Brainscape's Knowledge GenomeTM

Browse over 1 million classes created by top students, professors, publishers, and experts.


See full index

Econ > Definitions > Flashcards

Definitions Flashcards

1
Q

Demand

A

The relationship between possible prices of goods and services and the quantities that individuals are willing and able to buy over some period, ceteris paribus.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

Supply

A

The quantity of goods that firms can supply at different possible prices over a period, ceteris paribus.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

Micro

Elasticity

A

A measure of the responsiveness of an economic variable to change in another economic variable.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

Micro

Income elasticity of demand

A

The responsiveness of demand for a good or service to a change in income.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

Micro

Price elasticity of demand

A

Measures the responsiveness of a good or service’s quantity demand to a change in its price.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

Micro

Price elasticity of supply

A

Measures the responsiveness of the quantity supplied of a good or service to a change in its price.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

Micro

Perfect competition (HL)

A

A market structure with many small firms producing similar products, no entry or exit barriers, and perfect information. All the firms are thus price takers.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

Micro

Monopoly (HL)

A

A market structure in which only one firm is in the industry, so the firm is the industry. There are high barriers to entry.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

Micro

Oligopoly (HL)

A

A market structure where few large firms dominate the market, with high barriers to entry.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

Micro

Monopolistic competition (HL)

A

A market structure in which many sellers produce different products without entry barriers.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

Consumer surplus

A

The difference between the price a consumer is most willing to pay for a good and the price they pay.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

Producer surplus

A

The benefit enjoyed by producers receiving a price higher than they were willing to receive.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

Marginal utility

A

The extra or additional utility derived from consuming one more unit of a good or service.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

Micro

Externalities

A

External costs or benefits to third parties when a good or service is produced or consumed. An externality arises when an economic activity imposes costs or creates benefits on third parties for which they are not compensated or do not pay, respectively.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

Micro

Market failure

A

The failure of markets to achieve allocative efficiency. Markets fail to produce the output at which marginal social benefits equal marginal social costs; social or community surplus is not maximized.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

Micro

Public goods

A

Goods or services with non-rivalry characteristics and non-excludability, for example, flood barriers.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

Micro

Merit goods

A

Goods or services considered beneficial for people under-provided by the market and under-consumed, mainly due to positive consumption externalities.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

Micro

Demerit goods

A

Goods and services that are overconsumed by the individuals who consume them and society. They are usually due to negative consumption externalities.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
19
Q

Micro

Progressive taxation

A

The fraction of tax paid increases as income increases—the average tax rate increases.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
20
Q

Micro

Regressive taxation

A

The fraction of tax paid decreases as income increases. The average tax rate decreases. All indirect taxes are regressive.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
21
Q

Micro

Indirect taxes

A

Taxes on expenditures to buy goods and services.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
22
Q

Macro

Gross domestic product (GDP)

A

The value of all final goods and services produced within an economy over some time, usually a year or quarter.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
23
Q

Macro

Inflation

A

A sustained increase in the average level of prices in a country.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
24
Q

Macro

Deflation

A

A sustained decrease in the average price level of a country.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
25
Q

Macro

Unemployment

A

When a person is actively looking for work without a job.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
26
Q

Macro

Cyclical unemployment

A

Results from decreased aggregate demand and, thus, economic activity; it occurs in a recession.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
27
Q

Macro

Frictional unemployment

A

The unemployment of individuals who are in between jobs, as people quit to find a better job or move to a different location.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
28
Q

Macro

Seasonal unemployment

A

When people are out of work because their usual job is out of season.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
29
Q

Macro

Structural unemployment

A

Arises from several factors, including technological changes, changes in the patterns of demand for different labor skills, changes in the geographical location of industries, and labor market rigidities.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
30
Q

Macro

Fiscal policy

A

A demand-side policy that uses changes in government spending and or direct taxation to influence aggregate demand and, thus, growth, employment, and prices.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
31
Q

Macro

Monetary policy

A

A demand-side policy using changes in the money supply or interest rates to achieve economic objectives relating to output, employment, and inflation.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
32
Q

Macro

Aggregate demand (AD)

A

Planned spending on domestic goods and services at different average price levels per period of time. It consists of consumption, investment, government expenditures, and net exports.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
33
Q

Macro

Aggregate supply (AS)

A

Planned level of output domestic firms are willing and able to offer at different average price levels.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
34
Q

Macro

Economic growth

A

Refers to increases in real GDP over time.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
35
Q

Macro

Economic development

A

A multidimensional concept involving a
sustained increase in living standards that
implies higher levels of income and thus greatercaccess to goods and services, better education and health, a better environment to live in as well as individual empowerment.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
36
Q

Macro

Business cycle

A

The short-term fluctuations of real GDP around its long-term trend.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
37
Q

Global

Exchange rate

A

The value of one currency expressed in terms of another.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
38
Q

Global

Balance of payments

A

A record of the value of a country’s transactions with the rest of the world over some time.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
39
Q

Global

Comparative advantage (HL)

A

When a country can produce a good at a lower opportunity cost than another.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
40
Q

Global

Dumping

A

When a firm sells abroad at a price below the average cost or below the domestic price

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
41
Q

Global

Tariff

A

A tax placed on imports to protect domestic industries from foreign competition and raise revenue for the government.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
42
Q

Global

Quota

A

An import barrier that limits the quantity or value of imports that may be imported into a country.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
43
Q

Macro

Subsidy

A

The amount of money the government pays to a firm per unit of output to encourage production and provide the firm an advantage over foreign competition.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
44
Q

Global

Fixed exchange rate

A

A system in which the exchange rate is fixed, or pegged, to the value of another currency and maintained there with appropriate central bank intervention.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
45
Q

Global

Floating exchange rate

A

A system in which the exchange rate is determined solely by the currency’s market demand and supply in the foreign exchange market without any central bank intervention.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
46
Q

Global

Appreciation

A

When the price of a currency increases in a floating exchange rate system.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
47
Q

Global

Depreciation

A

The decrease in the value of a currency in terms of another currency in a floating or managed exchange rate system.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
48
Q

Global

Devaluation

A

A decrease in the value of a currency in a fixed exchange rate system.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
49
Q

Global

Trading bloc

A

A group of countries that have agreed to reduce protectionist measures, such as tariffs and quotas.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
50
Q

Macro

Real GDP

A

The total value of all final goods and services
produced in an economy in a given time period, usually one year, adjusted for inflation.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
51
Q

Macro

Nominal GDP

A

The total money value of all final goods and
services produced in an economy in a given
time period, usually one year, at current values (not adjusted for inflation).

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
52
Q

Global

Human Development Index (HDI)

A

A composite index of development that reflects the three basic goals of development: a long and healthy life, improved education, and a decent standard of living. The variables measured are life expectancy of birth, mean years of schooling and expected years of schooling, and GNI per capita.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
53
Q

Global

Gini coefficient

A

Measures the degree of income inequality in a country, ranging from zero to one. Diagrammatically, it is the ratio of the area between the Lorenz curve and the diagonal over the area of the half-square.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
54
Q

Global

National debt

A

The sum of all past budget deficits minus any budget surpluses, the total amount the government owes to domestic and foreign creditors.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
55
Q

Global

Poverty

A

Arises when the lack of material possessions or money prevents an individual or a family from achieving a minimum satisfactory standard of living.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
56
Q

Global

Gender inequality index

A

A composite indicator that measures gender inequalities in three human development dimensions: reproductive health, empowerment, and economic status.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
57
Q

Global

Development aid

A

Aid aimed at assisting developing countries in their development efforts. Includes project aid, program aid, and debt relief. It’s concessional, meaning there are low-interest rates and long repayment periods.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
58
Q

Global

Foreign aid

A

Refers to flows of grants or loans from developed countries to developing countries that are non-commercial from the donor’s point of view and for which the terms are concessional.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
59
Q

Global

Humanitarian aid

A

Aid given to alleviate short-term suffering, consisting of food aid, medical aid, and emergency relief aid, usually due to a natural catastrophe or war.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
60
Q

Global

Official Development Assistance (ODA)

A

Aid provided to a country by another government or multilateral agency. It’s the most essential part of foreign aid.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
61
Q

Global

Microfinance

A

The provision of small loans to poor entrepreneurs who lack access to traditional banking services.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
62
Q

Global

Foreign direct investment (FDI)

A

When a firm establishes a productive facility in a foreign country or acquires controlling interest in an existing foreign firm.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
63
Q

Global

World Trade Organization (WTO)

A

An international body that sets the rules for global trading and resolves disputes between its member countries. It also hosts negotiations concerning reducing trade barriers between its member nations.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
64
Q

Global

International Monetary Fund (IMF)

A

An international financial institution used by 189 countries. Its objectives include improving global monetary cooperation and securing financial stability by monitoring its members’ economic and financial policies and providing them with advice and loans if they face difficulties in their balance of payments.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
65
Q

global

Non-governmental organizations (NGOs)

A

Organizations not part of the government that promote economic development, humanitarian ideals, or sustainable development.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
66
Q

Global

Bilateral trade agreement

A

An agreement between two or more countries to phase out or eliminate trade barriers.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
67
Q

Global

Free trade

A

International trade that is not subject to trade barriers, such as tariffs or quotas.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
68
Q

Global

Free trade agreement

A

An agreement between two or more countries to phase out or eliminate trade barriers between them; members of the agreement can maintain their trade policy towards non-members.

69
Q

Global

Multilateral trade agreement

A

An agreement between many countries to lower tariffs or other protectionist measures currently carried out by the framework of the WTO.

70
Q

Global

Preferential trade agreement

A

Where a country agrees to give preferential access for specific products to one or more trading partners.

71
Q

Global

Regional trade agreement

A

Between countries, usually within a geographical region, to lower or eliminate trade barriers.

72
Q

Global

Trade creation (HL)

A

Occurs when lower-cost imports replace higher-cost imports due to the formation of a trading bloc or a trade agreement.

73
Q

Global

Trade diversion (HL)

A

Occurs when higher-cost imports replace lower-cost imports due to the formation of a trading bloc or a trade agreement.

74
Q

Global

Trade liberalization

A

The process of reducing barriers to international trade.

75
Q

Global

Trade protection

A

Government intervention to limit imports and encourage exports by setting up trade barriers that protect against foreign competition.

76
Q

Global

Sustainable Development Goals (SDGs)

A

17 goals set out by the UN that aim to end all forms of poverty, fight inequality, and tackle climate change.

77
Q

Micro

Asymmetric information (HL)

A

A type of market failure where one party in an economic transaction has access to more or better information than the other party.

78
Q

Micro

Automatic stabilizers (HL)

A

Institutionally built-in features (like
unemployment benefits and progressive income taxation) that tend to decrease the short-term fluctuations of the business cycle without the need for governments to intervene.

79
Q

Micro

Bounded rationality (HL)

A

A term introduced by Herbert Simon that suggests consumers and businesses have neither the necessary information nor the cognitive abilities required to maximize with respect to some objectives (such as utility), and thus choose to satisfice. They therefore are
rational only within limits.

80
Q

Micro

Bounded self-control (HL)

A

The idea that individuals, even when they know what they want, may not be able to act in their interests. Findings of bounded self- control include evidence of procrastination (for example, among students, professionals and others) that may result in self-harm, and submitting to temptation (for example, dieters).

81
Q

Micro

Bounded selfishness (HL)

A

The idea that people do not always maximize self-interest but also have concern for the well-being of others as shown by volunteer work and charity contributions.

82
Q

Global

Capital flight

A

Occurs when money and other assets flow out of a country to seek a “safe haven” in another country.

83
Q

Global

Capital transfers

A

Include financial or non-financial assets for items including debt forgiveness, investment, non-life insurance claims. They are part of the capital account of the balance of payments.

84
Q

Macro

Carbon taxes

A

Taxes levied on the carbon content of fuel. They are a type of Pigouvian tax.

85
Q

Circular economy

A

An economic system that looks beyond the linear take-make-dispose model and aims to redefine growth, focusing on society-wide benefits. It is based on three principles: design out waste, keep products and materials in use, and regenerate natural systems.

86
Q

Micro

Collusive oligopoly (HL)

A

A market where firms agree to fix price and/or to engage in other anticompetitive behaviour.

87
Q

Global

Common market

A

When a group of countries agree not only to free trade of goods and services but also to free movement of capital and labour.

88
Q

Macro

Consumer price index (CPI) (HL)

A

The average of the prices of the goods and services that the typical consumer buys expressed as an index number. The CPI is used as a measure of the cost of living in a country and to calculate inflation.

89
Q

Macro

Contractionary fiscal policy

A

Refers to a decrease in government
expenditures and/or an increase in taxes that aim at decreasing aggregate demand and thus reducing inflationary pressures.

90
Q

Macro

Contractionary monetary policy

A

A policy employed by the central bank involving an increase in interest rates and aimed at decreasing aggregate demand and thus inflationary pressures. Referred to also as tight
monetary policy.

91
Q

Macro

Cost-push inflation

A

Inflation that is a result of increased production
costs (typically because of rising money wages
or rising commodity prices) and illustrated by a
leftward shift of the SRAS curve.

92
Q

Macro

Crowding out (HL)

A

The idea that expansionary fiscal policy is not
very effective in increasing aggregate demand
because the increased borrowing needs of
the government to finance the increased
expenditures could lead to increased interest
rates. Thus, reducing private sector investment,
consumer spending, and other components of
AD.

93
Q

Global

Current account

A

A subaccount of the balance of payments that
records the value of net exports in goods and
services, net income and net current transfers of
a country over a period of time.

94
Q

Global

Customs union

A

An agreement between countries to phase out
or eliminate tariffs and other trade barriers and
establish a common external barrier toward
non-members.

95
Q

Global

Debt relief

A

A reduction of the debt burden of developing
countries organized by the World Bank and the
IMF.

96
Q

Global

Debt servicing

A

Refers to the repayment of principal and interest
on the debt of a person, a firm or a country.

97
Q

Global

Deflationary/recessionary gap

A

Arises when the equilibrium level of real output
is less than potential output as a result of a
decrease in AD.

98
Q

Macro

Demand-pull inflation

A

Inflation that is caused by increases in aggregate demand.

99
Q

Macro

Demand side policies

A

Refers to economic policies that aim at affecting
aggregate demand and thus macroeconomic
variables such as growth, inflation and employment; demand side policies include fiscal
policy and monetary policy.

100
Q

Global

Economically least developed countries (ELDCs)

A

Low-income countries facing severe structural constraints to sustainable development, with low levels of human assets, highly vulnerable to economic and environmental shocks.

101
Q

Global

Economic integration

A

Economic interdependence between countries
usually involving agreements between two or
more countries to phase-out or eliminate trade
and other barriers between them.

102
Q

Global

Economic well-being

A

A multidimensional concept relating to the level
of prosperity and quality of living standards in a
country.

103
Q

Economies of scale

A

Falling average costs that a firm experiences
when it increases its scale of operations.

104
Q

Efficiency

A

In general, involves making the best use of
scarce resources. May refer to producing at the
lowest possible cost or to allocative efficiency
where marginal social costs are equal to
marginal social benefits or where social surplus
is maximum.

105
Q

Macro

Expansionary fiscal policy

A

Refers to an increase in government expenditures and/or a decrease in taxes that aim at increasing aggregate demand and thus real output and employment.

106
Q

Macro

Expansionary monetary policy

A

Monetary policy aiming at increasing aggregate
demand through a decrease in interest rates;
also referred to as easy monetary policy.

107
Q

Maco

Expenditure approach (HL)

A

One of three analytically equivalent approaches
of measuring GDP that adds all the expenditures
made on final domestic goods and services
over a period of time by households, firms, the
government and foreigners.

108
Q

Factors of production

A

Resources used in the production of goods and
services; include land (natural resources), labour,
capital and entrepreneurship.

109
Q

Global

Financial account

A

In the balance of payments this records inflows
and outflows of portfolio and FDI funds over a
period of time, official borrowing and changes
in reserve assets.

110
Q

Macro

Full employment

A

A goal of macroeconomic policy that aims at
fully utilizing the scarce factor of production
labour. Full employment exists when the
economy is producing at its potential level
of real output and thus there is only natural
unemployment (the AD–AS model considers the
AD and AS curves together). In the production
possibilities curve (PPC model), full employment
exists when the economy is producing

111
Q

Macro

Gross national income (GNI)

A

The income earned by all national factors of
production independently of where they are
located over a period of time; it is equal to GDP
plus factor income earned abroad minus factor
income paid abroad.

112
Q

Global

Happy Planet Index

A

An index that combines four elements to show
how efficiently residents of different countries
are using environmental resources to lead
long, happy lives. The elements are well-being,
life expectancy, inequality of outcomes and
ecological footprint.

113
Q

Human capital

A

The education, training, skills, experience and
good health embodied in the labour force of a
country.

114
Q

Micro

Imperfect competition (HL)

A

A market structure where firms have a degree of
market power as they face a negatively sloped
demand curve and can thus set price.

115
Q

Macro

Income approach (HL)

A

One of the three equivalent ways that GDP
can be measured, by adding all the incomes
generated in the production process (wages,
profits, interest and rent) for a given time period.

116
Q

Global

Inequality adjusted Human Development Index (IHDI)

A

A composite indicator consisting of an average
of a country’s achievements in health, education
and income all adjusted for the degree of
inequality characterizing each.

117
Q

Global

Infant industry

A

Refers to a new industry that should be protected from foreign competition until it is large enough to achieve economies of scale that will allow it to be internationally competitive. It is used as an argument in favour of trade protection in developing countries.

118
Q

Inferior goods

A

Lower quality goods for which higher quality
substitutes exist; if incomes rise, demand for the
lower quality goods decreases.

119
Q

Injections

A

Within the circular flow model these refer to
spending on domestic output that does not
originate from households and thus includes
investment spending by firms, government
expenditures and exports.

120
Q

Global

Interventionist supply side policies

A

A set of policies that aim to increase an
economy’s productive capacity that relies on a
greater role for the government; these include
expenditures on infrastructure, education,
health care, research and development, and all
industrial policies.

121
Q

Law of diminishing marginal returns

A

A short-run law of production stating that as
more and more units of the variable factor
(usually labour) are added to a fixed factor
(usually capital) there is a point beyond
which total product continues to rise but at
a diminishing rate or, equivalently, marginal
product starts to decrease.

122
Q

Law of diminishing marginal utility

A

The idea that as an individual consumes
additional units of a good, the additional
satisfaction enjoyed decreases.

123
Q

Leakages

A

Income not spent on domestic goods and
services. It includes savings, taxes and import
expenditure.

124
Q

Macro

Long-run aggregate supply (LRAS)

A

Aggregate supply that is dependent upon the
resources and technology in the economy,
thus being independent of the price level. It
is vertical at the level of potential output. It
can only be increased by improvements in the
quantity and/or quality of factors of production
as well as improved technology.

125
Q

Macro

Long-term growth

A

Growth over long periods of time. In the PPC model this is shown by outward shifts of the PPC. When shown in the AD–AS model (the AD–AS model considers the AD and AS curves together), it is shown by rightward shifts in the LRAS curve.

126
Q

Luxury goods

A

Goods that are not considered essential by consumers therefore they have a price elastic demand (PED > 1), or income elastic demand (YED > 1).

127
Q

Micro

Marginal social cost (MSC)

A

The extra or additional cost to society of
producing an additional unit of output,
including both the private cost and the external
costs.

128
Q

Micro

Marginal social benefit (MSB)

A

The extra or additional benefit/utility to society
of consuming an additional unit of output,
including both the private benefit and the
external benefit.

129
Q

Macro

Market-based supply side policies

A

A set of policies based on well-functioning competitive markets in order to promote long-term economic growth, shown by increases in long-run aggregate supply.

130
Q

Micro

Market power (HL)

A

The ability of a firm (or group of firms) to raise
and maintain price above the level that would
prevail under perfect competition (or P > MC).

131
Q

Global

Marshall-Lerner condition (HL)

A

A condition stating that a depreciation or
devaluation of a currency will lead to an
improvement in the current account balance
if the sum of the price elasticity of demand for
exports plus the price elasticity of demand for
imports is greater than one.

132
Q

Global

Monetary union

A

Where two or more countries share the same currency and have a common central bank.

133
Q

Global

Multidimensional Poverty Index (MPI)

A

An international measure of poverty covering over 100 of the economically least developed countries. It complements traditional income-based poverty measures by capturing the deprivations that each person faces at the same time with respect to education, health and living standards.

134
Q

Global

Multilateral development assistance

A

Assistance provided by multilateral organizations such as the World Bank when they lend to developing countries for the purpose of helping them in their development objectives.

135
Q

Micro

Natural monopoly (HL)

A

A monopoly that can produce enough output to cover the entire needs of a market while still experiencing economies of scale. Its average costs will therefore be lower than those of two or more firms in the market.

136
Q

Micro

Negative externalities of consumption

A

Negative effects suffered by a third party whose interests are not considered when a good or service is consumed, so the third party are therefore not compensated.

137
Q

Micro

Negative externalities of production

A

Negative effects suffered by a third party whose
interests are not considered when a good
or service is produced, so the third party are
therefore not compensated.

138
Q

Macro

Nominal GNI

A

The total income earned by all the residents of
a country (regardless of where their factors of
production are located) in a given time period,
usually a year, at current prices (not adjusted for
inflation).

139
Q

Micro

Non-collusive oligopoly (HL)

A

Firms in an oligopoly do not resort to agreements to fix prices or output. Competition tends to be non-price. Prices tend to be stable.

140
Q

Micro

Non-price competition (HL)

A

Competition between firms that is based on factors other than price, usually taking the form of product differentiation.

141
Q

Nudge theory (HL)

A

Nudges (prompts, hints) are used to influence
the choices made by consumers in order to
improve the well-being of people and society.

142
Q

Global

OECD Better Life INDEX

A

An index to compare well-being across countries, based on several dimensions that the OECD has identified as essential, in the areas of material living conditions and quality of life.

143
Q

Macro

Output approach (HL)

A

One of the three equivalent ways that GDP can be measured, it adds up the value of final goods and services produced in a given time period.

144
Q

Global

Overvalued currency

A

A currency whose value or exchange rate
is greater than its equilibrium exchange rate, usually achieved through central bank intervention; may occur in a pegged or managed exchange rate system.

145
Q

Pigouvian taxes

A

An indirect tax that is imposed to eliminate the external costs of production or consumption.

146
Q

Micro

Positive externalities of consumption

A

The beneficial effects that are enjoyed by third parties whose interests are not accounted for when a good or service is consumed, therefore they do not pay for the benefits they receive.

147
Q

Micro

Positive externalities of production

A

The beneficial effects that are enjoyed by third parties whose interests are not accounted for when a good or service is produced, therefore they do not pay for the benefits they receive.

148
Q

Global

Poverty trap/cycle

A

Any circular chain of events starting and ending in poverty—for example, low income leads to low savings, leads to low investment, leads to low growth, leads to low income.

149
Q

Micro

Pice competition

A

Competition between firms that is based on price, for example, a firm that wants to increase its sales at the expense of other firms will lower its price.

150
Q

Micro

Price war

A

Occurs when firms successively cut their prices in an effort to match the price cuts of other firms, resulting in lower profits, possibly losses.

151
Q

Global

Purchasing power parity (PPP) (HL)

A

A method used to make the buying power of
different currencies equal to the buying power
of US$1. PPP exchange rates are used to make
comparisons of income or output variables
across countries while eliminating the influence
of price level differences.

152
Q

Macro

Quantitative easing (HL)

A

An expansionary monetary policy where a central bank buys (long term) government bonds or other financial assets, in order to stimulate the economy and increase the money supply.

153
Q

Micro

Rational consumer choice (HL)

A

Occurs when consumers make choices based on the following assumptions: they have consistent tastes and preferences, they have perfect information and they arrange their purchases so as to make their utility as great as possible (maximize it). It is assumed in standard
microeconomic theory.

154
Q

Micro

Rational producer behavior (HL)

A

Occurs when firms try to maximize profit. This
is an assumption in standard microeconomic theory.

155
Q

Micro

Satisficing (HL)

A

A business or firm objective to achieve a satisfactory outcome with respect to one or several objectives, rather than to pursue any one objective at the possible expense of others by optimizing (maximizing), for example, profit, revenue or growth. It is essentially a mix of the words “satisfy” and “suffice”.

156
Q

Scarcity

A

The limited availability of economic resources relative to society’s unlimited needs and wants of goods and services.

157
Q

Micro

Screening (HL)

A

In asymmetric information, the use of a screening process by the participant with less information to gain more information regarding a transaction, and so reduce adverse selection.

158
Q

Macro

Short-run aggregate supply (SRAS)

A

The total quantity of real output (real GDP) offered at different possible price levels in the short run (when wages and other resource prices are constant).

159
Q

Micro

Signalling (HL)

A

In asymmetric information, the participant with more information sending a signal revealing relevant information about a transaction to the participant with less information, to reduce adverse selection.

160
Q

Global

Specialization (HL)

A

Refers to when a firm or country focuses on the production of one or a few goods or services. This forms the basis of theory of comparative advantage in international trade.

161
Q

Global

Speculation

A

Refers to a process where something is bought or sold with a view to making a short term profit, for example, currency speculation where currencies are bought or sold so that a profit can be made when the exchange rate changes.

162
Q

Macro

Supply-side policies

A

Government policies designed to shift the long-run aggregate supply curve to the right, thus increasing potential output in the economy and achieving economic growth.

163
Q

Global

Sustainability

A

Refers to the preserving the environment so that it can continue to satisfy needs and wants into the future. Relates to the concept of “sustainable development”.

164
Q

Global

Sustainable development

A

Refers to the degree to which the current generation is able to meet its needs today but still conserve resources for the sake of future generations.

165
Q

Micro

Tradable permits

A

Permits to pollute, issued by a governing body, that sets a maximum amount of pollution allowable. These permits may be traded (bought or sold) in a market for such permits.

166
Q

Tragedy of commons (HL)

A

A situation with common pool resources, where individual users acting independently, according to their own self-interest, go against the common good of all users by depleting or spoiling that resource through their collective action.

167
Q

Global

Unfair competition

A

In international trade this refers to practices of countries trying to gain an unfair advantage through such methods as undervalued exchange rates.

168
Q

Wealth

A

The total value of all assets owned by a person, firm, community, or country minus what is owed to banks or other financial institutions.

169
Q

Micro

Welfare loss

A

A loss of a part of social surplus (consumer plus
producer surplus) that occurs when there is market failure so that marginal social benefits are not equal to marginal private benefits.

Econ (4 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2024 Bold Learning Solutions. Terms and Conditions