galaxy brain Flashcards
international trade
buying and selling of g&s between economies
free trade
trade in which no gov intervention (tariffs/import quota/subsidies) is present
exports
g&s produced domestically sold to foreigners
imports
g&s produced abroad sold domestically
economies of scale
unit cost advantages that a business may experience as an outcome of increasing its scale of operations
trade protection
gov intervention in international trade through imposing trade restrictions
prevent the free entry of imports into a country
protect the domestic econ from foreign competition
tariff
taxes on imported goods
import quota
a max legal limit to the Q of a g&s that can be imported over a particular time period to protect domestic producers
production subsidy
payment per unit of output granted by the government to domestic firms that compete with imports to increase their competitiveness compared to imports
export subsidy
payments per unit of export granted by the government to domestic firms
declared illegal by WTO
administrative barriers
lengthy procedures and extra costs used to discourage imports
dumping
it is the selling of a g&s in another country at a price below its unit CoP
economic cooperation
cooperation between countries in the form of trade agreements and removal of trade barriers
preferential trade agreement
agreement between 2 or more countries to lower trade barriers on particular products in trade between each other
bilateral trade agreement
trade agreement between 2 countries
multilateral trade agreement
trade agreement that involves many countries
regional trade agreement
trade agreement to promote trade liberalisation between a group of countries that are within a geo region
trading bloc
a group of countries that have agreed to reduce trade barriers
free trade area
a group of countries eliminating trade barriers between themselves
customs union
a group of countries eliminating trade barriers and adopting common policies towards non-member countries
common market
a group of countries eliminating trade barriers, adopting a common policy to non-member countries, and eliminate all restrictions on movements of any FoP
monetary union
a group of countries eliminating trade barriers, adopting a common policy to non-member countries, eliminate all restrictions on movements of any FoP, and adopt common currency and central bank
(function of) a country’s central bank
the government’s bank
implementing monetary policies: managing interest rates and money supply
managing exchange rate policy: buying and selling official reserves
(function of) World Bank
provides grants and low interest loans
offers policy advice and technical assistance to developing countries
coordinates projects with governments
reducing poverty levels and encouraging and safeguarding international investment
(function of) World Trade Organisation (WTO)
to provide a forum for negotiating and monitoring trade liberalisation
resolve trade disputes
(function of) International Monetary Fund (IMF)
promote international monetary cooperation and oversee the stability of the international monetary system
lend money to help members in BoP difficulties
exchange rate
value of one country’s currency expressed in terms of the amount of another country’s currency
money supply
what a country prints
currency supply
what a country supplies in the exchange market
foreign direct investment (FDI)
long-term investment by a multinational corporation in a foreign country
foreign exchange market
a market where individuals buy & sell different national currencies
floating exchange rate
exchange rate of a currency is determined by the D and S of that currency on the foreign exchange market
no gov intervention
appreciation
increase in the value of one currency against another
increase amount of foreign currency that can be bought by this currency
in floating
depreciation
decrease in the value of one currency against another
decrease amount of foreign currency that can be bought by this currency
in floating
fixed exchange rate
exchange rate fixed by the central bank of a country at a particular level
not permitted to change in response to changes in currency demand and supply
exchange controls
restrictions made by the gov on the Q of foreign exchange that can be bought by domestic residents of a country
revaluation
a country under a fixed exchange rate system rises the value of its currency
adopted when the value of the currency in the foreign exchange market is persistently lower than the fixed rate
similar to appreciation: exports more expensive + imports cheaper
devaluation
a country under a fixed exchange rate system lowers the value of its currency
adopted when the value of the currency in the foreign exchange market is persistently higher than the fixed rate
similar to depreciation: exports cheaper + imports more expensive
overvalued currency
currency in the managed exchange rate system has a value higher than its equilibrium market value
undervalued currency
has a value lower than its equilibrium market value
credit
a transaction that brings money into the country
foreign country need to buy domestic currency to buy domestic g&s → creates D for domestic currency
debit
a transaction that involves a flow of money out of the country
need foreign currency to buy foreign g&s → sell domestic currency → creates S of domestic currency
surplus
credits»_space;> debits
deficit
debits»_space;> credits
official borrowing
international borrowing by a government to help to cover a current account deficit
income equity
income is distributed based on one’s ability and work effort
how fairly income and opportunity are distributed between different groups in society
income equality
state when every member of a society receives exactly the same income
government expenditure
sum of government purchases of g&s and government transfer payments
distribution of income
how the nation’s total income is distributed amongst its population
poverty
inability to satisfy minimal consumption needs and basic necessities for living
absolute poverty
anyone living < USD 1.9 a day is considered to be living under extreme poverty
a situation where a person/family does not have enough income to meet basic human needs
relative poverty
a concept that compares the income of individuals/households in a society with median incomes
poverty line
an income level that is minimally sufficient to maintain a family in terms of food, housing, clothing and medical care
Lorenz curve
illustrates the degree of inequality of income/wealth distribution in an economy
more curvy line → more unequal
Gini coefficient
summary measure of the info contained in
the Lorenz curve
most widely used relative measure of income inequality
Gini coefficient = area between Santino 45 and Lorenz curve/total area below Santino 45
more curvy line → closer to 1 → more unequal
transfer payment
payment granted to households without any corresponding output in return
made by the government to redistribute income away from taxpayers and towards those in need of assistance by raising the poor’s disposable income
e.g. unemployment benefits, child and single parent allowances, old age/disability pensions, student grants
universal basic income (UBI)
method intended to provide residents a sum of money that they would receive regardless of any other income
disposable income
the remaining income available for an individual to spend or save, after taxation
direct taxes
taxes paid directly to the gov tax authorities, fully and directly borne by taxpayers
proportional tax
tax which the average tax rate is same as taxable income
same tax rate → same % ↓ → no effect on income distribution
personal income taxes
taxes on the wages, rental income, interest income and dividends by households and individuals
corporate income taxes
taxes on the profits of corporations, firms or businesses that formed a legal body that is legally separate from its owners
wealth taxes
taxes on the ownership of assets
wealth
the total value of all assets owned by a person, firm, community, or country
progressive tax
tax which the average tax rate increases as taxable income increases
decrease in disposable income of high-income group»_space;> low-income group
income distribution more equal → narrow income gap
regressive tax
tax which the average tax rate decreases as taxable income decreases
decrease in disposable income of high-income group «< low-income group
income distribution more unequal → widen income gap
economic development
a process that leads to an increase in the standards of living for a population as a whole
multi-dimensional: quantitative and qualitative concept
decreased poverty
decreased inequalities
increased employment opportunities
increased access to g&s that satisfy basic needs
poverty cycle
a situation where present poverty causes future poverty
transmitted from generation to generation
opportunity
a set of circumstances that makes it possible for someone to do something
status
one’s social/professional position in society due to one’s education level, income and wealth
infrastructure
a type of physical capital resulting from investments
e.g. power, telecommunications, piped water supply, roads, ports, airports
appropriate technology
technology well-suited to particular economy, geography, ecology & climate conditions of a country
tariff escalation
countries impose low tariffs on raw materials and higher tariffs on processed produce
raw materials are derived D
value added make processed g&s ↑ profitable → protect domestic producers
more difficult for less developed countries to expand into manufacturing
formal economy
registered and legally regulated market
informal economy
not registered and legally regulated market
capital flight
large-scale transfer of privately-owned financial capital to another country
indebtedness
how much money people owe from borrowing in the past
property rights
laws and regulations that define rights to ownership, use and transfer of property
land rights
rights and rules to possess, occupy and use land
economically less developed countries (ELDCs)
classified by the UN as low-income countries confronting severe structural impediments to sustainable development
highly vulnerable to economic and environmental shocks
have low levels of human assets
UN sustainable development goals (SDGs)
a collection of 17 global goals set by the UN to mobilise efforts to end all forms of poverty, fight inequalities and tackle climate change, while ensuring that no country is left behind
purchasing power parity
equalise purchasing power of Q of g&s in diff countries
comparing GDP/GNI across countries may be misleading bc different P levels
rich country overstate + poor country understate
Human Development Index (HDI)
a composite index that brings together three variables
life expectancy at birth, mean years of schooling and expected years of schooling, and GNI per capita (PPP)
OECD Better Life Index
an index to compare well-being across countries, based on 11 topics that the OECD has identified as essential, in the areas of material living conditions and QoL
Happy Planet Index
an index which is used to measure the collective happiness and well-being of a population
adjusted for unsustainable resource use (ecological footprint)
life expectancy
inequalities
foreign aid
the international transfer of capital and g&s from a country or international organisation, for the benefit of a recipient country and its population
import substitution
protectionist policies that decrease domestic consumers’ dependence on imported g&s and promote the development of domestic industry by imposing trade protection policies
export promotion
protectionist measures aimed at increasing competitiveness of domestic producers in foreign markets
diversification
involves a reallocation of resources into new activities that broaden the range of g&s produced
move from production and exporting of primary commodities and replace it with manufactured and secondary/tertiary services
social enterprise
a type of commercial organisation that aims to achieve a particular social goal to improve people’s well-being & promote social change
trade liberalisation
moving to freer trade by decreasing or eliminating trade barriers
