ADE

Question 1

Common currency area

Answer 1

a geographical area (possibly covering several countries) in which a common currency is used

Question 2

Budget deficit

Answer 2

an excess of government spending over government receipts

Question 3

Catch-up effect

Answer 3

the property whereby a country that start off poor grow more rapidly than countries that start off rich

Question 4

Budget surplus

Answer 4

an excess of government rreceipts over government spending

Question 5

Collective bargaining

Answer 5

the process by which unions and firms agree on the terms of employment

Question 6

Circular-flow diagram

Answer 6

a visual model of the economy that shows how money and production inputs and outputs flow through markets among households and firms

Question 7

Autonomous expenditure

Answer 7

Spending which is not dependent on income

Question 8

Busniness cycle

Answer 8

fluctuations in economic activity, such as employment and production

Question 9

Bond

Answer 9

A certificate of indebtedness

Question 10

Central bank

Answer 10

an institution designed to regulate the quantity of money in the economy

Question 11

Absolute poverty

Answer 11

a level of poverty where an individual does not have access to the basics of life- shelter, food, clothes

Question 12

Balance trade

Answer 12

A situation in which exports equal imports

Question 13

Comparative Advantage

Answer 13

the comparision among producers of a good according to their opportunity cost

Question 14

Balance budget

Answer 14

Where the total sum of money received by a government in tax revenue and interest is equal to the amount it spends, including on any debt interest owing

Question 15

Commodity money

Answer 15

money that takes the form of a commodity with intristic value

Question 16

Accounting profit

Answer 16

total revenue minus total explicit cost

Question 17

Closed economy

Answer 17

an economy that does not interact with other economies around the world

Question 18

Automatic stabilizers

Answer 18

Changes in fiscal policy that simulate aggregate demand when the economy goes into a recession, without policy makers having to take any deliberate action

Question 19

Absolute advantage

Answer 19

the comparision among producers of a good according to their productivity

Question 20

Aggregate supply curve

Answer 20

a curve that shows the quantity of goods and services that firms choose to produce and sell at each price level

Question 21

Aggregate demand curve

Answer 21

a curve that shows the quantity of goods and services that households, firms and goverment want to buy at each price level

Question 22

Appreciation

Answer 22

An increase in the value of a currency measure by how much foreign currency it can buy