Ib Economics Sl

Front 1

Utility

Back 1

satisfaction derived from consumption of a good/service.

Front 2

Profit

Back 2

[TR - TC]

Front 3

Normal Profit

Back 3

profit that the firm could make by using its resources in their next best use (opportunity cost)

Front 4

Abnormal Profit

Back 4

profit above normal profit, made without necessary efficiency.

Front 5

Positive Economics

Back 5

scientific or objective study of the allocation of resources, can be proven.

Front 6

Normative Economics

Back 6

study and presentation of policy prescriptions involving value judgments about the way in which scarce resources are allocated. (subjective approach to economics)

Front 7

Opportunity Cost

Back 7

The next best alternative already foregone

Front 8

Giffen Good

Back 8

special type of inferior good where demand increases when price increases

Front 9

Veblen Good

Back 9

(snob goods) goods bought in order to gain status, often sell better at high prices.

Front 10

Economies of Scale

[R-M-F-T-M]

Back 10

a fall in the long run average costs of production as output rises.

Technical: automation, specialized equipment, increased dimensions.
Financial: easier credit, lower rate of interest.
Managerial: specialized departments.
Marketing: advertising (brand name, sponsorship, …), packaging.
Risk-bearing: diversify.

Front 11

Pareto Optimality

Back 11

it is impossible to make one person better off without necessarily making someone else worse off.

Front 12

Market failure

Back 12

where resources are inefficiently allocated due to imperfections in the working of the market mechanism.

Front 13

Macroeconomic Policy Objectives

Back 13

Economic growth and development
Full employment
Price stability
External equilibrium

Front 14

Free Trade Areas

Back 14

group of countries between which there is free trade in goods and services but which allows member counties to set their own level of tariffs against non-member countries.

Front 15

Customs Unions

Back 15

group of countries that have the same external customs and internal free trade.

Front 16

Common Markets

Back 16

group of countries between which there is free trade in products and factors of production, and which imposes a common external tariff on imported goods from outside the market.

Front 17

Preferetnial Trading Partners

Back 17

Lower tariffs, (EU and ACP)

Front 18

Economic and Monetary Union

Back 18

Eurozone.

Front 19

Balance of Payments

Back 19

transaction of the flows of money in and out of an economy.

Front 20

Current Account

Back 20

payments for the purchase and sale of goods and services and net investment incomes (profit, interest, dividends) are recorded.

Front 21

Capital Account

Back 21

part of the B.o.P. where flows of savings, investment and currency are recorded. ASSETS

Front 22

Terms of Trade:

Back 22

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Front 23

Economic Growth

Back 23

An increase in the nation's capacity to produce goods and services.

Front 24

Economic Development

Back 24

fill

Front 25

HDI

Back 25

compares countries on the basis of real GDP per capita at PPP, life expectancy, education (literacy and school enrolment)

Front 26

Human Suffering Index

Back 26

takes into account factors such as access to clean water, adequate food, and education.

Front 27

Market-Orientated Supply-Side Policies

[M-W-D-P-T-TU]

Back 27

X Minimum Wage
X Welfare
- Deregulation
- Privatization
- ↓Tax
X Trade Unions

Front 28

Interventionist Supply-Side Policies

[IREI S]

Back 28

- Infrastructure
- Research and Development
- Education
- Information
- Subsidies

Front 29

Changes to Aggregate Demand

[Y?-I-W-C-I-X?]

Back 29

- Income
- Investments
- Wealth
- Confidence
- Interest Rate
- X-M

Front 30

Costs of Inflation

[S-L-U-T-P]

Back 30

- ↓Savings
- Labour unrest
- Uncertainty
- Trade (↓X)
- ↓Purchasing power

Front 31

Local Barriers to Economic Growth and Development

[S-H-I-T-C-L-I-M-E]

Back 31

- Stability
- Health
- Infrastructure
- Tax
- Corruption
- Laws
- Inequality
- Markets (informal)
- Education

Front 32

Diverse Characteristics of Developing Countries

[G-H-E-R-P-E-S]

Back 32

- Geography/demographics
- Historical background
- Ethics/religion
- Resource endowment
- Political structure
- Economy
- Structure of industry

Front 33

Foreign Barriers to Economic Growth and Development

[F-O-P]

Back 33

- Financial (debt, flight, no currency)
- Over dependence
- Protectionism (foreign)

Front 34

Common Characteristics of Developing Countries

[H-D-U-P-P-I-V]

Back 34

- ↓HDI
- Dependence on a single good
- Un/under employment
- ↓ Productivity
- ↑Population and dependency
- Imperfect markets and info
- Vulnerability in world affairs

Front 35

Causes of Economic Growth

[R-I-C-H]

Back 35

- Resources
- Institutional Factors
- Capital (widening/deepening)
- Human Capital

Front 36

Consequences of Economic Growth

[I-R-W-I-N]

Back 36

- ↑Inequality
- ↑Revenue (gov)
- ↑Welfare indicators
- ↑Income
- ↑Negative externalities

Front 37

Causes of Economic Development

[H-I-P-E]

Back 37

- Health
- Infrastructure
- Political stability
- Education

Front 38

Reasons to Cancel 3rd World Debt (Boomerang Effect)

[T-U-W-I-D-E]

Back 38

- Taxes
- Unemployment
- War
- Immigration
- Drugs
- Environment

Front 39

Why Do Countries Trade?

[C-E-R-P-C]

Back 39

- ↑Choice
- ↑Economies of scale
- ↑Resource access
- ↓Prices
- ↑Competition (efficiency)

Front 40

Pros of Protectionism

[B-S-T-S-C-O-D-E-S]

Back 40

- ↑Employment
- ↓Overspecialization
- ↑Taxes
- ↑Standards
- ↑Sunrise industries
- ↑Competitiveness
- ↑Sovereignty
- ↓Dumping
- ↑BoP

Front 41

Cons of Protectionism

[P-E-N-I-S]

Back 41

- ↑Prices
- ↓Variety (identical)
- ↓Efficiency
- ↓Specialization
- ↑Retaliation (nasty)

Front 42

Why is Globalization Happening?

[M-I-L-F-I-T]

Back 42

- ↑Transport
- ↑IT
- ↑Integration
- ↑Liberalization
- ↑FDI
- ↑MNCs

Front 43

Pros of Globilzations

[M-S-C-P-F-M-C]

Back 43

- Market
- Competition (efficiency)
- Choice
- Price
- FDI
- Stability
- Management

Front 44

Cons of Globalization

[D-W-F-S]

Back 44

- Failures
- Sovereignty
- WTO Fail
- Discrimination

Front 45

Fixed Exchange Rate Terms

Back 45

↑Revaluation
↓Devaluation

Front 46

Floating Exchange Rate Terms

Back 46

↑Appreciation
↓Depreciation

Front 47

Causes of a Stronger Currency

[F-S-T-R-I-P]

Back 47

-↓Inflation
-↑Foreign Income
-↑Taste
-↑Prospects
-↑Rates
-↑Speculation

Front 48

Economic Growth Models

Back 48

Lewis Dual Sector Model

Harrod-Domar Model (savings ration/capital effiency)

Front 49

Econmic Growth Strategies

Back 49

Export-Led
Import Substitution
FDI

Front 50

Types of Aid

Back 50

Humanitarian
Development (25% grant, LR welfare)

Front 51

Types of Development Aid

[L-T-P-T-C]

Back 51

Long-term loans
Tied Aid
Project Aid
Technical Aid
Commodities Aid

Front 52

Issues with Aid

Back 52

Stolen
Poor distribution
Self-interest
Reliance
Debt
Foreign protectionism
Washington Consensus