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Econ 2024 > everything econ > Flashcards

everything econ Flashcards

1
Q

What is abnormal profit?

A

Refers to positive economic profit, arising when total revenue is greater than total economic costs (implicit plus explicit costs); is also known as ‘supernormal profit’.

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2
Q

What is absolute advantage?

A

Refers to the ability of a country to produce a good using fewer resources than another country.

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3
Q

What is absolute poverty?

A

The inability of an individual or a family to afford a basic standard of goods and services, defined in relation to a nationally or internationally determined ‘poverty line’.

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4
Q

What is actual output in the PPC model?

A

Occurs somewhere inside an economy’s production possibilities curve (PPC) due to the presence of unemployed resources and productive inefficiency.

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5
Q

What is actual output in the AD-AS model?

A

May be higher or lower than potential output based on the position of an economy’s long-run aggregate supply (LRAS) curve.

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6
Q

What are ad valorem taxes?

A

Taxes calculated as a fixed percentage of the price of the good or service.

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7
Q

What is aggregate demand?

A

The total quantity of goods and services that all buyers in an economy want to buy over a particular time period, at different possible price levels, ceteris paribus.

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8
Q

What is the aggregate demand curve?

A

The curve that shows the relationship between the total quantity of goods and services that all buyers in an economy want to buy over a particular time period, at different price levels.

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9
Q

What is aggregate supply?

A

The total quantity of goods and services produced in an economy over a particular time period, at different price levels, ceteris paribus.

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10
Q

What are average costs?

A

Costs per unit of output, calculated by dividing total cost by the number of units of output produced.

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11
Q

What are average fixed costs?

A

Fixed cost per unit of output, calculated by dividing fixed cost by the number of units of output produced.

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12
Q

What is average product?

A

The total quantity of output of a firm per unit of variable input, showing how much output each unit of the variable input produces on average.

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13
Q

What is average revenue?

A

Revenue per unit of output sold, calculated by dividing total revenue by the number of units of output produced.

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14
Q

What is average tax rate?

A

Tax paid divided by total income, expressed as a percentage.

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15
Q

What are average total costs?

A

Total cost per unit of output, calculated by dividing total costs by the number of units of output; also equal to the sum of average fixed costs and average variable costs.

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16
Q

What are average variable costs?

A

Variable cost per unit of output, calculated by dividing variable cost by the number of units of output.

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17
Q

What is the balance of payments?

A

A record of all transactions between the residents of a country and the residents of all other countries, showing all payments received and made.

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18
Q

What is the balance of trade in goods?

A

The value of exports of goods minus the value of imports of goods over a specific period of time.

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19
Q

What is the balance of trade in services?

A

The value of exports of services minus the value of imports of services over a specific period of time.

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20
Q

What is the balance on capital account?

A

The sum of inflows minus outflows of funds in the capital account of the balance of payments.

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21
Q

What is the balance on current account?

A

The sum of inflows minus outflows of funds in the current account of the balance of payments.

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22
Q

What is allocative efficiency?

A

An allocation of resources that results in producing the combination and quantity of goods and services most preferred by consumers.

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23
Q

What is anti-dumping?

A

An argument that justifies trade protection policies when a country’s trading partner is suspected of practising dumping.

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24
Q

What is appreciation of a currency?

A

An increase in the value of a currency in the context of a floating or managed exchange rate system.

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25
Q

What is appropriate technology?

A

Technologies that are well-suited to a country’s particular economic, geographical, ecological, and climate conditions.

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26
Q

What is asymmetric information?

A

A type of market failure where buyers and sellers do not have equal access to information.

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27
Q

What are automatic stabilisers?

A

Factors that automatically stabilize the economy by reducing short-term fluctuations of the business cycle.

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28
Q

What is the balance on financial account?

A

The sum of inflows of funds minus outflows in the financial account of the balance of payments.

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29
Q

What is a balanced budget?

A

The situation where government tax revenues are equal to government expenditures over a specific period of time.

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30
Q

What are barriers to entry?

A

Anything that can prevent a firm from entering an industry and beginning production.

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31
Q

What is capital?

A

One of the factors of production, also known as ‘physical capital’, including machinery, tools, equipment, buildings, etc.

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32
Q

What is the capital account?

A

In the balance of payments, refers to the inflows minus outflows of funds for capital transfers and the purchase or use of non-produced natural resources.

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33
Q

What is the circular flow of income model?

A

A model showing the flow of resources from consumers to firms and the flow of products from firms to consumers.

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34
Q

What is a closed economy?

A

An economy that has no international trade.

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35
Q

What is collusion?

A

An agreement among firms to fix prices or divide the market to limit competition and maximize profit.

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36
Q

What is collusive oligopoly?

A

A type of oligopoly where firms agree to restrict output or fix the price to limit competition.

37
Q

What is a commercial bank?

A

A financial institution whose main functions are to hold deposits, make loans, and transfer funds.

38
Q

What are common access resources?

A

Resources that are not owned by anyone and are available for anyone to use without payment.

39
Q

What is a common market?

A

A type of trading bloc where countries eliminate tariffs and allow free movement of factors of production.

40
Q

What is a bilateral trade agreement?

A

Any trade agreement involving two trading partners, usually two countries.

41
Q

What is the break-even point?

A

The point of production where total revenue is exactly equal to total costs.

42
Q

What is the break-even price?

A

A price at which the firm breaks even, meaning total revenues are just equal to total costs.

43
Q

What is a budget surplus?

A

The situation where government tax revenues are greater than government expenditures.

44
Q

What is business confidence?

A

A measure of the degree of optimism among firms in an economy about future performance.

45
Q

What is the business cycle?

A

Fluctuations in the growth of real output, consisting of alternating periods of expansion and contraction.

46
Q

What is a cap and trade scheme?

A

A scheme where a government sets a limit on pollutants that can be legally emitted by a firm.

47
Q

What is capital expenditures?

A

Public investments, or the production of physical capital, such as building infrastructure.

48
Q

What is a budget deficit?

A

The situation where government tax revenues are less than government expenditures.

49
Q

What is capital liberalisation?

A

The free movement of financial capital in and out of a country.

50
Q

What are capital transfers?

A

Inflows minus outflows for debt forgiveness, non-life insurance claims, and investment.

51
Q

What is a carbon tax?

A

A tax per unit of carbon emissions of fossil fuels, aimed at addressing climate change.

52
Q

What is a cartel?

A

A formal agreement between firms to limit competition and increase monopoly power.

53
Q

What is a central bank?

A

A financial institution responsible for regulating the financial system and carrying out monetary policy.

54
Q

What does ceteris paribus mean?

A

A Latin expression meaning ‘other things being equal’, used in economic theories to isolate changes in variables.

55
Q

What is comparative advantage?

A

When a country has a lower relative cost in the production of a good than another country.

56
Q

What is a competitive market?

A

A market composed of many buyers and sellers acting independently, with no influence on price.

57
Q

What is the Consumer Price Index (CPI)?

A

A measure of the cost of living for the typical household; it compares the value of a basket of goods and services in one year to the value of the same basket in a base year. Inflation (and deflation) is measured as a percentage change in the basket’s value from one year to another.

58
Q

What is consumer surplus?

A

Refers to the difference between the highest prices consumers are willing to pay for a good and the actual price paid. In a diagram, it is shown by the area under the demand curve and above the price paid by consumers.

59
Q

What is consumption?

A

Spending by households on goods and services (excluding spending on housing).

60
Q

What is contractionary fiscal policy?

A

Refers to fiscal policy typically pursued in times of inflation, involving a decrease in government spending or an increase in taxes (or both). May be contrasted with expansionary fiscal policy.

61
Q

What is contractionary monetary policy?

A

Monetary policy usually pursued in times of inflation, involving an increase in interest rates, aimed at lowering investment and consumption spending; also known as ‘tight monetary policy.’ May be contrasted with expansionary monetary policy.

62
Q

What is the core rate of inflation?

A

A rate of inflation based on a consumer price index that excludes goods with highly volatile prices, notably food and energy prices.

63
Q

What is corporate indebtedness?

A

The degree to which corporations have debts.

64
Q

What is the current account?

A

In the balance of payments, includes the balance of trade (exports minus imports of goods) plus the balance on services (exports of services minus imports of services), plus inflows minus outflows of income and current transfers. The balance of trade is often the most important part.

65
Q

What is the current account balance?

A

See balance on current account.

66
Q

What is a current account deficit?

A

Occurs when the current account balance has a negative value, meaning debits are larger than credits (an excess of debits).

67
Q

What is a current account surplus?

A

Occurs when the current account balance has a positive value, meaning credits are larger than debits (an excess of credits).

68
Q

What are current expenditures?

A

In the government budget, refers to government spending on day-to-day items that are recurring (i.e., repeat themselves) and items that are used up as a good or service is provided. Includes wages and salaries, supplies and equipment, subsidies, and interest payments on government loans.

69
Q

What are current transfers?

A

An item in the current account of the balance of payments, referring to inflows and outflows of funds for items like gifts, foreign aid, and pensions.

70
Q

What is a customs union?

A

A type of trading bloc where member countries eliminate trade barriers among themselves and adopt a common external policy toward non-members. Members also act as a group in trade negotiations with non-members, achieving a higher degree of economic integration than a free trade area.

71
Q

What is cyclical unemployment?

A

A type of unemployment that occurs during economic downturns, when aggregate demand is low. Also known as ‘demand-deficient’ unemployment.

72
Q

What are debit items?

A

In the balance of payments, refers to payments made to other countries, recorded with a minus sign; they represent an outflow of foreign exchange.

73
Q

What are deciles?

A

Division of a population into ten equal groups with respect to the distribution of a variable, such as income; for example, the lowest income decile refers to the 10% of the population with the lowest income.

74
Q

What is corporate social responsibility?

A

The practice of corporations to avoid socially undesirable activities, such as pollution, child labor, or unhealthy working conditions, and to engage in socially desirable activities, like supporting human rights and donating to charities.

75
Q

What is cost-push inflation?

A

Inflation caused by a fall in aggregate supply due to rising costs of production (e.g., wages or other inputs), shown as a leftward shift in the AS curve.

76
Q

What are costs of production?

A

The total opportunity costs firms incur to acquire resources for production, including explicit costs (for purchased resources) and implicit costs (for self-owned resources).

77
Q

What are credit items?

A

In the balance of payments, refers to payments received from other countries, recorded with a plus sign; they represent an inflow of foreign exchange.

78
Q

What is cross-price elasticity of demand (XED)?

A

A measure of the responsiveness of demand for one good to a change in the price of another good. If XED > 0, the goods are substitutes; if XED < 0, the goods are complements.

79
Q

What is crowding-out?

A

The potential impact on real GDP when increased government spending (expansionary fiscal policy) is financed by borrowing, potentially raising interest rates and reducing private investment spending, thus offsetting the effects of expansionary policy.

80
Q

current account

A

In the balance of payments, this includes the balance of
trade (recording exports minus imports
of goods) plus the balance on services (recording exports of services minus imports of services), plus inflows minus outflows
of income and current transfers. The most important part of the current account in most countries is the balance of trade.

81
Q

Current account deficit

A

Occurs when the current account balance has a negative value, meaning that debits are larger than credits (there is an excess of debits).

82
Q

current account surplus

A

Occurs when the current account balance has a positive value, meaning that credits are larger than debits (there is an excess of credits).

83
Q

current expenditures

A

In the government budget, refers to government spending
on day-to-day items that are recurring
(i.e. repeat themselves) and items that
are used up or ‘consumed’ as a good or service is provided. Include wages and salaries (for all government employees); spending for supplies and equipment for the day-to-day operation of government activities (for example, school supplies and medical supplies for public schools and public health care services); provision of subsidies; and interest payments on government loans.

84
Q

current transfers

A

An item in the current account of the balance of payments, refers to inflows and outflows of funds for items including gifts, foreign aid, and pensions.

85
Q

customs union

A

A type of trading bloc, consisting of a group of countries that fulfil the requirements of a free trade area (elimination of trade barriers between members) and in addition adopt a common policy towards all non-member countries; members of a customs union also act as a group in all trade negotiations and agreements with non-members. It achieves a higher degree of economic integration than a free trade area, but lower than a common market.

86
Q

cyclical unemployment

A

A type of unemployment that occurs during the downturns of the business cycle, when the economy is in a recessionary gap; the downturn is seen as arising from declining or low aggregate demand, and therefore
is also known as ‘demand-deficient’ unemployment.

87
Q

debit items

A

In the balance of payments, refer to payments made to other countries, entering the balance of payments accounts with a minus sign; they represent an outflow of foreign exchange from a country.

88
Q

deciles

A

Division of a population into ten equal groups with respect to the distribution of a variable, such as income; for example, the lowest income decile refers to 10% of the population with the lowest income.

Econ 2024 (6 decks)

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