Development Economics Flashcards

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 45 flashcards covering Development Economics.

Long-run Economic growth
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An increase in national output resulting from an increase in aggregate supply. If GDP rises because the nation’s resources became more productive or more abundant, then the full employment level of output will increase, indicating that such growth in sustainable, and most likely characterized by low inflation (i.e. stable price levels).

Long-run Economic growth
Lorenz Curve
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A curve showing the distribution of income within a nation. Shows what percentage of the total income in a nation is earned by each quintile (e.g. the top 20% versus the middle or the bottom 20%)

Lorenz Curve
Diversification
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Producing a variety of different goods as a strategy to protect a nation from the unforeseen demand shocks which often disrupt the economic growth and development of certain developing nations which are over-dependent on the production of single commodity (e.g. oil, coffee, diamonds, bananas).

Diversification
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
Commodity
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A good widely demanded (often globally) and supplied by many sellers, usually without much product differentiation between sellers. Commodities are standardized products. The price of commodities is determined by the market as a whole, often in the global market, not by any individual producer or group of producers. Often traded on national or international commodities markets. Examples include oil, wheat, corn, coffee, copper, cotton, tin, rice, gold, and other primary goods.

Commodity
Market system
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Market economic system: A system of resource allocation in which buyers and sellers meet in markets to determine the price and quantity of goods, services and productive resources.

Market system
Tied aid
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Aid given by a more developed country to a less developed country that comes with “strings attached”, e.g. the recipient nation must spend any of the money received on goods and services produced by the lending country.

Tied aid
Infant Industry
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An industry that is emerging in a less developed country, but which has not achieved the economies of scale and other efficiencies that allow it to compete with larger producers in more developed countries. Sometimes used as a justification for protectionist policies.

Infant Industry
Production possibilities curve
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A graph that shows the various combinations of output that the economy can possibly produce given the available factors of production and the available production technology.

Production possibilities curve
Deterioration in terms of trade
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Occurs when the price of a nation’s exports decreases relative to the price of its imports. May lead to an improvement in the current account balance if demand for imports is elastic relative to export demand, or a worsening in the current account balance if import demand is relatively inelastic.

Deterioration in terms of trade

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