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.

Improvement in terms of trade
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When the price of a nation’s exports rises relative to the price of its imports. May result in an improvement in the current account balance if demand for the country’s exports is inelastic relative to its import demand, or a worsening in the current account balance if export demand is elastic relative to import demand.

Improvement in terms of trade
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
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
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
Foreign Direct Investment (FDI)
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Investment in factors of production abroad by multi-national corporations.

Foreign Direct Investment (FDI)
Development
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Improvements in standards of living of a nation measured by income, education and health

Development
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
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
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
More Economically Developed Country (MEDC)
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A term referring to a country in which the average income is above approximately $15,000 PPP per year, in which most people have access to health care and education. Includes most of Europe, North America, parts of Latin America and East Asia.

More Economically Developed Country (MEDC)

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