Economics Unit 4 Defs

The ability to produce good more efficiently

A situation of a household whose income is insufficient to allow it to purchase the minimum bundle of goods and services needed for survival

A rise in the exchange rate within a floating exchange rate system

A process by which gov expenditure and revenue varies with the business cycle, thereby helping to stabilise the economy without any conscious intervention from government

Account identifying transactions in (physical) capital between the residents of a country and the rest of the world

A set of trading arrangements in which a group of countries remove 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

The ability to produce a good relatively more efficiently (ie at lower opportunity cost)

A process by which an increase in gov expenditure crowds out private sector activity by raising the cost of borrowing

Account identifying transactions in goods and services between the residents of a country and the rest of the world

A group of countries that agree to trade without barriers between them, and with a common tariff barrier against the rest of the world

A process through which many countries have been observed to pass whereby improved health lowers the death rate, and the birth rate subsequently also falls, leading to slow and stable population growth

The notion that the countries of the world can be divided into core and periphery, and that the countries in the core developed by exploiting those in the periphery

a fall in the exchange rate within a a floating exchange rate system

process whereby a government reduces the price of its currency relative to an agreed rate in terms of foreign currency

A process of economic and social transformation in a country that allows improvements in wellbeing, health, education and other factors that contribute to the quality of life of its citizens

a tax levied directly on income

set of trading arrangements that are the same as for a common market, but also having fixed exchange rates between the member countries and a common monetary policy

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

Ratio of the percentage of exports of a product to total manufacturers' sales

Situation in which economic growth is achieved through the exploitation of economies of scale, made possible by focusing on exports and so reaching a wider market than would be available within the domestic economy

Schemes that set out to ensure that small producers in LDCs receive a fair price for their products

Account identifying transactions in financial assets between the residents of a country and the rest of the world

A system in which the government of a country agrees to fix the value of its currency in terms of that of another country

A system in which the exchange rate is permitted to find its own level in the market

Investment undertaken in one countries by companies based in other countries

A situation in which an LDC is unable to import the goods that it needs for development because of a shortage of foreign exchange

Stocks of foreign currencies and gold owned by the central bank of a country to enable it to meet any mismatch between the demand and supply of the country's currency

A group of countries that agree to trade without barriers between themselves, but having their own individual barriers with countries outside the area

A market in which it is possible to buy a commodity at a fixed price for delivery at a specified future date; such a market exists for foreign exchange

Precursor to the WTO, which organised a series of 'Rounds' or tariff reductions

A measure of the degree of inequality in a society

A process by which the world's economies are becoming more closely integrated

Rule stating that over the economic cycle net government borrowing will be for investment only, and not for current spending

A model of economic growth that emphasises the importance of savings and investment

Initiative launched in 1995 to provide debt relief for heavily indebted poor countries

Stocks of funds that are moved around the world from country to country in search of the best return

Ratio of the percentage of imports of a product to home demand

A tax on expenditure, eg VAT

A process of transforming an economy by expanding manufacturing and other industrial activity

Multilateral institution that provides short-term financing for countries experiencing BoP problems

Trade in services

A group of economists who believed that the macroeconomy could settle in an equilibrium that was below full employment

A theory arguing that there may be gains from trade arising when countries (or individuals) specialise in the production of goods or services in which they have a comparative advantage

A model developed by Sir Arthur Lewis that argued that less-developed countries could be seen as being typified by two sectors, traditional and modern, and that labor could be transferred to the modern sector in order to bring about growth and development `

A graphical way of depicting the distribution of income (inequality) within a country

Tax on additional income, defined as the change in tax payments due divided by the change in taxable income

An approach to economic growth in which governments are recommended to intervene less where markets can operate effectively, but to intervene more strongly where markets are seen to fail

Schemes that provide finance for small-scale projects in LDCs

Targets set for each less developed country, reflecting a range of development objectives to be monitored each year to evaluate progress

A group of economists who believed that the macroeconomy always adjusts rapidly to the full-employment level of output, and that monetary policy should be the prime instrument for stabilizing the economy.

Channel through which changes to the interest rate feed through into the real economy

A company whose production activities are carried out in a number of countries

The long-run equilibrium level of output to which monetarists believe the macroeconomy will always tend

The unemployment rate that exists when the economy is in LR equilibrium

Economies that experienced rapid economic growth from the 1960s to the present

The rate of unemployment in an economy that is consistent with the constant rate of inflation; equivalent to the natural rate of unemployment

Measures imposed by a government that have the effect of inhibiting international trade

Aid provided to LEDCs by countries in the OECD

A curve illustrating the trade-off relationship between unemployment and inflation

A tax in which the marginal tax rate rises with income, i.e. a tax bearing most heavily on the relatively well-off members of society

Theory stating that in the long run exchange rates (in a floating rate system) are determined by relative inflation rates in different countries

A process by which the central bank purchases assets such as government and corporate bonds in order to release additional money into the financial system

The nominal exchange rate adjusted for differences in relative inflation rates between countries

A tax bearing more heavily on the relatively poor members of society

Situation obtaining if household income falls below 50% of median adjusted household disposable income

A process whereby a government raises the price of domestic currency in terms of foreign currency

A form of land tenure system in which the landlord and tenant share the crop

A process described by economic historian Walt Rostow, which set out five stages through which he claimed that all developing countries would pass-

Traditional, Preconditions, Takeoff, Drive to Maturity, Age of Mass Consumption

Situation in which an economy simultaneously experiences stagnation (high unemployment) and high inflation

'Development which meets the needs of the present without compromising the ability of future generations to meet their own needs' (Brundtland Commission, 1987)

A tax on imported goods

The ratio of export prices to import prices

a group of newly industrialized economies in the East Asian region, including Hong Kong, Singapore, South Korea and Taiwan

Trade in goods

A multilateral organisation that provides financing for long-term development projects

multilateral body responsible for overseeing the conduct of international trade