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.

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
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
Development
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Improvements in standards of living of a nation measured by income, education and health

Development
Tragedy of the commons
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When there exists a common access resource, over which there is no private owner, the incentive among rational users of that resource is to exploit it to the fullest potential in order to maximize their own self gain before the resource is depleted. The tragedy, therefore, is that common resources will inevitably be depleted due to humans’ self-interested behavior, leaving us with shortages in key resources essential to human survival.

Tragedy of the commons
Terms of Trade
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The ratio of an index of a nation’s export prices to its import prices. An improvement in the terms of trade means export prices have risen relative to import prices. A worsening means import prices have risen relative to export prices.

Terms of Trade
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
Foreign Direct Investment (FDI)
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Investment in factors of production abroad by multi-national corporations.

Foreign Direct Investment (FDI)
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
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
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

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