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| Factor Endowment Trade Theory |
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Definition
| specialization; countries should use natural resources (copper or labor force) |
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| strategy seeks to find a niche in the world economy for a certain type of export. Industries producing this export may receive governmental subsidies and better access to the local markets |
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| the ability of a party (an individual, a firm, or a country) to produce a particular good or service at a lower opportunity cost than another party. It is the ability to produce a product with the highest relative efficiency given all the other products that could be produced |
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| specialization of cooperative labour in specific, circumscribed tasks and like roles. Historically an increasingly complex division of labour is closely associated with the growth of total output and trade, the rise of capitalism, and of the complexity of industrialisation processes. Division of labour was also a method used by the sumerians to categorise different jobs, and divide them to skilled members of a society |
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| trend of shrinking the government and allowing businesses to run independently and freely (neoliberalists: Gordon Brown, Keynes, Clinton, Obama) |
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| economic system that combines private and state interprises; reflects both capitalism and socialism; |
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| the creation of money for the use of capital; the spending of money in hopes of yielding further gains in the future |
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| any one of a variety of systems, institutions, procedures, social relations and infrastructures whereby businesses sell their goods, services and labor to people in exchange for money |
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| measure of output from a production process, per unit of input |
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| specialized field (banking or corn or automobiles or raw materials) |
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| laissez-faire economics; let capitalism work itself out; from Univ. in Chicago; focused on benefits of free markets, rational expectations, Real Business Cycle, monetarism |
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| Keynesian Economics - economists are more suspicious of free markets; advocate more government involvememt; critical of Rational Expectations and point out irrationality |
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| Real Business Cycle Theory |
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Definition
cycles are not due to temporary deviations from an optimal level of potential output itself;
recessions and periods of economic growth as the efficient response to exogenous changes in the real economic environment. That is, the level of national output necessarily maximizes expected utility, and government should therefore concentrate on the long-run structural policy changes and not intervene through discretionary fiscal or monetary policy designed to actively smooth out economic short-term fluctuations.
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| In forming expectations, rational individuals make efficient use of all the information available to them; government should get out of the business of second-guessing private preferences |
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type of sub prime loan given to a person with "no income, no job, no assets"
No
Income
No
Job, no
Assets |
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Definition
| supposed to stabilize financial markets by 'shorting' - taking bets that a security (ownership of loans; esp. through mortgages) will fall in value |
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| total opportunity costs (both explicit and implicit) of a venture to an entrepreneur or investor |
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| characteristic in which one trade depends on the previous trade. For example, in some trading systems or methods, winning trades tend to follow other winning trades, and losses tend to follow losses (or vice versa) |
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| cost related to the next-best choice available to someone who has picked among several mutually exclusive choices.[1] It is a key concept in economics. It has been described as expressing "the basic relationship between scarcity and choice." |
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| cost advantages that a business obtains due to expansion. There are factors that cause a producer’s average cost per unit to fall as the scale of output is increased (benefit of 'buying in bulk') |
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| government borrows money & taxes citizens |
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| The Federal Reserve can raise/lower interest rates for what banks changes each other for loans; raising/lowering tasks |
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| places a primacy on the value of human value |
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| predates globalization; free trade |
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| a country devotes as many of its energies and resources to whatever natural assets and gifts it possesses (like Chile with copper or Germany with skilled workforce) |
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Term
| Gross Domestic Product (GDP) |
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Definition
| measure of an economy's size; the total final output of goods and services produced by an economy within the country's territory by residents and non-residents |
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| Gross National Product (GNP) |
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| the total domestic and foreign output claimed by residents of a nation; comprises GDP plus incomes accruing to residents of that nation from abroad |
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| rising energy prices and falling demand |
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| Keynesian Revolution - the "core" |
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Definition
| "a monetary economy is one in which changing views about the future are capable of influencing the quantity of employment and not merely its direction" |
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| an economic 'shock'; an unexpected recession |
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| Keynesian economics (the bottom line) |
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Definition
- full employment for a nation
- providing the right incentives
- he believed that everyone should act ethically
- uncertainty rules because of the human element (unpredictability)
- fair market
- GOAL: bring people the 'good life'
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| the state either starves or stimulates the economy (either taxes/tariffs or bailouts and aid) |
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