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10 Cards in this Set
- Front
- Back
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Purchasing power parity
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1. The equality of the prices of a bundle of goods (usually the CPI) in two countries when valued at the prevailing exchange rate. Called absolute PPP.
2. The equality of the rates of change over time in the prices of a bundle of goods in two countries when valued at the prevailing exchange rate. Called relative PPP. Implies that the rate of depreciation of a currency must equal the difference between its inflation rate and the inflation rate in the currency to which it is being compared |
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Autarky
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The situation of not engaging in international trade; self-sufficiency. (Not to be confused with "autarchy," which in at least some dictionaries is a political term rather than an economic one, and means absolute rule or power.)
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Comparative advantage
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The ability to produce a good at lower cost, relative to other goods, compared to another country. In a Ricardian model, comparison is of unit labor requirements; more generally it is of relative autarky prices. With perfect competition and undistorted markets, countries tend to export goods in which they have comparative advantage. See also absolute advantage. Due to Ricardo (1815).
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Portfolio
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The entirety of the financial assets (and usually also liabilities) that an economic agent or group of agents owns
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Equity
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Share in the ownership of a corporation; more commonly called a stock, as in the stock market.
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Bond
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A debt instrument, issued by a borrower and promising a specified stream of payments to the purchaser, usually regular interest payments plus a final repayment of principal. Bonds are exchanged on open markets including, in the absence of capital controls, internationally, providing a mechanism for international capital mobility
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Bilateral
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Between two countries, in contrast to plurilateral and multilateral.
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Remittances
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Payments from one country to another that are not payment for anything (goods, services, assets, the use of capital, etc.), such as charitable contributions, gifts to family members, and government aid.
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Subsidy
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A payment by government, perhaps implicit, to the private sector in return for some activity that it wants to reward, encourage, or assist. Under WTO rules, subsidies may be prohibited, actionable, or non-actionable.
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Unilateral Transfer
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Payment made by the government or private sector of one country to another as a gift or aid, not as payment for any good or service nor as an obligation. Also called a transfer payment.
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