Glossary terms Flashcards
absolute poverty
- the inability of an individual or a family to afford a basic standard goods and services, where the standard is absolute and unchanging over time
- determines the minimum income that can sustain a family in terms of its basic needs
actual output
- quantity of output actually produced by an economy
- occurs inside PPC because of unemployed resources and productive inefficiency
- can be higher or lower than potential output (if there’s inflationary or deflationary gap) or it may be equal to potential output (long-run equilibrium)
ad valorem taxes
- taxes calculated as a fixed percentage of the price of the good or service
- amount of taxes increases as the price increases
administrative barriers
- trade protection measures in the form of administrative procedures that countries can use to prevent free flow of imports into a country (NOTE: not the obvious trade protection measures like tariffs)
ex) controls on packaging, customs procedures like inspections
aggregate demand
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.
aggregate supply
the total quantity of goods and services produced in an economy over a particular time period, at different price levels, ceteris paribus.
allocative efficiency
- an allocation of resources that results in producing the combination and quantity of goods and services mostly preferred by consumers
- achieved when the economy allocates its resources so that no one can become better off from consumption without someone else becoming worse off (P=MC)
anti-dumping
- justifies trade protection policies
- if a country’s trading partner practices dumping, the country can impose trade protection measures to limit quantities of dumped good
appreciation of a currency
-increase in the value of a currency in a floating exchange rate system or managed exchange rate system
appropriate technology
-technologies well suited to a country’s particular economic, geographical, ecological and climate conditions
automatic stabilisers
- factors that automatically work toward stabilizing the economy by reducing the short term fluctuations of the business cycle
- include progressive income taxes and unemployment benefits
balance of payments
- a record of all transactions between the residents of a country and the residents of other countries, showing all payments received from other countries (credits), and all payments made to other countries (debits)
- sum of credits should be equal to sum of debits
balance of trade in goods
the value of exports of goods minus the value of imports of goods over a specific time (usually a year)
balance of trade in services
the value of exports of services minus the value of imports of services over a specific time (usually a year)
balance on capital account
the sum of inflows minus outflows of funds in the capital account of the balance of payments
balance on current account
the sum of inflows minus outflows of funds in the current account of the balance of payments
balance on financial account
the sum of inflows of funds minus outflows in the financial account of the balance of payments
bilateral trade agreement
any trade agreement involving two trading partners, usually two countries. It can also involve a trade agreement between one country and another group of countries when this group acts as a single unit
Ex) European Union
budget deficit
-the government’s budget, where government tax revenues are less than government expenditures over specific period of time (usually a year)
business confidence
a measure of the degree of optimism among firms in an economy about the future performance of firms and the economy
business cycle
fluctuations in the growth of real output, or real GDP, consisting of alternating periods of expansion (increasing real output) and contraction (decreasing real output)
cap and trade scheme
- a scheme in which a government authority sets a limit or ‘cap’ on the amount of pollutants that can be legally emitted by a firm, set by an amount of pollution permits distributed to firms
- firms that want to pollute more can buy more permits, while firms that want to pollute less can sell their excess permits
capital
- one of the factors of production
- also known as “physical capital”, including machinery, equipment, buildings, etc.
- “human capital” refers to skills, abilities, knowledge and levels of good health acquired by people
- “natural capital” has to do with the factor of production ‘land’
- “financial capital” includes stocks and bonds
capital account
inflows minus outflows of funds for
- capital transfers’ (like debt forgiveness and non-life insurance claims)
- purchase or use of non-produced natural resources (like mineral rights, forestry rights, fishing rights, airspace)