Actual Growth
an increase in real output for an economy over time. It is measured as an increase in real GDP.
Aggregate Demand
the total spending in an economy consisting of consumption, investment, government expenditure and net exports.
Appreciation
an increase of the value of the currency, expressed in terms of another currency, in a floating exchange rate system.
Consumption
is spending by individuals and households on domestic consumer goods and services over a period of time.
Cross elasticity of demand
the responsiveness of the demand for one good to a change in the price of another good.
Demand
the quantity of goods and services that consumers are willing, and able to buy at each possible price (over a given time period).
Depreciation
a fall in the value of one currency against another currency in a floating exchange rate system.
Dumping
the selling of a good in another country at a price below its cost of production.
Economic Growth
increased real output for an economy over time and it is measured by an increase in real GDP
Economic Development
increase in the standard of living as measured by health, happiness, income, etc.
Exchange rate
the price of one currency expressed in terms of another.
negative externalities
costs to a third party caused by the production, or consumption of a good (or service). Can occur when MSC is greater than MSB.
Factors of Production
four types of resources used in the production process: land, labor, capital, and possibly entrepreneurship.
Fiscal Policy
the use of government spending and taxation to shift the AD curve.
Free good
unlimited supply, no opportunity cost.
Free Trade
trade between countries without government intervention.
GDP
total value of all final goods and services produced in an economy in a given time period.
Inflation
a sustained increase in th general or average level of prices.
Market
the interaction between buyers and sellers in order to exchane goods or services.
Merit Goods
goods with strong positive externalities.
Monetary policy
a demand-side policy with the Central Bank using changes in the money supply or interest rates to affect AD.
Monopolistic Competition
market when there are many buyers and sellers producing differentiated products, with no barriers to entry.
Oligopoly
market where few large firms dominate the industry, high barriers to entry.
Opportunity cost
the cost of an economic decision in terms of the next best thing foregone.
Poverty Cycle
Low income, low savings, low investment.
Price elasticity of demand
responsiveness of quantity demanded to a change in the price of the good.
Quotas
import barriers that set limits on the quantity or value of imports into a country.
recession
at least two quarters of negative economic growth.
resource allocation
concerned with how resources are distributed in an economy.
unemployment
people of working age actively seeking work at the current wage rate but cannot find one.
subsidy
payment made by the government to producers in order to reduce the costs of production or to increase output.
supply
willingness and ability of producers to produce a quantity of a good at a given price.
tariff
tax imposed on imports.
WTO
world trade organization, encourages the reduction of trade barriers between nations