spending to control the economy.

  • Mnemonic: "Government money moves."

  • Franchise

  • Definition: A business model where individuals buy rights to operate a brand.

  • Mnemonic: "Same brand, different owners."

  • Functional Division

  • Definition: Organizing a business based on different tasks (marketing, finance, HR).

  • Mnemonic: "Each team has a job."

G

  • Global Company

  • Definition: A business that operates in multiple countries.

  • Mnemonic: "Examples: McDonald's, Apple, Nike."

  • Global Dependency

  • Definition: When countries rely on each other for goods/services.

  • Mnemonic: "We need their products, they need ours."

  • Gross Domestic Product (GDP)

  • Definition: The total value of goods/services produced in a country in a year.

  • Mnemonic: "How rich a country is."

I

  • Infrastructure

  • Definition: Roads, bridges, and utilities supporting the economy.

  • Mnemonic: "What keeps a country running."

  • International Business

  • Definition: Trade and business between different countries.

  • Mnemonic: "Business beyond borders."

  • International Company

  • Definition: A business that operates in more than one country.

  • Mnemonic: "A company that goes worldwide."

  • Investment Canada Act

  • Definition: A law regulating foreign investment in Canada.

  • Mnemonic: "Rules for foreign investors in Canada."

J

  • Joint Venture
  • Definition: Two businesses partnering to work on a project.
  • Mnemonic: "Team up for profit."

L

  • Lagging Indicator

  • Definition: Economic data that changes after the economy does (e.g., unemployment rate).

  • Mnemonic: "Tells us what already happened."

  • Licensing Agreement

  • Definition: A contract where one company allows another to use its brand, patents, or products.

  • Mnemonic: "Renting out a brand."

M

  • Mixed Economy

  • Definition: A system with both private businesses and government control.

  • Mnemonic: "Mix of capitalism & socialism."

  • Monetary Policy

  • Definition: Central bank actions to control money supply and interest rates.

  • Mnemonic: "Government controls money flow."

N

  • Natural Resources

  • Definition: Materials from nature used for business (e.g., oil, trees).

  • Mnemonic: "Stuff from the earth."

  • Opportunity Cost

  • Definition: The value of what you give up when making a choice.

  • Mnemonic: "Choosing one thing means losing another."

P

  • Political System

  • Definition: The way a country is governed (e.g., democracy, autocracy).

  • Mnemonic: "Democracy, autocracy, etc."

  • Primary Industries

  • Definition: Businesses that extract natural resources (farming, fishing, mining).

  • Mnemonic: "Getting raw materials."

  • Productivity

  • Definition: How efficiently goods/services are produced.

  • Mnemonic: "Output vs. effort."

Q

  • Quota
  • Definition: A limit on how much of a product can be imported.
  • Mnemonic: "Import cap."

R

  • Recovery

  • Definition: When the economy starts improving after a recession.

  • Mnemonic: "Getting back on track."

  • Recession

  • Definition: A period of economic decline.

  • Mnemonic: "Slowing down economy."

S

  • Secondary Industries

  • Definition: Businesses that manufacture goods from raw materials.

  • Mnemonic: "Making products."

  • Sectors

  • Definition: Different parts of the economy (agriculture, technology, healthcare, etc.).

  • Mnemonic: "Industry categories."

  • Semi-Manufactured Goods

  • Definition: Partly processed materials used in final products.

  • Mnemonic: "Halfway to being finished."

  • Subsidy

  • Definition: Government money to help businesses stay competitive.

  • Mnemonic: "Government financial boost."

  • Subsidiary

  • Definition: A company controlled by a larger parent company.

  • Mnemonic: "Owned by a bigger business."

T

  • Tariff

  • Definition: A tax on imported goods.

  • Mnemonic: "Import tax."

  • Team Canada

  • Definition: Canada’s international trade strategy.

  • Mnemonic: "Canada’s business squad."

  • Trade Barriers

  • Definition: Restrictions on international trade.

  • Mnemonic: "Rules blocking trade."

  • Trade Deficit

  • Definition: When a country imports more than it exports.

  • Mnemonic: "Buying more than selling."

  • Trade Embargo

  • Definition: A complete ban on trade with a country.

  • Mnemonic: "No trade allowed."

  • Trade Sanction

  • Definition: Penalties on a country’s trade.

  • Mnemonic: "Limited trade as punishment."

  • Trade Surplus

  • Definition: When a country exports more than it imports.

  • Mnemonic: "Selling more than buying."

  • Trough

  • Definition: The lowest point in the business cycle.

  • Mnemonic: "Economy at rock bottom."

U

  • Unemployment

  • Definition: The percentage of people without jobs.

  • Mnemonic: "People looking for work."

  • USMCA

  • Definition: A trade agreement between the U.S., Canada, and Mexico.

  • Mnemonic: "North American trade deal."