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

Wage
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The payment to labor in the resource market. Wages are the “price of labor”

Wage
Money Multiplier
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1/RRR (required reserve ratio). Tells the total amount by which total deposits will increase by in the banking system following an initial change in checkable deposits. For example: an initial injection of $1000 of new money into an economy with a reserve ratio of 0.1 will generate $1000 x (10) = $10,000 in total money.

Money Multiplier
Income Elasticity of Demand (YED)
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A measure of the responsiveness of consumers of a particular good to changes in their income. Calculated as the percentage change in the quantity of a good divided by the percentage change in consumers’ income. Can be negative (inferior goods) or positive (normal goods).

Income Elasticity of Demand (YED)
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
Cross-price Elasticity of demand (XED)
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A measure of the responsiveness of consumers of one good to changes in the price of a related good (either a complement or a substitute). Calculated as the percentage change in the quantity of Good A divided by the percentage change in the price of Good B. Can be negative (for complementary goods) or positive (for substitute goods).

Cross-price Elasticity of demand (XED)
Exports
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The spending by foreigners on domestically produced goods and services. Counts as an injection into a nation’s circular flow of income.

Exports
Productivity
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The output per unit of input of a resource. An important determinant of the level of aggregate supply in a nation. Will increase as a result of better or more capital, education and health, all which add to the human capital of a nation.

Productivity
Flat rate taxes
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Indirect taxes which are of a fixed amount, rather than a percentage of the sales price. For example a $3 per pack tax on cigarettes. It would be $3 whether the sales price is $2 or $5.

Flat rate taxes
M2
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A more broadly defined component of the money supply. Equal to M1 plus savings deposits, money market deposits, mutual funds, and small time deposits.

M2
Average variable cost
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The total variable costs (of labor and raw materials) of a particular level of output divided by the quantity being produced.

Average variable cost

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