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

Ceteris paribus
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“All else equal”; used as a reminder that all variables other than the ones being studied are assumed to be constant.

Ceteris paribus
Economic growth
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An increase in the output of goods and services in a nation between two periods of time.

Economic growth
Marshall-Lerner Condition
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Determines how a depreciation in a currency’s exchange rate will affect the nation’s current account balance. If the combined price elasticities of demand for exports and imports is greater than one (elastic), then a depreciation of the currency will move the current account towards surplus. But if demand for exports and imports is inelastic, a weaker currency will move the current account towards deficit.

Marshall-Lerner Condition
Infrastructure
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The physical assets of a nation which increase the efficiency with which the nation produces its output. Includes all the roads, electricity grids, water and sewage facilities, but also factories, airports, railways, tunnels, bridges schools and hospitals: anything that increases the productivity of labor in the nation.

Infrastructure
Weath
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An important determinant of consumption. Refers to the total value of a household’s assets minus all its liabilities.

Weath
Dumping
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The practice of producers in one nation selling their output at a price lower than their costs of production in another nation. Considered a justification for protectionism by the World Trade Organization.

Dumping
Current account
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Measures the balance of trade in goods and services and the flow of income between one nation and all other nations. It also records monetary gifts or grants that flow into our out of a country.

Current account
Shortage
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When the quantity demanded for a particular good is greater than the quantity supplied. Also called “excess demand”. Occurs when the price is below the equilibrium level, for example, when a government imposes a price ceiling in a market.

Shortage
Productive efficiency
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When a good is produces in the least cost manner, productive efficiency is achieved. This means that firms producing the good are achieving the lowest possible average production cost; in other words, they are producing at the lowest point on their average total cost curve, where marginal cost intersects the ATC. Among the four market structures (perfect competition, monopolistic competition, oligopoly and monopoly), only perfectly competitive firms will achieve productive efficiency in the long-run, since the price in the market will always be competed down to the firms’ minimum ATC.

Productive efficiency
Self-correction
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The idea that an economy producing at an equilibrium level of output that is below or above its full employment will return on its own to its full employment level if left to its own devices. Requires flexible wages and prices, and therefore is only likely to happen in the long-run (macroeconomics).

Self-correction

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