Actual growth
is an increase in real output for an economy over time. It is measured as an increase in real GDP
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Aggregate demand
is the total spending in an economy consisting of consumption, investment, governement expenditure and net exports
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Bilateral aid
is given directly from one country to another
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multilateral aid
is money that is given by countries to international institutions which are distributed to countries
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official aid
is provided to a country by another government to governmental organizations such as UN or EU
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tied aid
is granted on the condition that it is used to buy goods or services from the donor country
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Allocative efficiency
exists where price is equal to marginal cost and resources are allocated in such a way that neither too much nor too little is priduced from society's point of view
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is government legislation [=imposition of a tariff] against the seeling of imported goods at a price below their production costs
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in an increase of the value of the currency, expresed in terms of another currency, in a floating exchange rate system
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Average costs
is the total costt divided by the quantity produced
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budget deficit
occurs when governement expenditure exceceds governement revenue (taxation)
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Business cycle
is the periodic fluctuations in real income/output/GDP around the productive potential or long term trend of the economy.
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Capital flight
occers when foreign currencies (or other financial assets) flow out of a country to seek a "safe haven" in another country
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is a group of producers in an industry that join together to regulate supply (or fix or increase prices)
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Centrally planned economy
is an economic system where resources are allocated by the government or a central planning authority
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comparitive advantage
implies that one coutnry is able to produce a good at a lower opportunity cost than another
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is spending by household on domestic consumer goods and services over a period of time
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is the abuse of public office for private gain, the abuse (dishonest use) of power (position). Examples might include activities such as bribery, misuse of contract paymnts and embezzlement
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current account balance
is a record of revenues earned from the export of goods and services and the expenditure on imports of goods and services
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current account deficit
is where the value of total imports of goods and services net income flows are greater than the value of total exports of goods and services
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current account surplus
is where revenues from exports of goods and services plus net income flows are greateer than the spending on the imports of goods and services
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cross elasticity of demand
is the responsiveness of the demand for one good to a change in price in another good
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crowding out
is a situation when the government spends more than it receives, and needs to borrow money forcing interest rates to rise and thereby reducing investment and consumption
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is the quantity of goods and services that consumers are willing and able to buy at each possible price
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demerit good
is a good considered to be harmful to people that would be over provided by the market and so over-consumerd or a good whose consumption creates negative externalities, for a third party who are not involved in the purchse of sale of the product
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is a fall in the value of one currency aggainst another currency in a floating exchange rate system
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what are developing countries characterized by
low income per capita, high rates of poverty, low standard of living, low HDI ranking/ value
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the selling of a good in another country at a price below its cost of production
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economic growth
is the growth of real output in an economy over time and it is measured by an increase in real GDP
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economic development
is a broader concept than economic growth involving welfare improvements to the standard of living including health, education, and shelter
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economies of scale
are a fall in long run unit costs and comes about as a result of firm increasing its scales of operations
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is the facter of production involving organising of the other factors and/ or risk taking
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exchange rate
is the price of one currency expressed in terms of another
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fiscal policy
the use of government spending and taxation to shift the AD curve
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floating exchange rate
where the exchange rate changes according to the market forces fo demand and supply
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foreign direct investment
is the establishment of production units by multinational companies in a foreign country
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free good
is unlimited in supply and has no opportunity cost
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free market economy
is a market in which resource allocation is determined by demand and supply or a price mechanism or producers and consumers or where the means of production are privately held by individuals and firms
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free trade
exists where there is a trade between different countries without government intervention
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free trade area
is an agreement whereby there is free trade among memver countries, but each memeber can maintain its own trade barriers in trade with non-member countries
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GDP or national output
is the total value of all final goods and services produced in an economy given time period
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real GDP or real output
the value of all final domestic goods and services adjusted to inflation
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Gini coefficient
is a measure of inequality in the distribution of income
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human resources
the labor force of a country
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imported substitution policies
are designed to encourge the domestic production, of goods, rather than importing them. The strategies encourage protectionsm
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income elasticity of demand
is the measrure of the responsiveness of demand of a good or serivce to change in income
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the amount of money that a country owes to other countries and/or international institutions
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indirect tax
an expenditure or tax or a tax levied on goods and services and is imposed by the government
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involves essential facilities and services such roads, airports, sewage treatment, railways, telecommunications and other utilities typically provided by the governement
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is a sustained increase in general or average level of prices over a given period of time
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is a sustained increase in general or average level of prices in an economy over a given period of time
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inflaitonary gap
refers to inflationary pressure create by the current equilibrium being above the full employment or equilibrium
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informal markets
markets in which economic activity is not officially recorded/ measured
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interest rates
the price of capital or the price of borrowed/loaned money, usually expressed as a percentage
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expenditure by firms on capital equipment and is an injection into the economy
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managed exchange rates
system where the exchange rate is determined by market forces, but the government/central bank intervenes from time to time in order to keep it within a certain band
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the interaction between buyers and sellers in order to exchange goods or services or buyers and sellers coming together in order to exchange a good or a service
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maximum price
the upper limit imposed by the governement below which the price may not fall. A maximum price is usually set below the equilibrium to aid relatively poor consumers
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merit goods
goods or services with strong positive externalities that would be under provided by the market and so under consumed
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minimum price
the lower limit imposed by the government below which the price may not fall. a minimum price is usually set above the equilibrium to aid farmers
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monetary policy
demand side policy with the central bank using changees in the supply of money or interest rates to affect AD
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monopolistic competition
is amarket when there are many buyers and sellers, producing differentiated products, with no barriers to entry
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is a market structure where there is only on firm in the industry or a single firm dominates the market
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multinational cooperations
companies that have productive units in more than one country.
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the raito of the induced change in national income to the increase in the level of injections and it is equal to the reciprocal of the mps+mpt+mpm
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non governmental organizations that exist to: promote sustainable economic development and or humanitarian ideals
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the value of economic variable that has not been adjusted for the effects of inflation
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normal profit
the amount of revenue needed to cover the total costs of production, including opportunity cost
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foreign reserves
are reserves of foreign currencies held by the central bank or the government
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a market where few large firms dominate the industry, with at least one other characteristic such as interdependency of firms, high barriers to entry, homogenous or differentiated product
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collusive oligopoly
where a few firms act together to avoid competition by resorting to agreements to fix prices or output
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opportunity cost
the cost of an economic decision in terms of the next best alternative foregone
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poverty cycle
involves low incomes which lead to low savings and low investment which ensure low incomes in the future
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potential growth
in an increase in the potential output of an economy through an increase in the quantity/ quality of resources
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measure of responsiveness of the quatity demanded to a change in the price of a good
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price discrimination
exists when a producer charges a different price to customers for an identical good or service
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product differentiation
where a producer attempts to distinguish their product from those of competitiors, with the aim of making demand less price elastic
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productive efficiency
exists when production is achieved at lowest cost per unit of output. this is achieved at the point where average total cost is at its lowest
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progressive tax
is where the higher the level of income, the higher the percentge of taxation that is paid
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property rights
give people a leagal right to own property/assets
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involves governemnt intervention in order to restrict trade between countries
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are import barriers that set limits on the quantity or value of imports into a country
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a way that scarce resources are allocated or the distribution/allocation of a good among users or a method of distributing a good when there is a shortage
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Card 2


Aggregate demand


is the total spending in an economy consisting of consumption, investment, governement expenditure and net exports

Card 3


Bilateral aid


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Card 4


multilateral aid


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Card 5


official aid


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