Flashcards – all units

Only 10 flashcards are shown at a time! Once you’ve mastered these 10 Economic terms, click the shuffle button below for 10 new terms. There are approximately 330 flashcards in total covering Micro, Macro, International and Development Economics

Public sector
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Refers to the activities undertaken by the government or the state. “Public sector investment” generally refers to government spending on infrastructure.

Public sector
Merit goods
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Products which create positive externalities, or spillover benefits, on a third party due to their production and/or consumption. For example, vaccines are a merit good since they make all of society healthier, not just the individual who receives them.

Merit goods
Debt cancellation
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See indebtedness. When international lenders from a more economically developed country (MEDC) who are owed money by a the government of a less economically developed country (LEDC),usually from loans taken out by corrupt governments in the past, forgive the debt they are owed. Allows for the limited tax revenues collected by the developing country’s government to be used to provide public goods and services (such as infrastructure, education and health care) which contribute to the poor country’s economic development.

Debt cancellation
Fair Trade
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A trade scheme which promotes better working and living conditions among the producers of primary commodities such as bananas and coffee in less developed countries. Attempts to assure that a larger percentage of the final sale price of such commodities makes it back to those who produced them.

Fair Trade
Incentive
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Refers to the motivation an individual has to undertake a particular action.

Incentive
Goods
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The physical output of a firm producing a product meant for sale and consumption in a product market. Contrast with services, which are non-physical products produced and sold by firms to consumers.

Goods
Sustainable development
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A system for achieving improvements in living standards which is able to endure over a long period, characterized by the use of renewable resources and other technologies that both improve living standards and protect the environment

Sustainable development
Land
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Includes all natural resources needed to undertake production of goods or services: including soil, timber, minerals, fossil fuels, fresh water, livestock, fish, etc… “the gifts of nature”

Land
Open market operations
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The central bank’s buying and selling of government bonds on the open market from commercial banks and the public. Aimed at increasing or decreasing the level of reserves in the banking system and thereby affecting the interest rate and the level of aggregate demand. Selling bonds takes money out of circulation, reducing the supply of money and raising the interest rate (contractionary monetary policy). The Fed’s buying of bonds increases the amount of money in circulation, increasing the money supply and reducing interest rates (expansionary monetary policy).

Open market operations
Capital Flight
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When the scarce capital available to a less developed country leaves for the safety and security of a more developed economy. Financial capital flight occurs when savers prefer to put their money in foreign banks to domestic banks, reducing the supply of loanable funds in a poor county. Human capital flight is also known as “brain drain” when the skilled workers in a poor country prefer to seek work in a richer country, reducing the production possibilities of the less developed country.

Capital Flight

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