key terms Flashcards
absolute advantage
the ability to produce a good more efficiently
absolute poverty
situation of a household whose income is insufficient to allow it to purchase the minimum bundle of goods and services regarded as necessary for survival
appreciation
a rise in the exchange rate within a floating exchange rate system
bank rate
the rate of interest charged by the BoE on short term loans to other banks
BRIC countries
a group of countries (Brazil, Russia, India, China) who went through rapid economic growth and formed a political alliance
buffer stock
a scheme intended to stabilise the price of a commodity by buying excess supply in periods when supply is high, and selling when supply is low
capital account on the balance of payments
account identifying transactions in physical capital between the residents of a country and the rest of the world
central bank
the banker to the government , performing roles such as regulating the financial system
common market
a set of trading arrangements in which a group of countries removes barriers to trade among them, adopt a common set of barriers against external trade, establish common tax rates and laws regulating economic activity, allow free movement of factors of production between members and have common public sector procurement policies.
comparative advantage
the ability to produce a good relatively more efficiently at a lower opportunity cost
current account on the balance of payments
account identifying transactions in goods and services between the residents of a country and the rest of the world, together with income payments and international transfers
customs union
a group of countries that agrees to trade without barriers between them, and with a common tariff barrier against the rest of the world
deindustrialisation
a process whereby the structure of economic activity in a country shifts away from manufacturing activity towards the service sector
depreciation
a fall in the exchange rate within a floating exchange rate system
economic and monetary union
a set of trading arrangements the same as for a common market, but in addition having a common currency and a common monetary policy
emerging economies
economies that have experienced rapid economic growth with some industrialisation and characteristics of developed markets
exchange rate mechanism
a system that was set up by a group of European countries in 1979 with the objective of keeping member countries currencies relatively stable against each other
export led growth
economic growth is achieved through the exploitation of economies of scale, made possible by focusing one exports and so reaching a wider market that would be available within the domestic economy
fair trade schemes
schemes that set out to ensure that small producers in developing countries recieve a fair price for their products
financial account on the balance of payments
account identifying transactions in financial assets between the residents of a country and the rest of the world
fiscal deficit
occurs when government outlays exceeds government receipts
fixed exchange rate
a system in which the government of a country agrees to fix the value of its currency in terms of that of another country
floating exchange rate
a system in which the exchange rate is permitted to find its own level in the market
foreign currency gap
a situation in which a developing country is unable to import the goods that it needs for development because of a shortage of foreign exchange
foreign direct investment (FDI)
investment undertaken in one country by companies based in other countries
free trade area
a group of countries that agrees to trade without barriers between themselves, but having their own individual barriers with countries outside the area.
