Term
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Definition
| The ability of a country to produce a good with fewer resources than another country. |
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Term
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Definition
| Aggregate demand is the total spending in an economy consisting of consumption, investment, government expenditure and net exports at every price level. |
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Term
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Definition
| Aggregate supply is the total supply in the economy at every price level. |
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Term
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Definition
| Government legislation to prevent the selling of an imported good from another country at the price below its cost of production |
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Term
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Definition
| An increase in the value of one currency against another currency in a floating exchange rate system |
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Term
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Definition
| A record of the financial transactions of a county's government, firms, and consumers with the rest of the world |
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Term
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Definition
| Official aid given grom one government to another |
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Term
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Definition
| This occurs when government spending is greater than government revenues. / A government using Keynesian demand management policies might deliberately run a budget deficit to stimulate the economy. |
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Term
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Definition
| The periodic swings experienced by an economy, moving from expansion to contraction and perhaps recession |
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Term
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Definition
| Anything that is made by humans and is used to make other goods or services. EG (machinery) |
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Term
| Centrally Planned Economy |
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Definition
| An economic system where resources are allocated by the government or a central planning authority and not by the forces of demand and supply. |
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Term
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Definition
| The unemployment rate that includes all people claiming unemployment benefits. |
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Term
| Commodity Price Agreement |
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Definition
| An agreement among commodity-producing and commodity-consuming countries to try to stabilize the price of a commodity. |
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Term
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Definition
| Goods that are normally consumer together |
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Term
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Definition
| A few firms acting together to avoid competition by resorting to agreements to fix prices or output. |
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Term
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Definition
| A country is able to produce a good at a lower opportunity cost than another country has a comparative advantage in the production of that good. |
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Term
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Definition
| Spending by individuals and households on consumer goods and services over a period of time. |
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Term
| Cross elasticity of demand |
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Definition
| The responsiveness of demand for one good to a change in price of another. |
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Term
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Definition
| Inflation that is caused by increases in the cost of production such as increases in the price of labour, or costs of raw materials. / A low value of a currency may lead to cost-push inflation, when raw materials and components are imported. |
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Term
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Definition
| A measure of the revenues earned from the exports of a good and services minus the expenditure on imports of goods and services. |
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Term
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Definition
| Revenues from the exports of goods and services are less than the spending on imports of goods and services. |
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Term
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Definition
| A form of economic integration where countries have a free trade area with other countries along with a common external tariff to countries outside the union. |
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Term
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Definition
| The willingness and ability to purchase a quantity of a good or service at a certain price over a time period. |
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Term
| Demand Management Policies |
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Definition
| Fiscal and/ or monetary policies designed to influence the level of demand in an economy and reduce the fluctuations in the business cycle. |
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Term
| Demand-deficient unemployment |
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Definition
| Disequilibrium unemployment caused when the aggregate demand for labour falls and the wage rate dead not fall. Also known as cyclical unemployment |
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Term
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Definition
| Inflation caused by increases in aggregate demand when the economy is at ful employment |
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Term
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Definition
| A persistent fall in the price level |
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Term
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Definition
| The shortfall that exists when the equilibrium level of national income is below the full employment national income. |
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Term
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Definition
| Goods that are bad for people and create negative externalities of consumption. Thus they are over-provided in a free market. |
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Term
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Definition
| A fall in the value of once currency against another currency in a floating exchange rate system |
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Term
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Definition
| A fall in the value of one currency against another currency in a fixed exchange rate system. |
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Term
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Definition
| Reduction or removal of regulations or legislation in an attempt to remove any barriers to competition. |
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Term
| Deteriorating Terms of trade |
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Definition
| When the average price of exports falls relative to the average price of imports, or making it more expensive to buy imports, in terms of exports that need to be sold. |
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Term
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Definition
| An economy with low income per capita and hence, low living standards, is considered to be a developing country. / This may be measured using the human development index, a composite indicator including measure of GDP per capita, life expectancy and literacy rates. |
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Term
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Definition
| Taxes on consumer income, or business profits. |
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Term
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Definition
| The income that remains after taxes have been deducted |
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Term
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Definition
| The selling of a good in another country at a price below its costs of production |
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Term
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Definition
| A broad concept involving improvement in standards of living, reduction in poverty, improved health and education, with increased freedom and economic choice. |
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Term
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Definition
| A measure of the responsiveness of demand to a change in price, income, or price of relative good. |
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Term
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Definition
| The ability to take the initiative and the risks involving the establishment of new products and new methods of production. |
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Term
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Definition
| A state of balance, from which there is no tendency to move |
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Term
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Definition
| This is the 'natural' level of unemployment that includes structura, frictional and seasonal unemployment. It is the difference between the aggregate supply of labour and the labour force. |
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Term
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Definition
| The price of one currency expressed in terms of another, which can be determined by market forces or a central authority. |
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Term
| Expenditure reducing policy |
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Definition
| A policy designed to reduce aggregate demand in order to reduce spending on imports. This may be used to reduce a current account deficit. |
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Term
| Expenditure switching policy |
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Definition
| A policy designed to encourage the purchase of domestically produced goods rather than imported goods in order to reduce a current account deficit. |
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Term
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Definition
| Positive externalities. these occur when the costs of production or consumption, 'spill over' to benefit people other than those who produced and consumed the god or service. |
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Term
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Definition
| Negative externalities. These occur when the costs of production or consumption 'spill over' to negatively affect people other than those who produced and consumed the good or service. |
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Term
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Definition
| the costs or benefits that spill over to third parties as a result of an economic transaction. |
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Term
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Definition
| Also known as resources. These are the inputs used to produce goods and services: land, labour, capital and entrepreneurship. |
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Term
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Definition
| The factors of production that a country has in abundance. e.g. Chine - labour |
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Term
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Definition
| A growing international movement that ensures that produces in developing countries work in safe conditions and receive a 'fair' price for their products. A fair price is one that convers costs of production and guarantees a living income. |
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Term
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Definition
| Te use of government spending and taxation to manage aggregate demand |
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Term
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Definition
| A rate of exchange that is determined by the market forces of demand and supply in place of a rate of exchange fixed and managed by the government or the exchange rate appreciates and depreciates according the the market forces of demand and supply |
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Term
| Foreign Direct Investment |
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Definition
| Long term investment by multinational corporations in another country. |
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Term
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Definition
| Goods or services that are unlimited in supply and have no opportunity cost are free goods. |
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Term
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Definition
| An economy in which resources are allocated according the the forces of demand and supply. |
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Term
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Definition
| An agreement whereby goods and services more freely between member countries, but each member retains its sovereignty with respect to trade with countries outside the free trade area. |
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Term
| Gross domestic product (GDP) |
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Definition
| The value of all final goods and services produced in an economy in a given time period. It may be measured through the output method, the expenditure method or the income method. |
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Term
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Definition
| A measure of output in the economy in one year per head of the population |
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Term
| Gross national product (GNP) |
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Definition
| Gross domestic product plus net property income from abroad |
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Term
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Definition
| Foreign goods and servies bought by consumers, businesses and the government. |
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Term
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Definition
| An inward looking growth strategy in which trade barriers are put in place to encourage the purchase of domestically produced goods rather than imported goods. |
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Term
| Income elasticity of demand |
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Definition
| YED is the measure of the responsiveness of a quantity demanded of a good to a change in come. It is used to distinguish between normal and inferior goods. |
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Term
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Definition
| the government or private sector of a country owes a significant amount of money to foreign government, banks of multilateral institutions, such as the International Monetary Fund |
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Term
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Definition
| An expenditure tax on a good or service that is imposed by the government. |
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Term
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Definition
| A justification for trade protection. An industry may have the potential to develop a comparative advantage but may need short term protection against lower priced imports. |
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Term
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Definition
| A sustained increase in the general or average level of prices, usually measured through a consumer price index. |
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Term
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Definition
| The increase in the price level caused when aggregate demand rises when the economy is at full employment |
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Term
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Definition
| Informal markets can be referred to as unofficial economic activity. It may include subsistence agriculture, the unrecorded exchange of goods and services and the illegal exchange of goods and services. |
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Term
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Definition
| The essential facilities and services such as roads, airports, sewage treatment, water systems and other utilities that are necessary for economic activity |
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Term
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Definition
| The price of borrowed money |
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Term
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Definition
| Expenditure by firms on capital and is an injection to the economy. the addition of capital stock to an economy. |
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Term
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Definition
| One of the factors of production. The physical and mental services provided by households. |
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Term
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Definition
| All people of working age who are willing and able to work. This includes those who have jobs and those who are unemployed. |
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Term
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Definition
| One of the factors of production. this includes all raw materials, such as oil, timber, minerals, water and land itself. |
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Term
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Definition
| A period of time in which all factors are variable. |
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Term
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Definition
| A system where the exchange rate is determined by market forces, but the government intervenes from time to time in order to pursue macro economic objectives |
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Term
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Definition
| An economy where resource allocation is determined by arket forces of demand and supply |
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Term
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Definition
| When the free market fails to result in the socially efficient level of output where marginal social cost = marginal social benefit |
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Term
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Definition
| A maximum price is imposed by an authority and is set below the equilibrium price. |
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Term
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Definition
| Loands generally given to poo people who have no access to 'normal' forms of credit because they do not have the collateral to get loans. Aimed at small scale self employment projects such as market stalls, sewing etc. |
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Term
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Definition
| A minimum price is imposed by an authority and is set above the market price. Prices cannot fall below this price. |
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Term
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Definition
| A policy to control the money supply or alter interes trates. This is usually carried out by a country's central bank, and is used to manage aggregate demand. |
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Term
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Definition
| Official aid that is given by governments to an international organisation such as the UN, the World Bank or the IMF and is then disbursed into the recipients |
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Term
| Multinational Corporation |
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Definition
| A company that has productive units in more than once country. |
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Term
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Definition
| The negative 'spillover' effects that are suffered by a third party when a good or service is produced or consumed |
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Term
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Definition
| GDP before it has been adjusted by inflation |
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Term
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Definition
| Goods with positive income elasticity of demand, such that demand increases as income increases. |
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Term
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Definition
| Official aid is provide to a country by another government. |
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Term
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Definition
| The cost of an economic decision in terms of the next best alternative that is forgone. |
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Term
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Definition
| An increase in the potential output of the economy brought about by an increase in the quantity of the factor of production or an improvement in the quality of the factors of production. |
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Term
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Definition
| Any circular chain of events starting and ending in poverty, such as low income means low savings means low investment means low growth means low income |
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Term
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Definition
| Public goods are goods that have positive externalities, but would not be provided at all in a free market. |
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Term
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Definition
| A theory concerning exchange rates stating the exchange rates will move towards a level that adjusts for differences in inflation rates, so that identical basket of goods and services cost that same in each country. |
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Term
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Definition
| Import barriers that set limits on the quantity or value of imports that may be imported into a country |
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Term
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Definition
| GDP adjusted for inflation |
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Term
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Definition
| Also known as classical unemployment. A type of disequilibrium unemployment that occurs when the real wage is held above the free market equilibrium by a minimum wage or trade union power. |
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Term
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Definition
| A stage in the business cycle wen there are at least two consecutive quarters of negative economic growth. |
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Term
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Definition
| An increase in the value of once currency against another currency in a fixed exchange rate system. |
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Term
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Definition
| scarcity exists because human wants and needs are unlimited whereas the resources available to meet these wants and needs are limited. |
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Term
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Definition
| Unemployment due to permanent changes in the structure of an economy that makes workers in a given industry redundant, such as technologic advances, changes in demand. |
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Term
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Definition
| Government support to produces to reduce the costs of production and increase the supply of the good. The result will be a fall in price, but an increase in producer revenue. |
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Term
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Definition
| Development needed to meet the needs of the present generation without compromising the ability of future generations to meet their.s |
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Term
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Definition
| A tax on imported goods designed to reduce the competitiveness of imports and protect domestic producers |
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Term
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Definition
| A ratio of average export prices to average import prices. It reflects the purchasing power of exports. If terms of trade deteriorate, it means the average price of exports is faling relative to the average price of imports and means that a given amount of exports can buy fewer imports. |
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Term
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Definition
| This shows the level of economic activity in an economy, typically moving from high to low levels in a cyclical fashion. |
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Term
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Definition
| payments made by the government to individuals that is not in return for production, (welfare) |
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Term
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Definition
| People who are willing and able to work and are actively looking for work, but who do not have a job. |
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Term
| World trad organization (WTO) |
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Definition
| The international body which hosts negotiations concerning the reduction of trade barriers between its 149 countries |
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Term
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Definition
| Payments made to the factor of production of labour. |
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