UNIT 1
Resources used in the production of goods and services; include land (natural resources), labour, capital and entrepreneurship.
What is Factors of Production?
Anything that deters entry of new firms into a market, for example, licenses or patents.
What is Barriers to Entry?
Arises when the equilibrium level of real output is less than potential output as a result of a decrease in AD.
What is Deflationary/Recessionary Gap?
A record of the value of all transactions of a country with the rest of the world over a period of time.
What is Balance of Payments?
A measure of the satisfaction derived from consuming a good or service.
What is Utility?
A simplified illustration that shows the flows of income and expenditures in an economy.
What is Circular Flow of Income?
A type of market failure where one party in an economic transaction has access to more or better information than the other party.
What is Assymetric Information?
Planned spending on domestic goods and services at different average price levels, per period of time. Consists of consumption, investment and government expenditures plus net exports.
What is Aggregate Demand (AD)?
Typically refers to tariffs that aim at raising the artificially low price of a dumped imported good to the level of the higher domestic price. A dumped good is one that is exported at a price below the cost of producing it.
What is Anti-Dumping?
Goods that are not considered essential by consumers therefore they have a price elastic demand (PED > 1), or income elastic demand (YED > 1).
What is Luxury Goods?
Deals with areas of the subject that are capable of being falsified, or shown to be correct or not.
What is Positive Economics?
chieved when just the right amount of goods and services are produced from society’s point of view so that scarce resources are allocated in the best possible way. It is achieved when, for the last unit produced, price (P) is equal to marginal cost (MC), or more generally, if marginal social benefit (MSB) is equal to marginal social cost (MSC).
What is Allocatie Efficiency?
Unemployment of individuals who are in-between jobs, as people quit to find a better job or to move to a different location.
What is Frictional Unemployment?
An exchange rate system where the exchange rate is fixed, or pegged, to the value of another currency (or to the average value of a selection of currencies) and maintained there with appropriate central bank intervention.
What is Fixed-Exchange Rate?
The UN set out 17 global goals including those that aim to end all forms of poverty, fight inequalities and tackle climate change.
What is the Sustainable Development Goals?
Physical capital typically financed by governments that is essential for economic activity to take place, including roads, power, telecommunications and sanitation, generating significant positive externalities
What is Infrastructure?
The average of the prices of the goods and services that the typical consumer buys expressed as an index number. The CPI is used as a measure of the cost of living in a country and to calculate inflation.
What is CPI?
A set of policies that aim to increase an economy’s productive capacity that relies on a greater role for the government; these include expenditures on infrastructure, education, health care, research and development, and all industrial policies.
What is Interventionist Supply Side Policies?
A measure of the degree of income inequality of a country that ranges from zero (perfect income equality) to one (perfect inequality). Diagrammatically it is the ratio of the area between the Lorenz curve and the diagonal over the area of the half-square.
What is Gini Coefficient?
A type of market failure involving asymmetric information where a party takes risks but does not face their full costs by changing behaviour after a transaction has taken place. It is very common in insurance markets.
What is Moral Hazard?
An individual or group of individuals who have an interest, or stake, in an economic activity or outcome.
What is a Stakeholder?
The period of time when all factors of production are variable.
What is Long-Run in Microeconomics?
Any circular chain of events starting and ending in poverty—for example, low income leads to low savings, leads to low investment, leads to low growth, leads to low income.
What is the Poverty Trap/Cycle?
Permits to pollute, issued by a governing body, that sets a maximum amount of pollution allowable. These permits may be traded (bought or sold) in a market for such permits
What is Tradeable Permits?
A situation with common pool resources, where individual users acting independently, according to their own self-interest, go against the common good of all users by depleting or spoiling that resource through their collective action
What is the Tragedy of Commons?