The document provides definitions for various macroeconomic key terms:
- AAA credit rating refers to the best credit rating given to bonds, indicating negligible risk of default.
- Aggregate supply shocks reduce output and can increase inflation by affecting potential output or causing inflation.
- Austerity aims to reduce government deficits through tax increases and/or spending cuts.
- Bank runs occur when depositors lose confidence and withdraw funds due to fears the bank may collapse.
- Bond markets allow governments and firms to raise money through issuing new debt.
- The BRIC economies refer to the rising emerging markets of Brazil, Russia, India, and China.
- Bubbles occur when asset prices
Here are the key impacts of an increase in investment demand in a small open economy:
- Investment demand I(r*) increases.
- Saving S does not change.
- Net capital outflow decreases as domestic investment increases and saving remains the same.
- Net exports NX decrease as the trade balance deteriorates to finance the higher investment through net capital inflows.
So in summary, an increase in investment demand leads to a deterioration in the trade balance (lower NX) and lower net capital outflow, while saving remains unchanged.
CHAPTER 5 The Open Economy slide 23
This document discusses the theory of purchasing power parity (PPP). PPP states that exchange rates should adjust so that a currency can buy the same amount of goods and services in all countries. It is based on the law of one price, which says that goods must sell for the same price globally after accounting for exchange rates. The nominal exchange rate between two currencies should reflect differences in their price levels. Limitations of PPP include the fact that not all goods trade globally and tradable goods from different countries are not always perfect substitutes.
This document discusses inflation including its causes, types, and effects. Inflation is defined as a rise in general price levels over time which reduces purchasing power. Common causes of inflation include increases in the money supply, credit expansion, deficit financing, and artificial scarcity. The main types of inflation are demand-pull, caused by excessive demand, and cost-push, caused by increased input costs. Effects of inflation impact debtors, those with fixed incomes, consumers, producers, farmers, taxpayers, and governments. The document also includes a map of inflation rates worldwide and a report on rising food inflation forecasts.
The document discusses the international monetary system and different exchange rate systems. It begins by describing freely floating and managed float systems where market forces primarily determine exchange rates. It then outlines target zone arrangements, fixed rate systems, and the current hybrid system used by major and smaller currencies. The document also provides a historical overview of international monetary systems including the gold standard, Bretton Woods system, and European Monetary System.
The document summarizes the key aspects of a country's balance of payments (BOP), including:
1) The BOP records all economic transactions between a country's residents and the rest of the world in a given period, usually one year. It has both a current account and a capital/financial account.
2) A BOP deficit can put pressure on a country's exchange rate and signals the need for corrective measures.
3) Measures to correct a deficit include reducing imports through monetary steps like devaluation or non-monetary steps like tariffs and quotas.
Foreign exchange exposure is the risk associated with activities involving currencies other than a firm's home currency. It is the risk that foreign currencies may fluctuate in a way that financially harms the firm. There are three main types of foreign exchange exposure: transaction, economic, and translation. Firms can assess and manage their exposures through hedging strategies like financial contracts and operational techniques. Whether to hedge depends on factors like a firm's currency forecasts and focus on its core business versus currency speculation.
The foreign exchange market determines currency values through supply and demand. Companies face exchange rate risk from transactions, translations, and economic exposures. Hedging strategies like forwards, futures, options, and swaps help reduce this risk. Forwards lock in future exchange rates while futures offer liquidity through exchanges. Options provide downside protection and flexibility. Swaps involve exchanging interest payments in different currencies. Taking on foreign debt can also hedge exposure by exploiting interest rate relationships.
International economics deals with the economic relations among nations. The resulting interdependence is very important to the economic well-being of most nations of the world and is on the increase. The economic relations among nations differ from the economic relations among the various part of a nation. This gives rise to different problems, requiring somewhat different tools of analysis, and justifies International Economics as a distinct and separate branch of “Applied” Economics.
International economics deals with
1) The Pure Theory of Trade. This examines the basis for trade and the gains from trade.
2) The Theory of Commercial Policy. This studies the reasons for and the results of obstructions to the free flow of trade.
3) The Balance of Payments. This examines a nation’s total payments to and total receipts from the rest of the world. These involve the exchange of one currency with others.
4) Adjustment in the Balance of Payments. This deals with the mechanism of adjustment to balance of payments disequilibria under different international monetary systems.
Here are the key impacts of an increase in investment demand in a small open economy:
- Investment demand I(r*) increases.
- Saving S does not change.
- Net capital outflow decreases as domestic investment increases and saving remains the same.
- Net exports NX decrease as the trade balance deteriorates to finance the higher investment through net capital inflows.
So in summary, an increase in investment demand leads to a deterioration in the trade balance (lower NX) and lower net capital outflow, while saving remains unchanged.
CHAPTER 5 The Open Economy slide 23
This document discusses the theory of purchasing power parity (PPP). PPP states that exchange rates should adjust so that a currency can buy the same amount of goods and services in all countries. It is based on the law of one price, which says that goods must sell for the same price globally after accounting for exchange rates. The nominal exchange rate between two currencies should reflect differences in their price levels. Limitations of PPP include the fact that not all goods trade globally and tradable goods from different countries are not always perfect substitutes.
This document discusses inflation including its causes, types, and effects. Inflation is defined as a rise in general price levels over time which reduces purchasing power. Common causes of inflation include increases in the money supply, credit expansion, deficit financing, and artificial scarcity. The main types of inflation are demand-pull, caused by excessive demand, and cost-push, caused by increased input costs. Effects of inflation impact debtors, those with fixed incomes, consumers, producers, farmers, taxpayers, and governments. The document also includes a map of inflation rates worldwide and a report on rising food inflation forecasts.
The document discusses the international monetary system and different exchange rate systems. It begins by describing freely floating and managed float systems where market forces primarily determine exchange rates. It then outlines target zone arrangements, fixed rate systems, and the current hybrid system used by major and smaller currencies. The document also provides a historical overview of international monetary systems including the gold standard, Bretton Woods system, and European Monetary System.
The document summarizes the key aspects of a country's balance of payments (BOP), including:
1) The BOP records all economic transactions between a country's residents and the rest of the world in a given period, usually one year. It has both a current account and a capital/financial account.
2) A BOP deficit can put pressure on a country's exchange rate and signals the need for corrective measures.
3) Measures to correct a deficit include reducing imports through monetary steps like devaluation or non-monetary steps like tariffs and quotas.
Foreign exchange exposure is the risk associated with activities involving currencies other than a firm's home currency. It is the risk that foreign currencies may fluctuate in a way that financially harms the firm. There are three main types of foreign exchange exposure: transaction, economic, and translation. Firms can assess and manage their exposures through hedging strategies like financial contracts and operational techniques. Whether to hedge depends on factors like a firm's currency forecasts and focus on its core business versus currency speculation.
The foreign exchange market determines currency values through supply and demand. Companies face exchange rate risk from transactions, translations, and economic exposures. Hedging strategies like forwards, futures, options, and swaps help reduce this risk. Forwards lock in future exchange rates while futures offer liquidity through exchanges. Options provide downside protection and flexibility. Swaps involve exchanging interest payments in different currencies. Taking on foreign debt can also hedge exposure by exploiting interest rate relationships.
International economics deals with the economic relations among nations. The resulting interdependence is very important to the economic well-being of most nations of the world and is on the increase. The economic relations among nations differ from the economic relations among the various part of a nation. This gives rise to different problems, requiring somewhat different tools of analysis, and justifies International Economics as a distinct and separate branch of “Applied” Economics.
International economics deals with
1) The Pure Theory of Trade. This examines the basis for trade and the gains from trade.
2) The Theory of Commercial Policy. This studies the reasons for and the results of obstructions to the free flow of trade.
3) The Balance of Payments. This examines a nation’s total payments to and total receipts from the rest of the world. These involve the exchange of one currency with others.
4) Adjustment in the Balance of Payments. This deals with the mechanism of adjustment to balance of payments disequilibria under different international monetary systems.
Chapter 8 9 international monetary system (2)Elyas Khan
(1) The document discusses different international monetary systems including the gold standard, Bretton Woods system, and floating exchange rate system.
(2) It outlines the key features and rules of each system as well as their advantages and disadvantages. The gold standard collapsed due to World War 1 while Bretton Woods ended due to the Triffin dilemma and the U.S. abandoning the gold standard in 1971.
(3) The document also debates whether countries should return to fixed exchange rates or continue with floating rates, noting there are good arguments on both sides and the appropriate system depends on a country's individual circumstances.
This document discusses the economics of free trade. It explains the concept of comparative advantage, which holds that countries should specialize in producing goods and services where they have a lower opportunity cost compared to other countries. When countries specialize according to comparative advantage and trade, it leads to more efficient allocation of resources and gains from trade. Specialization and trade allow countries to produce more total output. While comparative advantage provides benefits, there are also risks and costs to consider from international trade, such as volatility, structural unemployment, and negative externalities from production and transportation.
1. Monetary policy involves central banks using interest rates, money supply, and exchange rates to influence the economy and meet targets like inflation.
2. The Bank of England sets the official interest rate in the UK and uses other tools like quantitative easing to boost the money supply when rates are low.
3. Changes in interest rates impact borrowing costs, spending, investment, and economic growth, but there are limits to how much lower rates can go and their effectiveness in boosting demand.
The document discusses how economic growth and changes in factors of production, technology, and tastes can impact international trade. It examines different types of factor growth, technical progress, and their effects on production possibilities and trade. Growth can lead to increased, decreased, or unchanged trade volumes depending on whether production and consumption effects are pro-trade or anti-trade. In large countries, growth impacts welfare through terms-of-trade and wealth effects, and can potentially cause immiserizing growth under certain conditions. Growth and changes in both trading nations will shift their production possibilities and can influence trade volumes and terms of trade.
This document discusses exchange rate volatility and its impact on trade flows. It begins by defining exchange rates and volatility. Exchange rate volatility refers to how much currency values fluctuate. Exchange rates change due to factors like inflation, interest rates, current account deficits, public debt levels, terms of trade, and economic/political stability. Volatility impacts trade, economic growth, capital flows, and inflation. A weaker currency stimulates exports but hurts imports, while a stronger currency has the reverse effects. Overall, stable exchange rates are better for attracting investment and trade.
This document discusses barriers to greater African participation in global trade and recommendations to address them. It finds that while some African countries have increased exports, many have not due to various barriers. Key recommendations include: 1) Deeper regional economic integration in Africa to create larger markets and exploit economies of scale; 2) Addressing high tariffs and non-tariff barriers African exports face in global markets, particularly for agricultural goods; 3) Improving African infrastructure and production capacity to allow greater processing of exports within Africa rather than just raw materials. Overall, reducing trade barriers both within Africa and faced by African exports globally could significantly boost African economic growth and development.
This document discusses inflation, defining it as a general increase in prices and a decline in the purchasing power of money. It outlines different types of inflation from creeping to hyperinflation. The main causes of inflation are described as too much demand and too little supply, which can be demand-pull or cost-push inflation. Effects include rising import prices, lower savings, and impacts on investment. Control measures discussed are monetary policy like interest rates and fiscal steps like tax increases. Present inflation rates in India are provided, ranging from -11% to 34% between 1969-2013, with an average of 7.7% over that period.
This document defines balance of payments and explains the causes of deficits in balance of payments. It notes that a balance of payments deficit occurs when a country's payments for imports exceed its receipts from exports. The key causes of Pakistan's balance of payments deficit identified are an increase in imports, a decrease in exports, high foreign debt servicing costs, and increases in the prices of industrial inputs. The document then provides recommendations to reduce the deficit, such as increasing and diversifying exports, restricting imports, improving product quality, and devaluing the currency. International institutions like the IMF can also provide loans to countries with persistent balance of payments deficits.
foreign direct investment
,
the direction of fdi
,
the source of fdi
,
why foreign direct investment
,
the form of fdi: acquisitions versus greenfield i
,
foreign direct investment in the world economy
,
trends in fdi
,
theories of foreign direct investment
,
the radical view
,
benefits and costs of fdi
The document provides an introduction to international finance. It discusses that international finance is different than domestic finance due to foreign exchange and political risks, market imperfections, and expanded opportunity sets when operating globally. Effective international financial management requires controlling risks, managing imperfections, and maximizing opportunities while pursuing the goal of shareholder wealth maximization. Globalization trends like increased trade liberalization, financial market integration, and the emergence of the Euro as a global currency have further integrated the world economy.
This document discusses foreign exchange rates and their determination. It explains that foreign exchange rates are the rates at which one country's currency can be converted into another's. These rates are determined by currency supply and demand in global foreign exchange markets. The key factors that influence supply and demand - and thus exchange rates - include interest rates, inflation rates, government budgets, and political stability. The document also outlines different exchange rate systems like fixed, floating, and managed rates.
The foreign exchange market serves three main functions:
1) The transfer function allows for the purchasing power to be transferred between countries through credit instruments like bills of exchange, bank drafts, and telephonic transfers.
2) The credit function provides credit for foreign trade by acting as an intermediary between exporters and importers through purchasing bills of exchange, direct loans, and letters of credit.
3) The hedging function allows exporters and importers to cover exchange rate risks by agreeing on future sales and purchases at current prices and exchange rates, protecting them from potential losses caused by future exchange rate variations.
A fantastic PPT on the foreign exchange rate. The PPT includes meaning and concept of foreign exchange and foreign exchange rate, the systems of determining foreign exchange rate, depreciation of domestic, appreciation of domestic currency, devaluation and revaluation of domestic currency. This PPT also explain the role of RBI in managing the exchange rate by using the concept of managed floating. Just download it and make your concepts stronger. Happy Learning !!
This document discusses inflation and related economic concepts. It defines inflation as a general rise in prices throughout the economy. It also defines deflation and hyperinflation. The document outlines the four main functions of money and discusses monetary policy and central banks' role as lender of last resort. Both negative and positive outcomes of inflation are presented. Recent inflation figures for Ireland are given, showing a rate of 2.85% in October 2011. Goods driving inflation in Ireland are identified as clothing, furnishings, housing costs, and electricity.
Balance of payments Presentation (complete)E Concepts
The presentation covers all important aspects of balance of payments majorly including;
Rules of Balance Of Payments
Balance of payments vs Balance of trade
Debit vs Credit transactions
Equilibrium vs disequilibrium in BOP
Measures to correct disequilibrium
This document discusses foreign capital inflows and their impact on the Indian economy. It begins by defining capital inflows and explaining how they help finance domestic investment needs and current account deficits. It then outlines the components of capital account transactions, including foreign investments like FDI, FII, and loans. Graphs show trends in total capital inflows and the components of foreign investment and loans from 2007-2013. The document analyzes the impact of foreign investments on sectors, employment, and economic growth. It concludes by recommending measures to attract more stable capital inflows while strengthening macroeconomic stability and competitiveness.
The document discusses the history and evolution of international monetary systems. It describes the gold standard system used in the late 19th century, the interwar period without a clear system, the Bretton Woods system established in 1944 pegging currencies to gold and the US dollar, and the move to floating exchange rates after the Bretton Woods system collapsed in the early 1970s. It also discusses features of fixed and flexible exchange rate systems used today including crawling pegs, target zones, and currency baskets.
Key Term Glossary for Economics Unit 1 (Micro)tutor2u
This document provides definitions for key economic terms used in AS Microeconomics. It defines terms such as ability to pay, Adam Smith, adverse selection, allocative efficiency, asymmetric information, barriers to entry, bottlenecks, command and control, consumer surplus, costs, deadweight loss, demand, division of labour, equilibrium, externalities, factors of income, firm, government failure, incentives, income, indirect tax, and information failure. In total, over 100 economic terms are defined in brief but clear explanations.
This document provides an overview of key microeconomics diagrams and concepts for the AS Economics exam. It includes definitions and illustrations of production possibility frontiers (PPF), demand and supply curves, equilibrium analysis, price elasticities, market failures, and government policies like taxes and subsidies. The document is a study guide for students preparing to take the AS Economics exam. It aims to clearly define important microeconomics terms and graphically depict the relationships between variables like price, quantity, demand, and supply.
Chapter 8 9 international monetary system (2)Elyas Khan
(1) The document discusses different international monetary systems including the gold standard, Bretton Woods system, and floating exchange rate system.
(2) It outlines the key features and rules of each system as well as their advantages and disadvantages. The gold standard collapsed due to World War 1 while Bretton Woods ended due to the Triffin dilemma and the U.S. abandoning the gold standard in 1971.
(3) The document also debates whether countries should return to fixed exchange rates or continue with floating rates, noting there are good arguments on both sides and the appropriate system depends on a country's individual circumstances.
This document discusses the economics of free trade. It explains the concept of comparative advantage, which holds that countries should specialize in producing goods and services where they have a lower opportunity cost compared to other countries. When countries specialize according to comparative advantage and trade, it leads to more efficient allocation of resources and gains from trade. Specialization and trade allow countries to produce more total output. While comparative advantage provides benefits, there are also risks and costs to consider from international trade, such as volatility, structural unemployment, and negative externalities from production and transportation.
1. Monetary policy involves central banks using interest rates, money supply, and exchange rates to influence the economy and meet targets like inflation.
2. The Bank of England sets the official interest rate in the UK and uses other tools like quantitative easing to boost the money supply when rates are low.
3. Changes in interest rates impact borrowing costs, spending, investment, and economic growth, but there are limits to how much lower rates can go and their effectiveness in boosting demand.
The document discusses how economic growth and changes in factors of production, technology, and tastes can impact international trade. It examines different types of factor growth, technical progress, and their effects on production possibilities and trade. Growth can lead to increased, decreased, or unchanged trade volumes depending on whether production and consumption effects are pro-trade or anti-trade. In large countries, growth impacts welfare through terms-of-trade and wealth effects, and can potentially cause immiserizing growth under certain conditions. Growth and changes in both trading nations will shift their production possibilities and can influence trade volumes and terms of trade.
This document discusses exchange rate volatility and its impact on trade flows. It begins by defining exchange rates and volatility. Exchange rate volatility refers to how much currency values fluctuate. Exchange rates change due to factors like inflation, interest rates, current account deficits, public debt levels, terms of trade, and economic/political stability. Volatility impacts trade, economic growth, capital flows, and inflation. A weaker currency stimulates exports but hurts imports, while a stronger currency has the reverse effects. Overall, stable exchange rates are better for attracting investment and trade.
This document discusses barriers to greater African participation in global trade and recommendations to address them. It finds that while some African countries have increased exports, many have not due to various barriers. Key recommendations include: 1) Deeper regional economic integration in Africa to create larger markets and exploit economies of scale; 2) Addressing high tariffs and non-tariff barriers African exports face in global markets, particularly for agricultural goods; 3) Improving African infrastructure and production capacity to allow greater processing of exports within Africa rather than just raw materials. Overall, reducing trade barriers both within Africa and faced by African exports globally could significantly boost African economic growth and development.
This document discusses inflation, defining it as a general increase in prices and a decline in the purchasing power of money. It outlines different types of inflation from creeping to hyperinflation. The main causes of inflation are described as too much demand and too little supply, which can be demand-pull or cost-push inflation. Effects include rising import prices, lower savings, and impacts on investment. Control measures discussed are monetary policy like interest rates and fiscal steps like tax increases. Present inflation rates in India are provided, ranging from -11% to 34% between 1969-2013, with an average of 7.7% over that period.
This document defines balance of payments and explains the causes of deficits in balance of payments. It notes that a balance of payments deficit occurs when a country's payments for imports exceed its receipts from exports. The key causes of Pakistan's balance of payments deficit identified are an increase in imports, a decrease in exports, high foreign debt servicing costs, and increases in the prices of industrial inputs. The document then provides recommendations to reduce the deficit, such as increasing and diversifying exports, restricting imports, improving product quality, and devaluing the currency. International institutions like the IMF can also provide loans to countries with persistent balance of payments deficits.
foreign direct investment
,
the direction of fdi
,
the source of fdi
,
why foreign direct investment
,
the form of fdi: acquisitions versus greenfield i
,
foreign direct investment in the world economy
,
trends in fdi
,
theories of foreign direct investment
,
the radical view
,
benefits and costs of fdi
The document provides an introduction to international finance. It discusses that international finance is different than domestic finance due to foreign exchange and political risks, market imperfections, and expanded opportunity sets when operating globally. Effective international financial management requires controlling risks, managing imperfections, and maximizing opportunities while pursuing the goal of shareholder wealth maximization. Globalization trends like increased trade liberalization, financial market integration, and the emergence of the Euro as a global currency have further integrated the world economy.
This document discusses foreign exchange rates and their determination. It explains that foreign exchange rates are the rates at which one country's currency can be converted into another's. These rates are determined by currency supply and demand in global foreign exchange markets. The key factors that influence supply and demand - and thus exchange rates - include interest rates, inflation rates, government budgets, and political stability. The document also outlines different exchange rate systems like fixed, floating, and managed rates.
The foreign exchange market serves three main functions:
1) The transfer function allows for the purchasing power to be transferred between countries through credit instruments like bills of exchange, bank drafts, and telephonic transfers.
2) The credit function provides credit for foreign trade by acting as an intermediary between exporters and importers through purchasing bills of exchange, direct loans, and letters of credit.
3) The hedging function allows exporters and importers to cover exchange rate risks by agreeing on future sales and purchases at current prices and exchange rates, protecting them from potential losses caused by future exchange rate variations.
A fantastic PPT on the foreign exchange rate. The PPT includes meaning and concept of foreign exchange and foreign exchange rate, the systems of determining foreign exchange rate, depreciation of domestic, appreciation of domestic currency, devaluation and revaluation of domestic currency. This PPT also explain the role of RBI in managing the exchange rate by using the concept of managed floating. Just download it and make your concepts stronger. Happy Learning !!
This document discusses inflation and related economic concepts. It defines inflation as a general rise in prices throughout the economy. It also defines deflation and hyperinflation. The document outlines the four main functions of money and discusses monetary policy and central banks' role as lender of last resort. Both negative and positive outcomes of inflation are presented. Recent inflation figures for Ireland are given, showing a rate of 2.85% in October 2011. Goods driving inflation in Ireland are identified as clothing, furnishings, housing costs, and electricity.
Balance of payments Presentation (complete)E Concepts
The presentation covers all important aspects of balance of payments majorly including;
Rules of Balance Of Payments
Balance of payments vs Balance of trade
Debit vs Credit transactions
Equilibrium vs disequilibrium in BOP
Measures to correct disequilibrium
This document discusses foreign capital inflows and their impact on the Indian economy. It begins by defining capital inflows and explaining how they help finance domestic investment needs and current account deficits. It then outlines the components of capital account transactions, including foreign investments like FDI, FII, and loans. Graphs show trends in total capital inflows and the components of foreign investment and loans from 2007-2013. The document analyzes the impact of foreign investments on sectors, employment, and economic growth. It concludes by recommending measures to attract more stable capital inflows while strengthening macroeconomic stability and competitiveness.
The document discusses the history and evolution of international monetary systems. It describes the gold standard system used in the late 19th century, the interwar period without a clear system, the Bretton Woods system established in 1944 pegging currencies to gold and the US dollar, and the move to floating exchange rates after the Bretton Woods system collapsed in the early 1970s. It also discusses features of fixed and flexible exchange rate systems used today including crawling pegs, target zones, and currency baskets.
Key Term Glossary for Economics Unit 1 (Micro)tutor2u
This document provides definitions for key economic terms used in AS Microeconomics. It defines terms such as ability to pay, Adam Smith, adverse selection, allocative efficiency, asymmetric information, barriers to entry, bottlenecks, command and control, consumer surplus, costs, deadweight loss, demand, division of labour, equilibrium, externalities, factors of income, firm, government failure, incentives, income, indirect tax, and information failure. In total, over 100 economic terms are defined in brief but clear explanations.
This document provides an overview of key microeconomics diagrams and concepts for the AS Economics exam. It includes definitions and illustrations of production possibility frontiers (PPF), demand and supply curves, equilibrium analysis, price elasticities, market failures, and government policies like taxes and subsidies. The document is a study guide for students preparing to take the AS Economics exam. It aims to clearly define important microeconomics terms and graphically depict the relationships between variables like price, quantity, demand, and supply.
A2 Economics Exam Technique - Weesteps to Evaluationtutor2u
While low inflation used to be a top priority, it may no longer be appropriate given today's economic context. High unemployment and the risk of deflation are more immediate concerns. However, maintaining some inflation target is still important for long-term stability and investment. Overall, the appropriate policy priorities depend on weighing these different factors against the wider economic situation.
The document discusses various concepts related to market failures, aggregate demand and supply, unemployment, and inflation. It provides diagrams to illustrate negative and positive externalities, shifts in aggregate demand and supply curves, different types of unemployment including real wage and demand deficient unemployment, and causes of inflation including cost-push and demand-pull inflation. Key terms and concepts are defined concisely with examples.
AS Micro Markets and Market Failure Key Term GlossaryEton College
This document defines key terms related to micro markets and market failure, including:
- Ability to pay, absolute poverty, adverse selection, allocative efficiency, asymmetric information, barriers to entry, black markets, bottlenecks, and budget constraints.
- Deadweight loss, demand, derived demand, diminishing returns, effective demand, elasticity, externalities, factors of production, and government failure.
- Market structures like monopoly, oligopoly and perfect competition. It also defines market failures like public goods, externalities, and information asymmetry.
This document provides definitions and diagrams related to macroeconomics concepts including:
- Definitions of macroeconomics, national income, GDP, GNP, real GDP
- Circular flow diagrams showing flows between households, firms, government
- Components of aggregate demand and supply
- Causes of shifts in aggregate demand and short-run aggregate supply
- Business cycles and use of diagrams to illustrate macroeconomic goals
- Unemployment, inflation, and Phillips curve concepts
- Monetary and fiscal policy approaches and their strengths/weaknesses
Spring 2007 SharePoint Connections Oleson Advanced Administration and Plannin...Joel Oleson
Advanced Administration the 2nd part in a 2 part series on Administration topics for SharePoint Server by Joel Oleson. SharePoint Connections Spring 2007 in Orlando,
In 2012 and 2013, Gartner positioned Office 365 as a "leader" in numerous Magic Quadrant reports. Today, Office 365 is the recognized industry leader in business productivity, with one in four enterprise customers using the service.
Whether you are considering a migration to the cloud or already have your Office 365 environment up and running, join us as we explore best practices when moving to Office 365, including:
Available features and SKUs
Deployment overview
Native vs. third party tools
Coexistence
Management
The document provides information about a Furnace Safeguard Supervisory System (FSSS) for a 210 MW boiler unit. The FSSS continuously monitors operations related to fuel firing and other vital parameters to ensure safety. It discusses key components of the FSSS including control rooms, panels, and indication and alarm systems. The FSSS also monitors for abnormal operating conditions like flame failure, pressure issues, and air/fuel problems. It controls fuel admission to protect the furnace from unsafe conditions.
This document provides a summary of Terrence Allison's professional experience and qualifications. He has over 15 years of experience managing IT projects for government agencies, including the Department of Health and Human Services and Walter Reed National Military Medical Center. He maintains an active Top Secret security clearance and has extensive skills in project management, network infrastructure installation, and strategic planning for IT systems.
How to Market Your Nonprofit's Impact to Maximize Your Fundraising ROIHubSpot
This document summarizes a presentation about marketing nonprofit impact to maximize fundraising returns. It discusses why people give (emotionally or as informed investors), retaining donors through the donor funnel, and case studies of charities that effectively communicate impact. The presentation emphasizes telling a compelling story that appeals to emotion and intellect, highlighting tangible impact through metrics, building community, and using a narrative arc in communications. Key tactics include email marketing, video, social media, and online fundraising.
13 the phillips curve and expectations theoryNepDevWiki
This document provides an overview of the Phillips Curve and expectations theory. It discusses the short-run and long-run Phillips Curves, and how adaptive and rational expectations theories explain the natural rate model. Adaptive expectations theory suggests that expansionary policies are useless long-run to reduce unemployment, while rational expectations theory indicates policies can be negated by anticipated effects. The document also reviews incomes policies and how different macroeconomic models like monetarism, Keynesianism, supply-side economics and the new classical school approach curing inflation.
The document discusses the effectiveness of cuts in government spending in meeting macroeconomic objectives. It presents three main arguments: 1) the impact depends on where spending is cut, 2) it depends on the magnitude of the cuts, and 3) it depends on external economic conditions. The document also considers the extent to which tax reductions could boost growth in the UK. It analyzes how different types of tax cuts could increase consumer spending, business investment, and competitiveness. However, it notes the UK's current economic context adds uncertainty around these policies.
The document describes a case of a 46-year-old male who presented with sudden onset chest and back pain that progressed to weakness in his lower extremities. Imaging revealed an aortic dissection involving the ascending aorta and descending aorta. He underwent surgery to replace the dissected ascending aorta but later developed multiple complications and died. The document also reviews the classification, presentation, risk factors, diagnosis and management of aortic dissections.
1. Ventricular septal defects (VSDs) are the most common congenital heart defect, accounting for up to 40% of cases. They can be classified based on their location as perimembranous, muscular, inlet, or outlet.
2. The natural history and clinical presentation depends on the size of the defect. Small restrictive VSDs may close spontaneously, while larger defects can lead to pulmonary hypertension.
3. Intervention is recommended for symptomatic patients or those with evidence of pulmonary hypertension, left heart volume overload, or aortic regurgitation in the case of an outlet VSD.
This document discusses Doppler ultrasound of the kidneys. It begins by describing the normal anatomy of the kidneys and renal vasculature. It then discusses how to perform grayscale and Doppler ultrasound exams of the kidneys, including identifying normal anatomical variants. Technical parameters for optimizing Doppler signals are provided. Normal Doppler waveform indices for the renal arteries are defined, including peak systolic velocity, resistive index, acceleration time and acceleration index.
Civil Family Law - Promise to Marry (Betrothal)Azrin Hafiz
This document discusses the law around betrothal or a promise to marry in Malaysia. It defines betrothal as an agreement to marry between two parties. For a betrothal contract to be valid, there must be an offer and acceptance, consideration in the form of consent to marry, and the parties must have the capacity to marry. The document outlines the requirements for capacity including that the parties must be single, of age, not within a prohibited degree of relationship, and of religions that do not prevent marriage. It discusses exceptions and cases related to these requirements. The document also examines what constitutes a breach of contract if the betrothal is valid and potential defenses a defendant could raise. Finally, it lists the available remedies if
This document defines key economic terms used in macroeconomics. It provides definitions for terms like AAA credit rating (the best credit rating indicating negligible risk of default), accelerator effect (planned investment is positively linked to past and expected consumer demand growth), and aggregate supply shock (an inflation or potential output shock that reduces output and can increase inflation). In total, it defines over 30 important macroeconomic concepts.
The document defines several economic terms and concepts related to macroeconomics. It provides descriptions of key terms such as AAA credit rating, absolute advantage, absolute poverty, accelerator effect, accession countries, accommodatory policy, adjusted net savings, advanced economies, age dependency ratio, and ageing population. In less than 3 sentences, the document is a glossary that defines various macroeconomic terms and concepts.
A2 Macro Growth and Development Economics Glossarytutor2u
This document defines economic and development terms used in growth and development economics and macroeconomics. It provides descriptions for over 100 terms, including AAA credit rating, absolute advantage, absolute poverty, accelerator effect, accession countries, accommodatory policy, adjusted net savings, advanced economies, age dependency ratio, and aid effectiveness.
Economic Development and Growth GlossaryEton College
The document provides definitions for various economic development and growth terms. It includes definitions such as:
- AAA Credit Rating refers to the best credit rating given to corporate bonds, indicating negligible risk of default.
- Absolute poverty refers to those without adequate nutrition, shelter, or clothing to survive, as defined by the World Bank.
- Accelerator effect links planned capital investment positively to past and expected consumer demand growth.
- Several other terms are also defined such as accession countries, accommodatory policy, adjusted net savings, advanced economies, and age dependency ratio.
Aggregate demand is the total spending on goods and services in an economy. It is calculated as the sum of consumption (C), investment (I), government spending (G), and net exports (X-M). Shocks to aggregate demand can occur due to events like a housing market slump, credit crunch, or unexpected changes in interest rates or fiscal policy. These shocks cause the aggregate demand curve to shift, showing a new relationship between the price level and real GDP. Factors that can cause the aggregate demand curve to shift include changes in expectations, monetary policy, fiscal policy, economic conditions abroad, household wealth, and the availability of credit.
This document discusses key macroeconomic concepts including aggregate demand, aggregate supply, and macroeconomic equilibrium. It defines aggregate demand as the total demand for goods and services in an economy and identifies its components as consumption, investment, government spending, and net exports. Aggregate supply is defined as the total output an economy can produce. The document explains that macroeconomic equilibrium exists when aggregate demand is equal to aggregate supply, meaning the quantity demanded is equal to the quantity supplied at the current price level.
Inflation refers to the sustained increase in the general price level of goods and services in an economy over time. When inflation occurs, each unit of currency buys fewer goods and services, leading to a decrease in the purchasing power of money. Inflation is typically measured using various economic indicators, such as the Consumer Price Index (CPI) or the Wholesale Price Index (WPI). These indices track the average price changes of specific baskets of goods and services over time.
The business cycle refers to periodic fluctuations in economic activity, involving periods of expansion and contraction. A business cycle involves peaks of economic activity following expansion, and troughs of economic decline. It includes the phases of expansion, crisis/recession, recovery/revival, and affects factors like GDP, employment levels, production, prices and profits over time. The causes of business cycles can include changes in consumption, business investment, government policies, innovations, and political/external events.
The business cycle refers to periodic fluctuations in economic activity, involving periods of expansion and contraction. A peak marks the end of an expansion period, while a trough marks the end of a contraction period. Business cycles are caused by internal factors like consumption, investment, and government activity, as well as external factors like innovations, wars, and political events. Governments try to control business cycles through monetary and fiscal policies that influence aggregate demand and output.
Inflation and Deflation- Indian contextSujay Kumar
The document provides an overview of inflation and deflation, including:
- Types of inflation such as demand-pull, cost-push, and structural inflation. Cost-push inflation can arise from wage increases, profit increases, or increases in raw material prices.
- Measures to control inflation including monetary measures like increasing bank rates, cash reserve ratios, and open market operations, and fiscal measures like reducing government spending and increasing taxes.
- Deflation is defined as a general decline in prices. Types of deflation include debt deflation, money supply deflation, bank credit deflation, and confiscatory deflation.
- Measures to control deflation focus on increasing consumption and investment through
AS Macro Revision Aspects of the Economic Cycletutor2u
This document provides an overview of the economic cycle and key stages including boom, slowdown, recession, and recovery. It defines recession as a period of at least six months of falling output and discusses the output gap. Negative output gaps occur when actual GDP is below potential GDP, resulting in underused resources and higher unemployment. Positive output gaps happen when resources are overutilized, posing inflationary pressures. The document also examines causes of recessions like external shocks or domestic policy changes and analyzes short-term effects like falling profits and rising unemployment as well as potential long-term hysteresis versus creative destruction.
In these slides we discuss about Economic Growth & Business Cycle like GDP, Real GDP, Ways of measuring GDP, GNP, Aggregate Demand and Supply, Stages and Shape of Business Cycle, Growth / Expansion, Peak / Boom, Recession, Depression
This document discusses different aspects of inflation including definitions, types (demand-pull and cost-push), causes, effects, and measures to control inflation. It defines inflation as a rise in the general price level and notes that it occurs when money supply grows faster than the rate of production of goods and services. The two main types of inflation are demand-pull, which is due to excess demand, and cost-push, which is due to increases in production costs. Fiscal, monetary, and general policy measures can be used to control inflation.
aggregate demand and aggregate supply for 2nd semester for BBAginish9841502661
The document discusses aggregate demand and aggregate supply. It defines aggregate demand as being underpinned by consumers, investors, government and foreigners. Aggregate supply reflects a positive relationship between price level and output in the short run due to price-cost dynamics. In the long run, aggregate supply is vertical as output is determined by fixed resources and technology. Macroeconomic equilibrium occurs where aggregate demand and supply intersect.
How Does Excessive Debt Hurt an Economy_ - Carnegie Endowment for Internation...ngnquyet
This document discusses how excessive debt can hurt an economy. It begins by explaining that too much debt creates an imbalance between total demand and supply in an economy that must be resolved through transfers of income between sectors. Rising debt can undermine growth through four main effects: 1) transfers between sectors can distort the economy, 2) financial distress as agents protect themselves from bearing debt costs, 3) creation of fictional wealth, and 4) additional future adjustment costs ("hysteresis"). Specifically, the transfers used to resolve demand-supply imbalances can hurt growth if they take forms like high inflation, taxes, or unemployment. Rising debt also causes uncertainty that leads sectors to protect themselves in ways that slow growth and increase financial fragility.
The document discusses interest rates, which are the amount charged by a lender to a borrower for using assets. Interest rates affect businesses and banks. During periods of high interest rates, businesses earn more from investments but are less likely to invest in equipment or improvements. Banks also earn more interest but have less to loan out if businesses are not investing. When interest rates are low, businesses may invest more in capital goods but banks earn less interest. Overall, interest rates impact borrowing costs for businesses and banks' profits from lending.
The document summarizes the outlook for markets in 2009. It believes the recession will persist through 2009 with a weak recovery. Government stimulus plans aim to boost spending but the effects may be delayed. The Federal Reserve has increased money supply but must remove excess cash to avoid inflation. Consumers are saving more due to debt and falling asset values, which may slow growth but support bond prices. Global trade and capital flows are also slowing. The outlook calls for a challenging year with opportunities in quality companies and bonds offering higher yields. Flexibility will be needed to respond to changing opportunities and risks.
The document discusses various macroeconomic concepts related to fiscal and monetary policy such as:
- Supply side policies can shift the LRAS curve to increase potential output without raising inflation.
- Fiscal policy tools like government spending, taxation, and transfers can be used for demand management.
- Monetary policy tools like interest rates can influence money supply and demand to impact output and inflation.
- Crowding out refers to how increased government spending and borrowing can reduce private investment by raising interest rates.
CA NOTES ON BUSINESS CYCLES IN BUSINESS ECONOMICS
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This is a revision presentation on aspects of the privatisation of the Royal Mail - an important milestone in the history of privatisation in the UK economy.
This is an updated version of a slideshow revision presentation on the way in which different charts are presented in economics exams and some tips for handling the data in your answers.
UK Economy in 2015 - Macro Revision PresentationEton College
The document summarizes the performance of the UK economy. It notes that while GDP has recovered since the recession, GDP per capita remains below pre-recession levels. Unemployment has fallen but youth unemployment remains high. Inflation fell to 0% in early 2015 due to lower food and fuel prices. The budget deficit has declined but remains over 5% of GDP, and the national debt is high at 79% of GDP. The trade deficit is growing, reflecting a lack of competitiveness, while the current account deficit was the largest in over 20 years in 2014.
AS Macro Question - Falling UnemploymentEton College
This is a revision resource for students taking the EdExcel unit 2 economics paper - suggesting a way of approaching the 30 mark question and scoring high marks for evaluation.
The UK government privatized Royal Mail in 2013 by floating the company on the stock exchange. This allowed retail investors to purchase shares and raised £1.98 billion for the government. Royal Mail employees were given 10% of shares. While privatization provided funds and shareholder incentives, critics argue it was sold too cheaply and will cost jobs. Royal Mail faces challenges from competition and new technologies but must still provide universal postal service.
Europe’s largest construction project
Crossrail will increase London's rail capacity by 10%
Crossrail route will run >100km from Reading and Heathrow in the west to Shenfield and Abbey Wood in the east.
40 Crossrail stations including 10 new stations
Crossrail will bring an extra 1.5 million people to within 45 minutes of central London
Total funding available to deliver Crossrail is £14.8bn
Costs outside the £14.8 billion funding package include the estimated £1 billion cost of buying trains, the majority of which will be funded directly by Transport for London
Economics of Crossrail (Microeconomics)Eton College
Europe’s largest construction project
Crossrail will increase London's rail capacity by 10%
Crossrail route will run >100km from Reading and Heathrow in the west to Shenfield and Abbey Wood in the east.
40 Crossrail stations including 10 new stations
Crossrail will bring an extra 1.5 million people to within 45 minutes of central London
Total funding available to deliver Crossrail is £14.8bn
Costs outside the £14.8 billion funding package include the estimated £1 billion cost of buying trains, the majority of which will be funded directly by Transport for London
The document discusses supply-side competitiveness and growth in the UK economy. It identifies several key supply-side challenges facing the UK, including a persistent productivity gap, high youth unemployment, low investment and research spending. It also discusses some potential policies to boost long-run supply-side growth, such as improving labour supply and mobility through immigration, investing in skills and training to boost productivity, and improving infrastructure to reduce bottlenecks. The effectiveness of these policies depends on overcoming challenges such as political opposition, significant costs, and long timeframes to see results.
AS Macro Supply Side and CompetitivenessEton College
The document discusses supply-side policies to boost long-term economic growth in the UK. It identifies key supply-side challenges facing the UK economy, including low productivity, regional economic divides, and low investment. It then analyzes three policy options to address these challenges: 1) increasing labor supply through immigration or higher participation rates, 2) improving labor mobility through housing and transport reforms, and 3) boosting innovation and enterprise through tax incentives. Each option is evaluated in terms of potential limitations or political difficulties. The document emphasizes that supply-side reforms require long-term commitments to overcome challenges.
Ed Conway Presentation to Tutor2u ETNC 2013Eton College
This document summarizes an economics teacher conference that discusses the state of the UK and global economies following the 2008 financial crisis. It notes that the recession in the UK was unusually long compared to previous downturns. It also discusses the effects of fiscal conservatism and monetary activism in the UK, as well as issues like declining real incomes, housing prices, and lack of global trade rebalancing.
Linda Yueh on prospects for the Chinese economyEton College
The document discusses China's impressive economic growth and the challenges it faces in becoming a high-income country. It notes that China's growth has been driven primarily by factor accumulation like capital and labor, as well as increasing total factor productivity. However, China now needs to transition to innovation-driven growth and rebalance its economy away from exports and investment towards domestic consumption. It also needs to address distortions from state-owned enterprises and continue reforms to support sustainable growth over the next 30 years.
Tim Harford on Bill Phillips and the Water MachineEton College
This document appears to be a listing of dates, captions, and a Twitter handle but does not contain any substantial information to summarize in 3 sentences or less. The dates and captions provided do not give enough context on their own to form a meaningful summary.
The document provides definitions for various business economics concepts in a glossary format. It defines key terms related to market structures, costs, pricing strategies, mergers and acquisitions, competition, and other foundational concepts in business economics. Some key terms defined include monopoly, oligopoly, economies of scale, marginal cost, price discrimination, and mergers and acquisitions.
1. Economies of scale can benefit both firms and consumers through lower average costs and prices.
2. Internal economies of scale reduce a firm's long-run average costs through increased production, allowing higher profits. External economies reduce costs for most businesses in a growing industry.
3. Consumers benefit from economies of scale through lower prices and increased consumer surplus as firms pass on some cost savings in more competitive markets.
This document provides an overview of key concepts from behavioural economics. It discusses:
1) How traditional economic models assume humans are rational actors who make utility-maximizing decisions, while behavioral economics recognizes humans have biases that influence decisions.
2) Various psychological factors ("messengers") that influence human behavior, including incentives, social norms, defaults, priming, and affect/emotions.
3) Specific cognitive biases and heuristics that shape decisions, such as loss aversion, availability heuristic, and status quo bias.
4) How understanding these behavioral influences can help design "nudges" to encourage healthier, safer, or more beneficial choices.
The document discusses market power and pricing strategies in the smartphone industry, noting that average smartphone selling prices are expected to fall 9% in 2013 due to intense competition between manufacturers as well as emerging markets and substitute devices. It also explores concepts of economies of scale that can lower costs and prices for consumers as smartphone production increases.
Rent controls aim to make housing more affordable but can distort housing markets and reduce rental supply. The document discusses how rent ceilings set below market equilibrium can cause excess demand and potential shortages. It evaluates arguments for and against maximum rent policies, noting the need to consider long term effects on supply and potential unintended consequences. Alternatives to address housing shortages like relaxing planning rules and incentives for building could improve rental markets while avoiding market distortions from price ceilings.
Micro Finance Fair Trade and DevelopmentEton College
Microfinance aims to provide financial services to the poor and extreme poor, including microloans, savings, insurance, and remittances. It aims to reduce poverty through financial inclusion and empowerment. Professor Muhammad Yunus founded Grameen Bank in Bangladesh, which pioneered microcredit and saw rapid early growth. However, microfinance also faces criticisms like over-indebtedness, limited poverty reduction, and reliance on subsidies. Fair trade aims to promote equitable trading conditions for marginalized producers and workers through minimum prices, social premiums, and standards. However, it remains a small niche and critics argue it is not a long-term development solution on its own.
This document provides information on different types of financial flows to developing countries, including foreign aid, remittances, foreign direct investment, and loans. It discusses the scale of these flows, noting that in 2010 private flows such as FDI made up 89.1% of total official and private flows, compared to 10.9% for official development aid. The document also outlines different types of foreign aid and perspectives on the impact and effectiveness of aid, including debates around whether aid fosters long-term growth and self-sufficiency or dependence.
1. AS Macro Key Term Glossary
AAA credit rating The best credit rating that can be given to a corporation's or a government’s
bonds, effectively indicating that the risk of default is negligible
Accelerator effect Where planned capital investment is linked positively to the past and
expected growth of consumer demand or national income
Aggregate supply Either an inflation shock or a shock to potential national output; adverse
shock aggregate supply shocks of both types reduce output and can increase the
rate of inflation
Animal spirits The state of confidence or pessimism held by consumers and businesses
Appreciation A rise in the market value of one exchange rate against another
Austerity Economic policy aimed at reducing a government's deficit (or borrowing).
Austerity can be achieved through increases in government revenues -
primarily via tax rises - and/or a reduction in government spending or future
spending commitments.
Automatic Automatic fiscal changes as the economy moves through stages of the
stabilisers business cycle – e.g. a fall in tax revenues from the circular flow in a
recession.
Bank run When a large number of people suspect that a bank may go bankrupt and
withdraw their deposits. Bank runs are rare, one happened with the Northern
Rock in 2007.
Bond Both companies and governments can issue bonds. The issue of new
government debt is done by the central bank and involves selling debt to
capital markets
Brain drain The movement of highly skilled people from their own country to another
nation
BRIC economies The BRIC grouping – Brazil, Russia, India and China – short hand for the rise of
emerging markets. The BRICs have a bigger share of world trade than the USA
Bubble When the prices of securities or other assets rise so sharply and at such a
sustained rate that they exceed valuations justified by fundamentals, making
a sudden collapse likely (at which point the bubble "bursts")
Budget deficit Occurs when government spending is greater than tax revenues. Reducing
the deficit can be achieved by tax increases or cuts in government spending
or a period of economic growth which brings about a rise in direct and
indirect tax revenues
Business confidence Expectations about the future of the economy – vital in influencing business
decisions about how much to spend on new capital goods
Capacity utilisation Measures how much of the productive potential of the economy is being
used. Utilisation falls during a recession leading to a rise in spare capacity
Capital market A stock or a bond market where firms can raise money for investment
purposes
2. Capital stock The value of the total stock of capital inputs in the economy
Capital-labour Replacing workers with machines in a bid to increase productivity and reduce
substitution the unit cost of production.. This can lead to structural unemployment
Catch-up effect This occurs when countries that start off poor tend to grow more rapidly than
countries that start off rich. The result is some convergence in the standard of
living as measured by per capita GDP
Claimant Count The number of people claiming unemployment-related benefits
Classical LRAS The classical LRAS curve is drawn as vertical because classical economists
argue that a country’s productive capacity is determined by factors other
than price and demand such as investment and innovation
Closed economy An economy operating without imports and exports – i.e. closed to global
trade
Comparative Comparative advantage refers to the relative advantage that one country or
advantage producer has over another. Countries can benefit from specializing in and
exporting the product(s) for which it has the lowest opportunity cost of
supply
Constant prices Constant prices tells us that the data has been inflation adjusted
Consumer Expectations about the future including interest rates, incomes and jobs
confidence
Consumer durables Products such as washing machines that are not used up immediately when
consumed and which provide a flow of services over time
Consumer price The consumer price index (CPI) is the government's preferred measure of
index inflation
Corporation Tax A tax on the profits made by companies
Cost push inflation An increase in the price level (or average price of goods and services) caused
by a sustained increase in firms’ costs of production
Credit crunch Where banks reduce lending to each other due to falling confidence that
loans will be repaid. This results in less credit being available for consumers
and businesses, resulting in an increase in the cost of borrowing money
The assessment given to debts and borrowers by a ratings agency according
Credit rating
to their safety from an investment standpoint - based on their
creditworthiness, or the ability of the company or government that is
borrowing to repay. Ratings range from AAA, the safest, down to D, a
company that has already defaulted
Creeping inflation Small rises in the general level of prices over a long period of inflation
Creeping A period of time where import tariff rates rise and where countries introduce
protectionism quotas and barriers to the mobility of labour and capital
Current account The overall balance of credits minus debits for trade in goods, trade in
services, investment income and transfers
Current account The amount by which money relating to trade, investment etc going out of a
deficit country is more than the amount coming in. A current account deficit implies
a net reduction of demand in a country’s circular flow
3. Cyclical trade A trade deficit that arises purely due to changes in the economy’s cycle, for
deficit example many countries run a deficit when their economy is growing strongly
Cyclical Unemployment caused by a lack of aggregate demand for goods and services,
unemployment where national output < potential output leading to a negative output gap
Default A default occurs when a borrower has broken the terms of a loan or other
debt, for example if a borrower misses a payment. The term is also used to
mean any situation when borrower can no longer repay its debts in full, such
as bankruptcy or a debt restructuring
Deflation A persistent fall in the general price level of goods and services
De-industrialization A decline in the share of national income from manufacturing industries
Depreciation A fall in the market value of one exchange rate against another
Depression A severe recession which may become a prolonged downturn in the economy
and where a nation’s GDP falls by at least 10 per cent
Deregulation Reducing barriers to entry in order to make a market more competitive
Developing country Countries generally lacking a high degree of industrialisation and/or other
measures of development
Discouraged People often out of work for a long time who give up on job search
workers
Discretionary fiscal Deliberate attempts to affect aggregate demand using changes in
policy government spending, direct and indirect taxation and borrowing
Discretionary Disposable income adjusted for spending on essential bills such as fuel
income
Disposable income Gross income less income tax and national insurancecontributions plus cash
welfare benefits. Disposable income is the money that comes into a
household from various sources,including welfare benefits but after taxes on
income
Double dip When an economy goes into recession twice without having undergone a full
recession recovery in between. The UK economy experienced a double-dip recession in
2012
Dumping When a producer in one country exports a product to another at a price
below the price it charges in its home market or below the costs of supply
Ecological debt Ecological debt is the concept that people’s demands have exceeded the
Earth’s ability to cope with the rising consumption of its resources
Economic cycle Variations in the annual rate of growth of an economy over time
Economic shocks Unpredictable events such as volatile prices for oil, gas and foodstuffs
Economic stability When indicators such as growth, prices and unemployment do not change
much from one year to another
Economically active Those who are unemployed and actively seeking employment
Economically Those who are of working age but are neither in work nor actively seeking
inactive work
4. Emerging markets The financial markets of developing countries
Expansionary A relaxation of monetary policy means an attempt to use an expansionary
monetary policy monetary policy to boost aggregate demand, output and jobs – includes
lower interest rates
Expectations How we expect the future to unfold – this can have powerful effects on the
spending decisions of households, businesses and the government
Expenditure The value of the goods and services purchased by households and by
measure of GDP government, investment in machinery and buildings. It also includes the value
of exports minus imports. Calculation is as follows: AD=C+I+G+X-M
Expenditure- Policies that are designed to ‘switch’ expenditure from imports to
switching policies domestically produced goods in order to improve the balance of payments
and stimulate GDP
Export revenue Sales from selling goods and services overseas, an injection of demand
Fine-tuning Changes in monetary policy or fiscal policy designed to gradually manage the
level of aggregate demand and prices e.g. small changes in policy interest
rates
Fiscal austerity Fiscal austerity refers to decisions by a government to reduce the amount of
government borrowing (i.e. cut the size of a fiscal deficit) over a period of
years
Fiscal policy A government's policy regarding taxation and public spending. It can be loose
(with the emphasis on increased spending and lower tax revenue to boost
economic activity, with the acceptance of a wider fiscal deficit) or tight (with
the emphasis on cutting spending and boosting tax revenue, resulting in a
slower economy
Fiscal stability Many governments seek to maintain a degree of balance between tax
revenues and public sector spending. A balanced budget is one in which
spending equal revenue
Fiscal stimulus Government measures, normally involving increased public spending and
lower direct and/or indirect taxation, aimed at giving a positive jolt to
economic activity
Forecast A prediction made about the likely future performance of an economy
Foreign direct FDI stands for Foreign Direct Investment. FDI is investment from one country
investment into another (normally by companies rather than governments) that involves
establishing operations or acquiring tangible assets, including stakes in other
businesses
Free trade When trade is allowed to occur without any form of restriction such as a tariff
Full capacity output A level of national output where all available factor inputs are fully employed
– this is a factor influencing the underlying growth rate (LRAS)
Full employment When there enough job vacancies for all the unemployed to take work
G20 A group of finance ministers and central bank governors from 20 economies
G7 A group of seven major industrialized countries: Canada, France, Germany,
Italy, Japan, the UK and the USA
5. GDP Gross domestic product (GDP) is the total value of output in the UK and is
used to measure change in economic activity
Gini Coefficient A measure of the extent to which groups of households, from the bottom of
the income distribution upwards, receive less than an equal share of income.
Globalisation The deepening of relationships between countries of the world reflected in
an increasing level of overseas trade and investment
GNI Gross National Income – income generated from the resources owned by
inhabitants and businesses of a given country
Golden Rule A rule introduced by the former Labour government which says that
borrowing on state provided goods and services should be zero over the
course of one economic cycle. Borrowing is allowed when it finances capital
investment
Government debt The total stock of unpaid debt issued by a government. A government will
normally borrow money by issuing bonds or other securities
Gross Domestic National income per head of population, a baseline measure of living
Product per capita standards
Gross National This is broadly the same as GDP except that it adds what a country earns from
Income (GNI) overseas investments and subtracts what foreigners earn in a country and
send back home. GNI is affected for example by profits from businesses
owned overseas and also remittances sent home by migrant workers
Haircut A reduction in the value of a troubled borrower's debts, imposed on, or
agreed with, its lenders as part of a debt restructuring
Hard landing A full-scale recession shown by a decline in real national output
Hot Money Money that flows around the world looking to earn the best rate of return. It
might be invested in any asset whose value is expected to rise (e.g. property
or shares) or placed in an account offering the best real rate of interest.
Household wealth Value of assets – including property, shares, savings and pension fund assets
Human capital Investment in education and training to increase the quality of the labour
force and to make people more flexible in a changing world of work
Human An index to assess comparative levels of development in countries, quantified
Development Index in terms of literacy, life expectancy and purchasing power
Hysteresis A problem caused by high levels of unemployment. An unemployed worker
loses skills and motivation and so finds it hard to re-enter the labour force
Immobility of Barriers to the movement of people between areas and between jobs
labour
Income elasticity of Responsiveness of demand to a change in the real income of consumers
demand
Inflation A sustained increase in the general price level for goods and services
Inflation target The Bank of Englandhas a CPI inflation target, which is currently 2 per cent.
When inflation rises or falls more than 1% above or below the target, the
Governor must write a letter to the Chancellor to explain why it has
6. happened.
Inflationary Demand and supply-side pressures that can cause a rise in the general price
pressures level. Demand-pull inflationary pressure is greatest when actual GDP exceeds
potential GDP causing a positive output gap. Cost-push inflationary pressure
can arise from increases in unit wage costs, rising import prices and an
increase in the prices of raw materials, fuel and components used in
production
Infrastructure The transport links, communications networks, sewage systems, energy
plants and other facilities essential for the efficient functioning of a country
and its economy
Innovation Changes to products or production processes – innovation is important in
delivering improvements in dynamic efficiency and generating better goods
and services
International An organisation of 186 countries, promoting global monetary cooperation,
Monetary Fund financial stability, international trade, employment and sustainable economic
(IMF) growth. It has provided help for several nations in the wake of the 2007-09
financial crises.
International A nation’s stock of foreign currency and gold
reserves
Inventories These consist of materials and supplies which are stored for use in
production, work-in progress, finished goods and goods for re-sale
Investment Spending on capital goods including plant & machinery and infrastructure
Investment income Interest, profits and dividends from assets owned and located overseas
Job search The process by which workers find appropriate jobs given their tastes and
skills
Keynesian The economics of John Maynard Keynes. The belief that the state can directly
economics stimulate demand in a stagnating economy. For instance, by borrowing
money to spend on public works projects like roads, housing, schools and
hospitals
Keynesian Unemployment caused by a lack of aggregate demand in the economy – a
unemployment deficiency of private sector spending causes output and employment to
contract
Labour shedding Cut backs in employment often seen in a slowdown or a recession
Labour shortages When businesses find it difficult to recruit the workers they need
Labour supply Number of people able, available and willing to work at prevailing wage rates
Lagging indicators Indicators which tend to follow economic cycles e.g. unemployment
Leading indicators Indicators which predict future economic trends e.g. consumer confidence
Leveraging The use of borrowed funds to increase your capacity to spend or invest
LIBOR Libor stands for the London Interbank Offered Rate and is used by banks
world-wide to determine the rate at which they lend to each other - whether
that’s receiving or giving loans (including 24 hour - 5 year loans). Libor rates
are set daily and released at the same time everyday - 11am London time
7. Life-cycle model A theory that says that savings rates depend on how old someone is
Liquidity The ease with which something can be converted to cash with little loss of
value
Macroeconomic The overall performance in terms of output, prices, jobs, trade and living
performance standards.
Marginal The proportion of any change in income that is spent rather than saved
propensity to
consume
Marginal The change in total saving as a result of a change in income
propensity to save
Marginal rate of tax The rate of tax on the next unit (£1) of income earned
Misery index Calculated by adding together the unemployment rate and the rate of
inflation
Monetary Policy Bank of England committee of 9 people thatmeets every month to set
Committee (MPC) interest rates.
Money supply The entire quantity of a country's commercial bills, coins, loans and credit
Moral hazard When an insured party decides to take higher risks because they perceive
their losses will be covered – often linked to the excessive risk-taking by
banks knowing that central banks might rescue them
Multiplier effect If there is an initial injection (e.g. a rise in exports) into the economy then the
final increase in aggregate demand and real GDP will be greater.
NAFTA North American Free Trade Agreement - a free trade area agreement signed
by the US, Canada and Mexico
National debt The total amount of debt that the government owes the private sector
Nationalisation Bringing a privately owned asset such as a company under state control
Negative equity When the value of an asset falls below the debt left to pay on that asset.
Term is most commonly used in connection with property prices after a
slump in prices
Net investment Gross investment minus an estimate for capital depreciation
Net inward When the number of migrants coming into a country is greater than those
migration leaving
Net trade The balance between the value of exports and imports
Nominal GDP Monetary value of all goods and services produced expressed at current
prices
Non-inflationary Sustained growth of real national output whilst maintaining price stability
growth
Output gap Difference between actual and potential national output. A negative output
gap means that an economy has a large margin of spare productive capacity
Output measure of Value of the goods and services produced by all sectors of the economy;
GDP agriculture, manufacturing, energy, construction, the service sector and
8. government
Overseas assets Assets such as businesses, shares, property which are owned in overseas
countries and which might generate a flow of income which is a credit item
on the current account of the balance of payments
Paradox of thrift If people save more in a recession, it will reduce consumption and thus AD
will fall, impeding economic growth and, eventually, lowering the general
level of savings
Patent box A reduced rate of Corporation Tax applied to profits from patents – designed
to stimulate research and innovation and improve the supply-side of the
economy
Peak The high point of the economic cycle beyond which a recession starts
Pension Fund Fund that pools employees' pension benefits and holds them so that they can
be paid at retirement. The money is invested in stocks, bonds and other
assets to boost returns and ensure that there are sufficient funds to be paid
out
Per capita incomes Income per head of the population – a measure of average living standards
Phillips Curve A statistical relationship between unemployment and inflation
Policy asymmetry When a given change in interest rates affects different groups or different
countries to a lesser or greater degree
Precautionary Saving because of fears of a loss of real income or employment
saving
Price stability Price stability occurs when there is low inflation and the price changes that
do occur have little impact on day-to-day decisions of people
Productive Productive capacity of the economy – boosted by high quality investment
potential
Productivity A measure of efficiency e.g. output per person employed or output per
person-hour
Propensity to Proportion of any change in income that is spent on overseas products
import
Propensity to save Proportion of any change in income that is saved rather than spent
Protectionism Restricting trade through tariffs and other forms of import controls
Purchasing power The buying power of a unit of currency. It is inversely related to the rate of
inflation
Quantitative easing The introduction of new money into the national supply by a central bank.
(QE) The idea is to add more money into the system to lower the risk of
depression and deflation and encourage banks/people to borrow and spend
Quota A physical limit on the quantity of a good that can be imported into a country
Real disposable Income after taxes and welfare benefits, adjusted for the effects of inflation
income
Real income Nominal income adjusted for price changes, expressed at constant prices
9. Real interest rate The nominal rate of interest adjusted for inflation
Real wage The nominal wage adjusted for the effects of inflation
Recession When an economy suffers a fall in output. Or a broadly-based contraction in
output, employment, investment and confidence
Recovery A phase of the economic cycle, after a recession/depression,during which real
GDP starts to increase and unemployment begins to fall
Redundancy Making someone redundant is to end their employment
Relative deflation An economy with an inflation rate, which is markedly lower than comparable
economies. Over time, a low relative rate of inflation can lead to an
improvement in price competitiveness, assuming that there has not been a
compensating change in the exchange rate between two countries
Remittances Sending of money to people in another country.For many lower-income
nations, remittance income is now a big contribution to Gross National
Income (GNI)
Repo Rate (policy The official 'base' rate of interest that is set by the Monetary Policy
rate) Committee and which, when changed, sends a signal to the rest of the
financial markets about a desired change in the direction of other borrowing
and savings interest rates. Repo is the rate of interest at which the Bank of
England is prepared to lend to banks
Retail Price Index The RPI is broadly similar to the CPI but includes mortgage repayments and
(RPI) some taxes, and excludes the top 4 per cent of earners. It is used to calculate
annual changes in wages, state benefits and pensions
Risk averse Exhibiting a dislike of uncertainty, often seen in a recession
Saving ratio The percentage of disposable income that is saved rather than spent
Slowdown A fall in the rate of growth of an economy but not a full-scale recession
Slump A sustained decrease in real GDP and a persistent rise in unemployment
Soft landing A slowdown in economic activity but which does not result in a recession
Sovereign debt Debt issued by or guaranteed by a government
Spare capacity When a business is not making full use of its available capacity – there are
spare factors of production including land, labour and capital. When an
economy has plenty of spare capacity, short run aggregate supply tends to be
elastic.
Stagflation A combination of slow growth and rising inflation. The most notable recent
period of stagflation occurred during the 1970s, when world oil prices rose
dramatically, and UK inflation rose at one point to nearly 30 per cent
Sterling exchange External value of sterling calculated using a weighted index of a basket of
rate index currencies – weightings are based on the value of trade with different
countries
Stimulus Monetary policy and/or fiscal policy aimed at encouraging higher growth
and/or inflation. This can include interest rate cuts, quantitative easing, tax
cuts and government spending increases
10. Structural trade A trade deficit that arises due to one or more underlying supply-side
deficit weaknesses rather than to a change in GDP or currency – caused by poor
competitiveness
Structural Unemployment that results from the decline in a particular industry which
unemployment leaves people unemployed because they do not have the skills needed by the
industries that are growing
Sustainable Growth which meets the needs of the present without compromising the
growth ability of future generations to meet their own needs. Growth that can
continue without damage to the environment, or the exhaustion of non-
renewable resources
Target A target is an objective of government policy e.g. low inflation
Tariff A tax on imported products which may be ad valorem (%) or a specific tax (a
set amount per unit imported).
Tight labour market When demand for labour is high and there are shortages of labour.
Businesses may have to offer higher wages to attract and keep the workers
they need
Time lags The time it takes for one change e.g. a change in interest rates to affect other
variables e.g. consumer confidence and spending
Toxic debt Loans that may not be repaid. For example, if one home loan on one street
goes bad, it might make people think that all the loans on the street will go
bad
Trade deficit A trade deficit occurs when a country imports a greater value of goods and
services than it exports. A trade deficit as a net withdrawal from the circular
flow of income
Trade-off A trade-off implies that choices have to be made between different
objectives of economic policy for example a trade-of between economic
growth and inflation
Tragedy of the A conflict over finite resources between individual interests and the common
Commons good which can lead to irreversible damage to the stock of natural resources
available to current and future generations
Transmission How a change in interest rates affects the various sectors of the economy
mechanism
Trend growth The long run average growth rate – mainly determined by changes in the
stock of available factor inputs and also improvements in productivity. Trend
growth is represented by a rightward shift in the LRAS (or PPC boundary)
Trough The low point of the economic cycle beyond which a recovery starts
Twin Deficits Twin deficits refer to a situation where an economy is running both a fiscal
deficit and also a deficit on the current account of the balance of payments
Under-employment When people want to work full time but find that they can only get part-time
work – the result is a loss of hours that the economy can use
Unemployment When the prospect of the loss of unemployment benefits dissuades those
trap without work from taking a new job – creates a disincentives problem
11. Unit wage costs Labour costs per unit of output
Unsecured credit Credit not secured by another asset – i.e. money borrowed on credit cards
Wage price spiral Where workers bid for higher wages because they have seen their real
income eroded by rising prices. This can lead to a further burst of cost-push
inflation
Wealth effect The supposed link between changes in wealth and household spending
World Bank A source of financial and technical assistance to developing countries. It can
provide loans and grants for a wide array of purposes that include
investments in education, health, public administration, infrastructure,
financial and private sector development, agriculture and environmental and
natural resource management
World Trade WTO oversees trade agreements, negotiations and disputes between
Organisation member countries. The WTO is an organisation that was formed in 1995 to
control trade agreements between countries and to set rules on international
trade. It replaced GATT(the General Agreement on Tariffs and Trade)