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economics > key definitions > Flashcards

key definitions Flashcards

1
Q

absolute advantage

A

when a country is able to produce more output of a good or service with the same amount of FOP

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2
Q

absolute poverty

A

the amount of income a person needs in order to stay alive; measured in the basic needs for survival

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3
Q

actual growth

A

when previously unemployed FOP are brought to use
- shown as a movement of a point within the PPC to a new point closer to the PPC

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4
Q

what is adverse selection?

A

when the buyer and seller does not have the same information, causing a transaction to take place on uneven terms

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5
Q

what is aggregate demand?

A

total spending in an economy
- consumption, investment, net exports and government expenditure

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6
Q

what is aggregate demand curve?

A

a demand curve showing the relationship between GDP and average price level

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7
Q

what is aggregate supply?

A

total amount of domestic goods and services supplied by producers or the government
- includes both capitol and consumer goods

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8
Q

what is allocative efficiency?

A

marginal cost = average revenue
- firm sells the last unit it produces at the amount it costs to make
- socially optimum level of output

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9
Q

what is allocative inefficiency?

A

marginal social cost isn’t equal to marginal social benefit
- cost of producing good isn’t the same as the price charged by producers

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10
Q

what is anchoring?

A

ideas or values that act as mental reference points when making decisions

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11
Q

what is anti-monopoly regulation?

A

policies intended to regulate the market share of an individual company to enforce competition

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12
Q

what is appreciation?

A

an increase in the value of one currency in terms of another currency in a floating exchange rate system

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13
Q

what is appropriate technology?

A

technology that caters to the particular social, economic and environmental characteristics of it’s users

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14
Q

what is asymmetric information?

A

when one party in an economic transaction has access to more or better information than the other party

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15
Q

what are automatic stabilizers?

A

features of government fiscal policy ( unemployment benefits) that automatically counter-balance fluctuations in economic activity
- government spending on unemployment

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16
Q

what is fiscal policy?

A

government’s use of taxation and government spending to influence and stabilize the economy

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17
Q

what is average tax rate?

A

the proportion of a person’s income that is paid as tax
- percentage

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18
Q

what is balance of payments?

A

value of all of the transactions between the residents of a country and the residents of another country in a given period of time

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19
Q

what is balance of trade in goods?

A

revenue received from exports of tangible goods - expenditure on imports of tangible goods over a given period of time

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20
Q

what is balance of trade in services?

A

revenue received from the exports of services - expenditure on imports of services over a given period of time

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21
Q

what is behavioral economics?

A

uses psychology with traditional models in an attempt to better understand economic decision making
- challenges the fact that consumers will always make rational choices to maximize utility

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22
Q

bounded rationality

A

when consumers or businesses don’t have enough information to make fully informed choices so satisfice instead of maximising utility

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23
Q

bounded self control

A

consumers are not rational and don’t stop consuming even when sensible to stop - consume good even if price is greater than marginal utility

24
Q

bounded selfishness

A

concern for the wellbeing of others

25
Q

budget deficit

A

planned government spending > government revenue
- can increase aggregate demand in an economy

26
Q

business confidence

A

economic indicator that measures the degree of optimism managers feel about the state of the economy and their business

27
Q

business cycle

A

a diagram showing fluctuations in economic activity
- there is usually a pattern : recovery, boom, slowdown recession

28
Q

capital

A

FoP that can be human or physical capitol
human - value of workforce
physical - stock of manufactured resources

29
Q

capitol account

A

measure of the buying and selling of assets between countries

30
Q

capital flight

A

when money and assets flow out of a country to seek a safe place

31
Q

capital transfers

A

measure of the net money movement gained or lost

32
Q

carbon taxes

A

taxes levied in the carbon contents of a fuel

33
Q

central bank

A

the government’s bank - responsible for the economies monetary policy

34
Q

ceteris paribus

A

all other things kept constant

35
Q

choice architecture

A

decisions we make are affected by the layout, sequencing and range of available choices

36
Q

circular economy

A

an economic system that aims to focus on society-wide benefits and redefine growth through 3 principles: design out waste, keep products and materials in use and regenerate natural systems

37
Q

circular flow of income

A

simplified model that shows the flow of money through the economy

38
Q

coarse theorem

A

when an externality is created and there is conflict due to assigned property, the two parties can bargain to create an efficient resource regardless of who had initial property rights - no costs with bargaining

39
Q

collusive oligopoly

A

few firms act together to avoid competition by agreeing to fix prices or output

40
Q

common access resources

A

natural resources which have no established private ownership, they are non-excludable but rivalrous

41
Q

nudges

A

using choice architecture to influence the decision making of consumers

42
Q

common market

A

a customs union with common policies on product regulation and free movement of goods, services and labour

43
Q

comparative advantage

A

when a country is able to produce a good at a lower opportunity cost

44
Q

complements

A

when goods are used in combination with each other

45
Q

consumption

A

spending by households on consumer goods and services over a period of time

46
Q

concentration ratios

A

functions showing the largest percentage market share for the largest firm in an industry, expressed as CR

47
Q

consumer confidence

A

measures the degree of optimism that consumers feel towards the state of their economy and their own financial situation

48
Q

consumer nudges

A

positive reinforcement and indirect suggestions used to influence behaviour and decision making

49
Q

consumer price index

A

measures the average rate of inflation by changes in the price of the “basket of goods” which is an average of consumer spending

50
Q

consumer surplus

A

additional benefit received by consumer by paying a price lower than what they are willing to pay

51
Q

contradictory monetary policy

A

a monetary policy designed to increase aggregate demand and the level of economic activity

52
Q

corporate social responsibility

A

when firms attempt to produce responsibly and ethically towards the community and environment to demonstrate a positive impact on society

53
Q

cost-push inflation

A

inflation caused by an increase in the cost of production in an economy

54
Q

credit creation

A

ability of commercial banks to expand deposits of money that they receive by lending multiples of the amount and increasing money supply

55
Q

crowding out

A

when the government spends more than it receives in revenue and needs to borrow money, forcing interest rates up and ‘crowding out’ private investment and consumption

economics (14 decks)

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