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

Externalities
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When the production or consumption of a good creates either positive or negative effects on a third party not involved in the goods production or consumption. Can be negative (spillover costs) or positive (spillover benefits)

Externalities
Revaluation
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When a government or central bank intevenes in the market for its own currency on foreign exchange market to raise its value relative to another currency or currencies. Measures may include raising domestic interest rates, purchasing the currency using foreign exchange reserves, or restricting the outflow of capital for foreign investment (exchange controls).

Revaluation
The Basic Economic Questions
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What should be produced? How should it be produced? and, “For whom should production take place?” Any economic system, either centrally planned or free market, must address these questions.

The Basic Economic Questions
Contractionary fiscal policy
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A demand-side policy whereby government increases taxes or decreases it expenditures in order to reduce aggregate demand. Could be used in a period of high inflation to bring the inflation rate down.

Contractionary fiscal policy
Differentiation
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When firms attempt to set their products apart from the competition through improvements in technology, branding, service, location and other means. The goal is to increase demand for the individual firm’s product at the expense of the competition, giving the firm more price marking power and allowing for economic profits to be earned.

Differentiation
Inelastic Demand
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When consumers are relatively unresponsive to price changes. A PED coefficient of less than one means that a particular change in the price of a good will be met by a proportionally smaller change in the quantity demanded.

Inelastic Demand
Marginal analysis
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Decision making which involves a comparison of marginal (extra) benefits and marginal costs.

Marginal analysis
Collusion
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When oligopolistic sellers cooperate on output and price, allowing for a more optimal payoff (profit) that would be achieved under competition.

Collusion
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
Loanable funds market
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The market in which the demand for private investment and the supply of household savings intersect to determine the equilibrium real interest rate. Can be used to illustrate the crowding-out effect of deficit-financed fiscal policy, which causes the supply of funds to become more scarce as households save more money in government bonds.

Loanable funds market

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