year 2 macro definitions

Question 1

Exchange rates

Answer 1

the price of a currency in terms of another

Question 2

Fixed exchange rates

Answer 2

when 2 currencies are exchanged at a set price

Question 3

floating exchange rates

Answer 3

when the price of a currency is determined by the free market

Question 4

FOREX

Answer 4

Foreign exchange market

Question 5

international competitiveness

Answer 5

the level of competitiveness between countries

Question 6

Marshall lerner condition

Answer 6

devaluation of a currency improves the current account BOP

Question 7

causes of globalization

Answer 7

Improved transport
Improved technology
Firms exploiting economies of scale
Reduced trade barriers
Growth of global financial system

Question 7

Terms of trade calculation

Answer 7

average price of exports / average price of imports

Question 8

Terms of trade

Answer 8

A measure of relative competitiveness

Question 9

MNC

Answer 9

Multinational corporation

Question 9

developed economies

Answer 9

a country with an abundance of wealth

Question 9

Primary sector

Answer 9

the sector of the economy that produces raw materials

Question 9

mobility of capital

Answer 9

the ease with which capital can be moved across borders

Question 9

Comparative advantage

Answer 9

when a country can produce a commodity at a lower opportunity cost than others

Question 10

absolute advantage

Answer 10

when a country produces a commodity with the best quality and at a faster rate than any others

Question 10

Tertiary sector

Answer 10

the sector of the economy which produces services

Question 10

Consequences of globalization

Answer 10

Greater trade in goods and services
More FDI
Greater transfer of technology
greater specialization
Greater labour migration
Development of global brands

Question 11

Sustainable growth

Answer 11

growth which meets the needs of current nations without compromising the ability of future generations to meet their needs

Question 11

Secondary sector

Answer 11

the sector of the economy which produces goods for consumption

Question 11

Tariffs

Answer 11

A tax on imports

Question 12

Quotas

Answer 12

A quantitative maximum on the level of imports

Question 12

Fledging industry

Answer 12

Industries which posses comparative advantage but do not yet have economies of scale

Question 13

Technical barriers to trade

Answer 13

Ways of increasing product compliance costs which increases the cost to those exporting into the country

Question 14

Intellectual property laws

Answer 14

Laws protecting intellectual creations

Question 14

Domestic subsidies

Answer 14

Government help for domestic businesses facing financial problems

Question 14

Free trade area

Answer 14

When at least 2 states partially or fully abolish custom tariffs and quotas on most or all goods

Question 15

Export subsidies

Answer 15

a payment to encourage domestic production by lowering costs

Question 15

Import licensing

Answer 15

Government grants importers the right to import goods

Question 16

Strategic industries

Answer 16

an industry that the government considers to be important for the countries economy or safety

Question 17

Export dumping

Answer 17

when goods are exported for less than their normal value to destroy international competition

Question 18

Trade wars

Answer 18

a situation in which countries conflict with each other using protectionism

Question 19

Monetary union

Answer 19

A customs union\single market with a common currency

Question 19

Customs union

Answer 19

an FTA which features common external tariffs and quotas

Question 20

A single market

Answer 20

A customs union which features common policies on product regulation and freedom of movement of the FOP

Question 21

Full economic union

Answer 21

Complete free trade, a common external tariff, a single market, monetary union and also common fiscal and supply side policies

Question 21

Economic integration

Answer 21

the level of integration between economies

Question 22

Trade creation

Answer 22

the increase in economic welfare from joining a free trade area

Question 22

poverty

Answer 22

A situation in which individuals are unable to afford basic necessities

Question 22

Income

Answer 22

The flow of money into a household

Question 23

Trade diversion

Answer 23

when trade is diverted from a more efficient supply to a less efficient one due to an FTA or customs union

Question 24

Wealth

Answer 24

the stock of value of a households assets

Question 25

Absolute poverty

Answer 25

When a household has to survive on $2 a day or less

Question 26

Relative poverty

Answer 26

Households who earn 60% or less of the median income

Question 27

Lorenz curve

Answer 27

A curve which shows the cumulative distribution of income against population

Question 28

Brain drain

Answer 28

When a countries smartest individuals leave because there is better work available elsewhere

Question 29

Stagflation

Answer 29

High rate of inflation at the same time as high unemployment

Question 30

NRU

Answer 30

the natural rate of unemployment

Question 31

Phillips curve

Answer 31

A curve which establishes a link between inflation and unemployment

Question 32

Demand pull inflation

Answer 32

Inflation that is caused by a decrease in AD

Question 33

Cost push inflation

Answer 33

Inflation that is caused by an decrease in AS

Question 34

neo classical economics

Answer 34

A school of economics which believes that the market is self correcting

Question 35

neo classical Philips curve

Answer 35

similar to the Keynesian curve but believes that unemployment will always return to a fixed value

Question 36

Money illusion

Answer 36

When households think they have more money but their real wealth hasn't changed

Question 37

Adaptive expectations

Answer 37

when the expectation changes over time