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74 Cards in this Set
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Economics |
The field of study that analyzes the distribution and value of competing consumer needs with scarce resources |
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Microeconomics |
A branch of Economics that deals with the behavior of consumers, businesses, firms and industries, the determination of market prices and the production of goods and services |
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Macroeconomics |
The branch of Economics on a larger scale that deals with the national and global economy and issues such as the impact of aggregate economy activity in the form of national income, the unemployment rate, public debt, international trade and Consumer Price Index |
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New global economy |
A result of globalization, trade liberalization and the information technology and Communications Revolution. The information and communication revolution has made geography and time irrelevant and enhance the Outreach of economic parameters. The signature Mark of the new global economy is new ideas, new technologies and new initiatives. |
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Economic Development |
Efforts that lead to economic progress through the structural transformation of the economy, such as creating or retaining jobs and supporting or growing incomes and the tax base. |
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Economic growth |
The increase in production of goods and services overtime in a country's National economy |
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Sustainable growth |
A combination of economic growth and environmental sustainability. |
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Sustainable development |
Economic development that meets the needs of the present generation without compromising the ability of future generations to use the resources to meet their needs. It refers to the proper and efficient management of the environment and the economy. In short, it is economic development that is sustained with foresight. |
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Structural change |
A massive and fundamental shift in the economic landscape |
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Industrial Revolution |
A major economic Revolution that transformed an agriculture-based economy and Society into an industrial driven economy and Society. The Industrial Revolution commenced in the late eighteenth and early nineteenth centuries. I recorded a period of major structural change and a shift away from agricultural production and Manufacturing and mass production that contributed to economies of scale. |
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Information Technology Revolution |
Associated with the beginning of the information age in the late 20th century. The invention of nanotechnology and the microchip that led to the creation of the computer are considered the pivotal innovations that empowered the information technology revolution. Economies of scope are the signature Mark of this economic revolution. |
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Staples thesis |
An export led growth model that identifies Canada's natural resources as the engine of economic activity at different periods in Canada's economic history. |
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Mercantilism |
The exploitation of a new world colonies in the 17th century through a system of triangular trade for the purpose of economic benefit to the colonizing powers. |
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Laissez-faire |
An economic system where the government does not intervene in the economy. The private sector takes the lead role in organizing economic activity through the markets. |
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Mixed economy |
An economic system that includes active participation of both private-sector and government |
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Division of labor |
Introduced by Adam Smith to describe the allocation of tasks or jobs to particular people. Instead of one worker completing all different phases of the production of a particular product, the production process is broken down into small, separate operations performed by different workers. |
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Business cycle |
The fluctuations in the rate of economic growth that take place in the economy over time. These fluctuations appear to occur in sequential pattern about every 5 years. Keynesian economics attempts to reduce the magnitude of negative economic impact of business cycle fluctuations such as unemployment and inflation and promote more balanced long-term growth. The peak of the business cycle is usually referred to as the boom and the trough as a recession or depression. |
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Globalization |
The growth of interdependence among world economies with enhanced trade and electronic connectivity. |
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Internetization |
The important role that the internet plays in all aspects of human Endeavors. Internet ization is the infrastructure and the medium of electronic connectivity in the information age and the new global economy. |
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Primary sector |
Oldest sector. Agriculture, fishing and resource extraction and industries such as mining and logging, forestry oil production, where natural resources and raw materials are made available for production |
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Secondary sector |
Manufacturing and Industrial sector of the economy. This is the level of economic activity where raw materials are processed into finished goods and made available for distribution and consumption. |
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Tertiary sector |
The service sector of the economy. This is the third level of economic activity where finished goods are distributed and sold. It also includes the sector of government employment and the provision of Public Services. This private sector service industry includes banking, telecommunications, hotels, restaurants, personal or domestic Services. Employment in the sector has grown consistently since the second world war and now accounts for the largest portion of employment. |
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IT sector |
The newest sector of the economy. Recent him rapidly expanding sector of the new economy in terms of employment creation and contribution to economic growth. It includes high technology and computer hardware and software development. |
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Classical economics |
The economic theories of Adam Smith, David Ricardo and others which revolved around the role of markets in the economy. Classical theories endorsed the principles that free markets without interference from government would lead to a prosperous economy. These theories are based on supply-side economics and ensuring a balanced budget. |
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Neoclassical economics |
The modern application of classical theory for example the view that markets operate efficiently and the way to increase output and employment is to increase aggregate supply. |
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Keynesian economics |
The application of the economic theories of John Maynard Keynes. These theories rely on the positive and constructive intervention of the government through monetary and fiscal policies in order to impact on the demand side of the economy. More specifically they explain the level of output and employment in the economy is being determined by aggregate demand. The ultimate goal was to reduce the Peaks and valleys of the business cycle and mitigate the adverse effects on inflation and unemployment. |
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Monetarists |
A school of Economics thought that Advocates that changes in the money supply of the most effective instrument of government economic policy and the main determinant of the price level. This economic school of thought is the brainchild of Nobel Prize winner Milton Friedman who advocated that inflation is caused by expanding the money supply faster than the economy. This philosophy prescribes restraints in the money supply growth and government expenditure as the cure for inflation, even though the immediate effect would be an increase in the unemployment rate. |
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International trade |
Process of buying and selling goods and services between countries through exports and imports. |
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Closed economy |
An economy that does not engage in international trade. |
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Protectionism |
An economic policy implemented by national governments, mostly to protect domestic industry and commerce from foreign imports that are perceived to have a bad effect on domestic industry. Protectionism is imposed by means of tariffs, quotas and all forms of import restrictions implemented in order to protect domestic industry from foreign competition |
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Tariffs |
Taxes on imported goods. Love you by the government as a percentage of value or by a certain amount per unit. The main purpose is to serve as an instrument of economic policy in order to protect domestic industry by giving it a competitive advantage over imported goods. Tariffs maybe preferential or maybe non-discriminatory. |
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Open economy |
An economy that engages in international trade |
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Trade liberalization |
The removal of barriers to trade such as import quotas and tariffs |
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Absolute advantage |
This exists only when one country has the resources to produce a particular product or can produce it more efficiently in terms of per unit cost and the allocation of resources. |
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Comparative advantage |
This exists when a country produces a good or service more efficiently and with less resources than any of its trading partners |
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Balance of trade |
An accounting of the difference between the value of visible exports and visible Imports |
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Balance of payments |
A record of the income expenditure transactions for a country that engages in international trade in the form of money received or paid out for visable exports and imports as well as invisible exports and imports |
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Bilateral trade agreements |
Trade agreements between two countries |
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Free trade area |
A trading bloc that has removed tariffs and endorsed free trade between its member countries |
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Common Market |
A customs union which permits the free movement of capital and labor between member countries |
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Foreign direct investment |
Overseas investment into a country by multinational enterprises and foreign individual investors. This investment is recorded as a credit in the balance of payments. |
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Multilateral trade agreements |
Trade agreements that include several countries |
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Fiscal policy |
The use of government expenditures and revenues, primarily taxation, in order to influence the level of economic activity. During an economic downturn in the business cycle on expansionary fiscal policy would be implemented in the form of reducing the level of Taxation and increasing government expenditure. This would encourage more spending and reduce unemployment. In contrast, during an upturn in the business cycle and a booming economy a contractionary fiscal policy would be implemented in the form of increased Taxation and reduced government expenditures. This would reduce the level of demand in the economy and reduce inflation. |
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Monetary policy |
Usually implemented by a country's Central Bank in order to influence the level of economic activity and maintain Financial stability. The two principal tools of monetary policy are the level of the money supply and the interest rates. During a recession and expansion era monetary policy would be implemented in the form of reducing the level of interest rates and increasing the money supply. In contrast during a booming economy a contractionary monetary policy would be implemented in the form of increasing the level of interest rates and reducing the money supply. |
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Macroeconomic policy |
Policies designed to influence the level of employment, price level, economic growth and the balance of payments. The aim of that macroeconomic policy is to sustain high employment, price stability, High rate of economic growth and balance of payments equilibrium |
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Microeconomic policy |
Policies designed to improve the efficiency of individual Marcus with the purpose of enhancing increased effort and operational effectiveness. |
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Central Bank |
An institution that is at arm's length from government which regulates the supply, availability and cost of money. It is generally endowed with the following powers 1. To hold and manage reserves of the commercial Banks and to act as a lender of Last Resort period 2. To issue currency, and 3. To serve as Fiscal Agent and financial advisor to the national government. In the United States it is called the Federal Reserve board, and England the bank of England, in Canada the Bank of Canada |
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Time lags |
The time between the formulation, implementation and effect of government economic policy, fiscal or monetary, and social policy |
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Regional disparity |
The uneven spread of economic activity and employment opportunities across the regions within the same country |
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Regional policy |
Government policy designed to improve economic conditions in the laggard regions of a country |
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Transfer payments |
Payments from a government to individuals or a different level of government in the form of income support, subsidies or financial support for social and economic infrastructure. |
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Supply-side policies |
Policies designed to improve the workings of markets. In this way they enhance the capacity of the economy to produce more in non-inflationary environment and shift the aggregate supply curve to the right. Supply-side policies are usually advocated by classical and monetarist Economist who believed that free markets are the most important factor in determining economic growth. Supply-side policies may include improving Education and Training, reducing the power of unions or removing regulations and red tape |
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Government policies |
Measures introduced by government in order to improve the social and economic condition of its citizens |
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Proactive public policy |
Public policy that anticipates crisis situations in the future and sets the process for addressing them with luxury of time and the benefits of foresight |
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Reactive public policy |
Public policy that is directed to deal with the immediate crises and requires instantaneous solutions |
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Factors of production |
The resources that are necessary for production. They're usually classified into four different groups. 1. Land - all natural resources 2. Labor - all human resources, 3. Capital - all physical aids to production such as Machinery, equipment and computers four. Entrepreneurship - all entrepreneurial skills and ability. It is important to note that the rate of economic growth in an economy will be determined by the quantity and quality of the factors of production that are available. |
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Natural resources |
All non person made resources which may be of renewable or nonrenewable type |
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Entrepreneurs |
People who undertake the risks of investment and organize the production process with the anticipation of making profits. |
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Competitive advantage |
A firm that has a lower cost structure than arrival which allows it to sell at a lower price or make a bigger profit at the same price |
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Public goods |
Goods and services that are produced by government or crown corporations. They can be jointly consumed by many consumers or simultaneously without any loss in quantity or quality. Public goods are those that would not be provided in a pure free market system. For example, government provides the public product of National Defense, Coast Guard and Homeland Security. Public goods display two special characteristics 1. Consumption by one person does not reduce the amount available for others 2. Once the goodies provided is impossible to prevent people from using it or assign individual cost and request payment. |
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Free market economy |
A system where resources are owned by individuals and private-sector corporations, markets allocate resources to the price mechanism and income depends on the work performed or the value of resources owned. |
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Command economy |
The preferred economic model of communist countries where the government allocates resources and sets production targets and growth rates. This is in sharp contrast to the free market system. |
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Public/national debt |
Used interchangeably, it is the total amount that the government owes to individuals and institutions and is usually the result of persistent budgetary deficits. |
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External debt |
The total amount of private and public debt owed by a country |
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National income |
The value of goods and services created by a country in one year. |
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Gross domestic product |
A measure of national income. It is the total value of all goods and services produced over a given time period, usually a year. it does not exclude the value of exports or Imports and can be measured either as the total of income, expenditure or output |
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Real gross domestic product |
The level of GDP after changes in inflation have been taken into account |
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Gross national product GNP |
The value of all the goods and services produced in an economy, plus the value of the goods and services exported minus the goods and services imported |
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Real gross national product |
The level of GNP after changes in inflation have been taken into account. |
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Budget |
The annual announcement of the government's fiscal priorities with respect to revenues and expenditures. |
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Budget deficit |
When government spending exceeds government income. |
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Budget surplus |
When governments income exceeds government spending. |
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Balanced budget |
When government income exactly matches government expenditure. Classical Economist argue that this should always be the aim for government policy keynesians belong to a different school of thought that favors government incurring a deficit budget during periods of low economic activity and a surplus budget during periods when the economy is booming as long as the government's fiscal approach is balanced in the long run where by previous deficits match future surpluses. |
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Inflation |
A sustained increase in the general price that can be measured either monthly, quarterly or annually by the Consumer Price Index |
