IB economics Paper 2 definitions
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Period of time, where factors of production are unemployed
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Recession
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Situation in which a country imports more than it exports
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trade deficit
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price < value
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undervalued
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where the value of total imports of goods and services are greater than the value of total exports of goods and services
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current account deficit
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When a currency is allowed to fluctuate within a narrow band in the SR, and is realigned in the LR
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managed exchange rate
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Investment made by a foreign company in the economy of another country.
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foreign direct investment
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when a country exports more than it imports
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trade surplus
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the basic structure or features of a system or organization
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infrastructure
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the market value of all final goods and services produced within a country in a given period of time
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GDP
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A free trade alliance of nations that share common external tariffs
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customs union
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a group of countries that acts as a single market, without trade barriers between member countries
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common market
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the value of a currency in one country compared with the value in another
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exchange rate
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It means that output and employment are increasing
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growth
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services to financial institutions, service to federal government, regulate and supervise financial institutions, monetary management
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function of Central Bank
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Economic goods or products before they are processed and/or given a brand name, such as a product of agriculture.
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commodities
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an increase in price or value of a currency
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appreciation
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to be able to make something using fewer resources than other producers require
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absolute advantage
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the ability to produce a good at a lower opportunity cost than another producer
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comparative advantage
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When a curency's value is determined by market forces (supply and demand)
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floating exchange rate
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A system under which the exchange rate for converting one currency into another is fixed
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fixed exchange rate
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a country exports more than it imports
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current account surplus
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a steady, long-term increase in real GDP
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economic growth
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Is an increase in standard of living, improvement of literacy rates and life expectancy with an increase in GDP
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Economic development
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1. Eradicate extreme poverty and hunger 2. Achieve universal primary education 3. Promote gener equality and empower women 4. Reduce child mortality 5. Improve maternal health 6. Combat HIV/AIDS, malaria, and other diseases 7. Ensure environmental sustainability 8. Develop a Global Partnership for Development
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international development goals (MDG)
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Education and health The use of appropriate technology Access to credit and micro-credit The empowerment of women Income distribution
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factors leading to economic development
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Over-specialization on a narrow range of products Price volatility of primary products Inability to access international markets Long-term changes in the terms of trade
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Trade problems facing many economically less developed countries (barrier to development)
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a government policy that uses trade restrictions and subsidies to encourage domestic production of manufactured goods
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Import substitution
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A development strategy that concentrates on producing for the export market
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export promotion
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A process that involves countries in reducing or removing trade barriers, such a tariffs and quotas, so goods and services can move around the world more freely
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Trade liberalization
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a forum for negotiation to liberalize trade. a mechanism for dispute settlement.
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The role of the WTO
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the strategy of spreading out investments to reduce risk
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Diversification
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A firm having operations in more than one country, international sales, and a nationality mix of managers and owners
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MNC
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Assistance to other nations in the form of grants, loans, or credits to buy the assisting nation's products. (US-EU after WW2 for recovery)
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economic aid
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-provide monetary reserves so countries could maintain exchange rates -offer credit for reserve payments -reduce foreign exchange control -monetary policies to prevent inflation/devaluation
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Role of IMF
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an international bank that offers low-interest loans, advice, and information to developing nations
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world bank
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the entext to which barriers to entry and exit in a market are free and costless
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contestability
