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General Terms

In economics, the principle ofabsolute advantagerefers to the ability of a party (an individual, or
Absolute advantage firm, or country) to produce more number of a good product or service than competitors, using
the same amount of resources.
An increase in the value of an asset over time. The increase can occur for a number of reasons
Appreciation including increased demand or weakening supply, or as a result of changes in inflation or interest

In economics,austerityis a set of policies with the aim of reducing government budget

Austerity deficits.Austeritypolicies may include spending cuts, tax increases, or a mixture of both.

The theory ofcomparative advantageis an economic theory about the potential gains from trade
Comparative advantage for individuals, firms, or nations that arise from differences in their factor endowments or
technological progress.
Aconsortiumis anassociationof two or
moreindividuals,companies,organisationsorgovernments(or any combination of these
Consortium entities) with the objective of participating in a common activity or pooling their resources for
achieving a common goal.
In economics, thecost-of-productiontheory of value is the theory that the price of an object or
condition is determined by the sum of thecostof the resources that went into making it.
Cost of production Thecostcan comprise any of the factors ofproduction(including labor, capital, or land) and

A fixedexchange rate, sometimes called apegged exchange rate, is a type ofexchange rateregime
Currency Peg where acurrency's value is fixed against either the value of another singlecurrency, to a basket of
othercurrencies, or to another measure of value, such as gold.

"Devaluation" means official lowering of the value of a country's currency within a fixed
Devaluation exchange rate system, by which the monetary authority formally sets a new fixed rate with
respect to a foreign reference currency.
In microeconomics,economies of scaleare the cost advantages that enterprises obtain due to
Economies of scale size, output, orscaleof operation, with cost per unit of output generally decreasing with
increasingscaleas fixed costs are spread out over more units of output.

Export-oriented industrialization(EOI) sometimes

calledexportsubstitutionindustrialization(ESI),exportledindustrialization(ELI) orexport-led
Export-oriented industrialisation (EOI) growth is a trade and economic policy aiming to speed up theindustrializationprocess of a
country byexportinggoods for which the nation has a comparative advantage.

Aforeign direct investment(FDI) is a controlling ownership in a business enterprise in one

Foreign direct investments (FDI) country by an entity based in another country.
Agold standardis a monetary system in which the standard economic unit of account is based on
Gold Standard a fixed quantity of gold.
TheGreen Revolutionrefers to a series of research and development and technology transfer
Green Revolution initiatives, occurring between the 1940s and the late 1960s, that increased agricultural
production worldwide.

Thegross domestic product(GDP) is one the primary indicators used to gauge the health of a
Gross Domestic Product (GDP) country's economy. It represents the total dollar value of all goods and services produced over a
specific time period - you can think of it as the size of the economy.

Gross national product(GNP) is the market value of all the products and services produced in
Gross National Product (GNP) one year by labour and property supplied by the citizens of a country.
Import substitutionindustrialization (ISI) is a trade and economic policy which advocates
replacing foreignimportswith domestic production. ISI is based on the premise that a country
Import substitution industrialisation (ISI) should attempt to reduce its foreign dependency through the local production of industrialized
Inflationis defined as a sustained increase in the general level of prices for goods and services. It
is measured as an annual percentage increase. Asinflationrises, every dollar you own buys a
Inflation smaller percentage of a good or service. The value of a dollar does not stay constant when there
Aninterest rateis therateat whichinterestis paid by borrowers (debtors) for the use of money
that they borrow from lenders (creditors). Specifically, theinterest rateis a percentage of
Interest rates principal paid a certain number of times per period for all periods during the total term of the
loan or credit.
Keynesian economics is the view that in the short run, especially during
Keynesian economics recessions,economicoutput is strongly influenced by aggregate demand (total spending in the
Laissez-faire is an economic system in which transactions between private parties are free from
Market economies/lassaiz-faire economies government interference such as regulations, privileges, tariffs, and subsidies.

An economicsystem that features characteristics of both capitalism and socialism. Amixed

Mixed economies economicsystem allows a level of privateeconomicfreedom in the use of capital, but also allows
for governments to interfere ineconomicactivities in order to achieve social aims.

A corporation that has its facilities and other assets in at least one country other than its home
Multi-National Corporations (MNCs) country. Such companies have offices and/or factories in different countries and usually have a
centralized head office where they co-ordinate global management.
A term used by political scientists and economists to describe a country whose level of economic
development ranks it somewhere between the developing and first-world classifications. These
Newly industrialised economies (NIEs) countries have moved away from an agriculture-based economy and into a more industrialized,
urban economy.
Bretton Woods System
A landmarksystemfor monetary and exchange rate management established in 1944.
Bretton Woods System TheBretton WoodsAgreement was developed at the United Nations Monetary and Financial
Conference held inBretton Woods, New Hampshire, from July 1 to July 22, 1944.

A treaty created following the conclusion of World War II. The General Agreement on Tariffs
andTrade(GATT) was implemented to further regulate world trade to aide in the economic
General Agreement on Trade and Tariffs (GATT) recovery following the war. GATT's main objective was to reduce the barriers of international
trade through the reduction of tariffs, quotas and subsidies.
TheInternational Monetary Fund(IMF) is the central institution embodying the international
monetary system and promotes balanced expansion of world trade, reduced trade restrictions,
International Monetary Fund (IMF) stable exchange rates, minimal trade imbalances, avoidance of currency devaluations, and the
correction of balance-of-payment problems.
World Bank/International Bank for Reconstruction An international organization dedicated to providing financing, advice and research to
and Development (IBRD) developing nations to aid their economic advancement.
Problems of the Global Economy
Balance of payments the difference in total value between payments into and out of a country over a period.

Afloating exchange rateorfluctuating exchange rateis a type ofexchange-rateregime in which a

Currency float currency's value is allowed to fluctuate in response to market mechanisms of the foreign-
exchangemarket. A currency that uses afloating exchange rateis known as afloatingcurrency.

The failure to promptly pay interest or principal when due.Defaultoccurs when a debtor is
Default unable to meet the legal obligation ofdebtrepayment. Borrowers maydefaultwhen they are
unable to make the required payment or are unwilling to honor thedebt.

Thedollar glutis a term for the accumulation of American dollars outside of the United States as
Dollar glut a reserve currency.
Afree trade agreement(FTA) is a legally bindingagreementbetween two or more countries to
Free Trade Agreement (FTA) liberalisetradeand bring about closer economic integration.
Economic interdependenceis a consequence of specialization, or the division of labor, and is
Interdependence almost universal. The participants in aneconomicsystem are dependent on others for the
products they cannot produce efficiently for themselves.
Nationalization is the process of taking a private industry or private assets into public ownership
Nationalisation by a national government or state.
The objective ofneo-mercantilistpolicies is to increase the level of foreign reserves held by the
Neo-mercantilism government, allowing more effective monetary policy and fiscal policy.

Non-tariff barriersare another way for an economy to control the amount of trade that it
Non-tariff trade barriers conducts with another economy, either for selfish or altruistic purposes. Anybarrierto trade will
create an economic loss, as it does not allow markets to function properly.

OPECis a cartel that aims to manage the supply of oil in an effort to set the price of oil on the
Organisation of Petroleum Exporting Countries
world market, in order to avoid fluctuations that might affect the economies of both producing
(OPEC) and purchasing countries.

The money earned from the sale of oil. The term "petrodollars" was coined when the price of oil
rose sharply in the 1970s. It resurfaced in the new millennium, when prices rose once again.
Petrodollars Although petrodollars initially referred primarily to money that Middle Eastern countries and
members of OPEC received, the definition has broadened in recent years.

The theory or practice of shielding a country's domestic industries from foreign competition by
Protectionism taxing imports.
Persistent high inflation combined with high unemployment and stagnant demand in a country's
Stagflation economy.
Tariff Atariffis a tax on imports or exports (an international tradetariff).
A barrier to trade is agovernment-imposedrestraint on the flow of international goods or
Trade barriers services. The most common barrier to trade is atariffa tax onimports. Tariffs raise the price of
imported goods relative to domestic goods (goods produced at home).
Trade deficit The amount by which the cost of a country's imports exceeds the value of its exports.
Trade surplus The amount by which the value of a country's exports exceeds the cost of its imports.
Avoluntary export restraintis a restriction set by a government on the quantity of goods that can
beexportedout of a country during a specified period of time. Often the wordvoluntaryis placed
Voluntary Export Restraints (VERs) in quotes because theserestraintsare typically implemented upon the insistence of the importing