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52 Cards in this Set
- Front
- Back
Utility
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satisfaction derived from consumption of a good/service.
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Profit
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[TR - TC]
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Normal Profit
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profit that the firm could make by using its resources in their next best use (opportunity cost)
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Abnormal Profit
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profit above normal profit, made without necessary efficiency.
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Positive Economics
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scientific or objective study of the allocation of resources, can be proven.
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Normative Economics
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study and presentation of policy prescriptions involving value judgments about the way in which scarce resources are allocated. (subjective approach to economics)
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Opportunity Cost
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The next best alternative already foregone
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Giffen Good
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special type of inferior good where demand increases when price increases
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Veblen Good
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(snob goods) goods bought in order to gain status, often sell better at high prices.
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Economies of Scale
[R-M-F-T-M] |
a fall in the long run average costs of production as output rises.
Technical: automation, specialized equipment, increased dimensions. Financial: easier credit, lower rate of interest. Managerial: specialized departments. Marketing: advertising (brand name, sponsorship, …), packaging. Risk-bearing: diversify. |
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Pareto Optimality
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it is impossible to make one person better off without necessarily making someone else worse off.
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Market failure
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where resources are inefficiently allocated due to imperfections in the working of the market mechanism.
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Macroeconomic Policy Objectives
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Economic growth and development
Full employment Price stability External equilibrium |
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Free Trade Areas
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group of countries between which there is free trade in goods and services but which allows member counties to set their own level of tariffs against non-member countries.
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Customs Unions
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group of countries that have the same external customs and internal free trade.
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Common Markets
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group of countries between which there is free trade in products and factors of production, and which imposes a common external tariff on imported goods from outside the market.
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Preferetnial Trading Partners
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Lower tariffs, (EU and ACP)
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Economic and Monetary Union
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Eurozone.
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Balance of Payments
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transaction of the flows of money in and out of an economy.
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Current Account
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payments for the purchase and sale of goods and services and net investment incomes (profit, interest, dividends) are recorded.
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Capital Account
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part of the B.o.P. where flows of savings, investment and currency are recorded. ASSETS
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Terms of Trade:
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fill
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Economic Growth
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An increase in the nation's capacity to produce goods and services.
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Economic Development
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fill
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HDI
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compares countries on the basis of real GDP per capita at PPP, life expectancy, education (literacy and school enrolment)
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Human Suffering Index
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takes into account factors such as access to clean water, adequate food, and education.
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Market-Orientated Supply-Side Policies
[M-W-D-P-T-TU] |
X Minimum Wage
X Welfare - Deregulation - Privatization - ↓Tax X Trade Unions |
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Interventionist Supply-Side Policies
[IREI S] |
- Infrastructure
- Research and Development - Education - Information - Subsidies |
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Changes to Aggregate Demand
[Y?-I-W-C-I-X?] |
- Income
- Investments - Wealth - Confidence - Interest Rate - X-M |
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Costs of Inflation
[S-L-U-T-P] |
- ↓Savings
- Labour unrest - Uncertainty - Trade (↓X) - ↓Purchasing power |
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Local Barriers to Economic Growth and Development
[S-H-I-T-C-L-I-M-E] |
- Stability
- Health - Infrastructure - Tax - Corruption - Laws - Inequality - Markets (informal) - Education |
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Diverse Characteristics of Developing Countries
[G-H-E-R-P-E-S] |
- Geography/demographics
- Historical background - Ethics/religion - Resource endowment - Political structure - Economy - Structure of industry |
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Foreign Barriers to Economic Growth and Development
[F-O-P] |
- Financial (debt, flight, no currency)
- Over dependence - Protectionism (foreign) |
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Common Characteristics of Developing Countries
[H-D-U-P-P-I-V] |
- ↓HDI
- Dependence on a single good - Un/under employment - ↓ Productivity - ↑Population and dependency - Imperfect markets and info - Vulnerability in world affairs |
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Causes of Economic Growth
[R-I-C-H] |
- Resources
- Institutional Factors - Capital (widening/deepening) - Human Capital |
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Consequences of Economic Growth
[I-R-W-I-N] |
- ↑Inequality
- ↑Revenue (gov) - ↑Welfare indicators - ↑Income - ↑Negative externalities |
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Causes of Economic Development
[H-I-P-E] |
- Health
- Infrastructure - Political stability - Education |
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Reasons to Cancel 3rd World Debt (Boomerang Effect)
[T-U-W-I-D-E] |
- Taxes
- Unemployment - War - Immigration - Drugs - Environment |
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Why Do Countries Trade?
[C-E-R-P-C] |
- ↑Choice
- ↑Economies of scale - ↑Resource access - ↓Prices - ↑Competition (efficiency) |
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Pros of Protectionism
[B-S-T-S-C-O-D-E-S] |
- ↑Employment
- ↓Overspecialization - ↑Taxes - ↑Standards - ↑Sunrise industries - ↑Competitiveness - ↑Sovereignty - ↓Dumping - ↑BoP |
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Cons of Protectionism
[P-E-N-I-S] |
- ↑Prices
- ↓Variety (identical) - ↓Efficiency - ↓Specialization - ↑Retaliation (nasty) |
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Why is Globalization Happening?
[M-I-L-F-I-T] |
- ↑Transport
- ↑IT - ↑Integration - ↑Liberalization - ↑FDI - ↑MNCs |
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Pros of Globilzations
[M-S-C-P-F-M-C] |
- Market
- Competition (efficiency) - Choice - Price - FDI - Stability - Management |
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Cons of Globalization
[D-W-F-S] |
- Failures
- Sovereignty - WTO Fail - Discrimination |
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Fixed Exchange Rate Terms
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↑Revaluation
↓Devaluation |
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Floating Exchange Rate Terms
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↑Appreciation
↓Depreciation |
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Causes of a Stronger Currency
[F-S-T-R-I-P] |
-↓Inflation
-↑Foreign Income -↑Taste -↑Prospects -↑Rates -↑Speculation |
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Economic Growth Models
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Lewis Dual Sector Model
Harrod-Domar Model (savings ration/capital effiency) |
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Econmic Growth Strategies
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Export-Led
Import Substitution FDI |
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Types of Aid
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Humanitarian
Development (25% grant, LR welfare) |
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Types of Development Aid
[L-T-P-T-C] |
Long-term loans
Tied Aid Project Aid Technical Aid Commodities Aid |
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Issues with Aid
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Stolen
Poor distribution Self-interest Reliance Debt Foreign protectionism Washington Consensus |