1. Absolute advantage: It is when a
country is able to produce more of a good or service compared to another by
using the same amount of resources/ It is when a country is able to produce a
good or service by using fewer resources compared to another
2. Absolute poverty: It is when a
person’s income is so low that he/she is unable to get access to basic food,
shelter and clothing
3. Accelerator principle: An economic
concept that draws a connection between the national output/ income and capital
investment
4. Accelerator effect: It is when an
increase in national income results in a larger than proportionate increase in
investment
5. Aid: Economic assistance by one
country for another
6. Appreciation: It is when the value of
one currency worth more in terms of another
7. Average propensity to consume (apc):
Percentage or portion of disposable income that is spent rather than saved
8. Average propensity to save (aps):
Percentage of portion of disposable income that is saved rather than spent
9. Actual growth: Refers to a movement
from within the production possibility frontier (PPF) of an economy to a
position on the frontier/ an increase in the aggregate demand (AD)
10. Bilateral aid: Economic assistance
that is directly given by one country to another
11. Bonds: An instrument issued by the
governments and private firms with the purpose of raising capital
12. Budget deficit: Is when the government
expenditure exceeds tax revenue
13. Budget surplus: Is when tax revenue
exceeds public sector expenditure
14. Capital flight: Is the case where foreign
investors repatriate capital and money out of a country to another, usually to
avoid an economic catastrophe
15. Capital-intensive: A production
process which involves more intense use capital goods than manual workers
16. Capital expenditure: Refers to spending
that will create future benefits such as the construction of roads and bridges,
airports, schools and hospitals
17. Capital gain tax: A charge which is
levied by the government upon the gains in the value of assets when they are
sold or bequeathed
18. Current expenditure: Refers to
spending onto items that are used up in in the process of providing a good or
service such as wages, stationeries, drugs for NHS and others
19. Common market/ single market: A type
of trading bloc which is made up of free trade area, free movement of capital
and labour and common policies on product regulation
20. Common external tariff: A tariff rate
which is agreed to by all members of a custom union or common market onto
imports from non-members
21. Comparative advantage: Is when a country
is able to produce a good or service at a lower opportunity cost than another
22. Custom union: A type of trading bloc
which is made up of free trade area and where common external tariff is being
introduced
23. Cyclical deficit: It refers to the
budget deficit that occurs at the low point of an economic/ business cycle
24. Debt cancellation/ forgiveness/
relief: It refers to a programme to cancel or reduce the amount of debts owed
by country
25. Demand deficient/ cyclical
unemployment: Joblessness which is often related to the downturn of an economic
cycle/ collapse in aggregate demand
26. Depreciation: It is when the value of
one currency appreciates against another
27. Devaluation: Refers to a deliberate
downward adjustment of a country’s currency against another
28. Dutch disease: Happens when a country
is overly depending on the exports of natural resources and hence a rise in
domestic currency which subsequently erodes the competitiveness of
manufacturing sector
29. Economic growth: An increase in real
output/ potential output
30. Economic development: An improvement
in the well-being/ welfare of the people and this encompasses not just real GDP
per capita but also level of literacy, life expectancy, access to clean water
supply, the quality of the environment they live in and others
31. Exchange rate: It is the value of one
currency expressed in terms of another
32. Embargo: A complete ban on imports
from a certain country
33. European Central Bank (ECB): It is the
official central bank for all countries that use euro as their official
currency
34. Economic and Monetary Union (EMU): It
is the fifth stage of an economic integration within the countries in Europe
with features like free trade, freer movements of labour and capital, single
monetary policy and harmonisation of fiscal measures
35. European Union (EU): A group of
European countries that participates in the world economy as one unit
36. Eurozone: countries that officially
adopt the euro as their currency
37. Expenditure-reducing policies:
Measures to reduce the consumption of imports through the lowering of income
38. Expenditure switching policies:
Measures to increase the consumption of domestic goods at the expense of
imported ones
39. Exports: The selling of goods and
services across border
40. Fair Trade Foundation: An organisation
that seeks to transform the trading structures
in favour of the poor and disadvantaged farmers
41. Financial aid: Monetary related
assistance such as fixed-rate loans and low-interest loans
42. Fiscal policy: Manipulation of
government spending or/ and taxation in order to influence the movement of
aggregate demand
43. Fixed exchange rate: It is when the
value of one currency is fixed against another
44. Floating exchange rate: It is when the
value of one currency is allowed to freely float against another
45. Foreign exchange gap: When the size of
current account deficit is greater than the value of capital inflows
46. Foreign exchange reserves: The
reserves of foreign currencies which are held by the central bank on behalf of
the government
47. Free trade: When trade between nations
is allowed to take place without any restriction
48. Free Trade Area (FTA): It is the
second stage of economic integration where all member countries agree to
further reduce or eliminate trade barriers among themselves
49. Frictional/ search unemployment: Joblessness
that occurs as people are in the midst of looking on for a new job
50. Full integration: This refers to the
final stage of economic integration with features like full monetary union and
complete or near complete fiscal harmonisation (such as the USA)
51. Gini coefficient: It is the ratio of
the area under the Lorenz curve to the entire area under the income equality
line
52. Globalisation: The integration of
global economies into one market place where goods and services, capital and
labour are freer to move about
53. Gross National Product (GNP): It is
the market value of all final goods and services produced by factors of
production belonging to a country regardless of where they are
54. Hidden/ disguised unemployment: Joblessness
that is not reflected by the official unemployment statistics because of the
way they are compiled
55. Harrod-Domar model: An economic model
which suggests that growth depends on savings and capital-output ratio
56. Hot money: Flows of money/ capital
from one country to another to benefit from high interest rate or/ and exchange
rate
1. Highly Indebted Poor Countries (HIPC):
A group of developing countries with high levels of poverty and debt overhang
which are eligible for special assistance from both IMF and World Bank
2. Human Development Index (HDI): A
measurement of wellbeing which considers real GDP per capita (PPP), life
expectancy at birth and number of years spent in education
3. Human Poverty Index (HPI): Another
measurement of wellbeing that focuses on the extent of deprivation in the three
elements which are already reflected by HDI, namely longevity, knowledge and
decent standard of living
4. Imports: The buying of goods and
services from another country
5. Import substitution industrialization
(ISI): An economic policy that advocates replacing foreign imports with
domestic production
6. Injection: Inflows of money into the
circular flow of income
7. Income tax: Tax which is directly
levied onto a person’s income
8. Income inequality: A measurement of
the distribution of income which highlights the gap between those individuals
who make the most with those who make the least
9. Inheritance tax: Tax which is directly
imposed onto a person who inherits money and property from a person who has
died
10. Infant industry/ sunrise industry: An
industry which is in the stage of development and therefore is absolutely
incapable in competing with established competitors
11. Infrastructure aid: An economic
assistance by a foreign country or firm in the form of infrastructure like
roads and bridges, electricity and water supply and others
12. International Monetary Fund (IMF): An
international organisation which aims to reduce trade barriers between
countries, stabilise currencies and to lend money to developing nations
13. International trade: The buying and
selling of goods and services across borders
14. Inward-looking policies: Measures to
promote growth and development through the establishment and support of
domestic industries
15. J-curve: A theory which states that a
country’s current account deficit will initially worsen soon after its currency
depreciates because of the rise in the price of imports in terms of local
currency
16. Labour intensive: A production process
which uses more manual workers than capital
17. Lewis Dual-Sector model: An economic
theory that explains how a transition from agricultural to manufacturing sector
will aid in growth and development in emerging economies
18. Lorenz curve: A graphical
representation of how income is actually distributed within a country
19. Managed float: It is an exchange rate
system in which the government or the monetary authority will intervene
occasionally to influence the direction of its currency
20. Marshall-Lerner condition: A theory
which states that currency devaluation/ depreciation will only lead to an
improvement in balance of payments if the sum of both elasticity of demand and
supply is greater than one
21. Marginal propensity to consume (mpc): Proportion
of every one dollar increase in disposable income which will be spent on
consumption expenditure
22. Marginal propensity to save (mps):
Proportion of every one dollar rise in disposable income which will be saved
23. Marginal propensity to tax (mpt): Proportion
of each extra dollar of income which is taken by the government
