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

Command Economy
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An economic system in which resources are allocated through central planning, usually by the state or central government.

Command Economy
Cost-push inflation
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An increase in the average price level resulting from a decrease in aggregate supply (from higher wage rates and raw material prices) and accompanied by a decrease in real output and employment.

Cost-push inflation
Official reserves
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Foreign currencies held by a nation’s central bank, resulting from accumulations in the current account and the financial account in the nation’s balance of payments. To balance the two accounts in the balance of payments, a country’s official foreign exchange reserves measures the net effect of all the money flows from the other accounts.

Official reserves
Structural unemployment
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Caused by changes in the structure of demand for goods and in technology; workers who are unemployed because their skills do not match what is in demand by producers in the economy.

Structural unemployment
GDP (expenditure approach)
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Consumption + Investment + Government spending + Net Exports: Measures the total spending on goods and services produced in a nation in a year.

GDP (expenditure approach)
Inferior Goods
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Goods that consumers demand less of as their incomes rise and more of as their incomes fall. For example fast food meals.

Inferior Goods
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
Foreign exchange market
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The market in which international buyers and sellers exchange foreign currencies for one another to buy and sell goods, services, and assets from various countries. It is where a currency’s exchange rate relative to other currencies is determined.

Foreign exchange market
Multilateral aid
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Aid given by organizations such as the World Bank, representing many donor nations. In contrast to unilateral aid, which is given from one country to another.

Multilateral aid
Frictional unemployment
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When workers are voluntarily moving between jobs, or when recent college graduates are looking for their first job. Considered part of the natural rate of unemployment.

Frictional unemployment

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