ECONOMIC DEVELOPMENT KEY TERMS IN PRELIM

1. The means by which a government adjusts its spending levels and tax rates to monitor and
influence a nation’s economy
Fiscal policy
2. The ability to produce a good at a lower opportunity cost than another producer
Comparative advantage
3. An economic theory that compares different countries' currencies through a "basket of goods"
approach
Purchasing power parity
4. The institutional framework for the exchange of one national currency into another.
Foreign exchange market
5. The form of controlling ownership in a business in one country by an entity based in another
country
Foreign investment
6. The policy of protecting domestic industries against foreign competition by means of tariffs,
subsidies, import quotas, or other restrictions or handicaps placed on the imports of foreign
competitors
Protectionism
7. A sustained improvement in institutions and organizations that support growth
Change
8. A summary statement of all the international transactions of the residents of a nation with the
rest of the world during a particular period of time, usually a year
Balance of payment
9. The merging to various degrees of the economies and economic policies of two or more
countries in a given region
Economic policy
10. The process by which the monetary authority of a country, typically the central bank or
currency board, controls either the cost of very short-term borrowing or the money supply
Monetary policy
11. The ability to produce a good using fewer inputs than another producer
Absolute advantage
12. Developed the neocolonial dependence theory
Raul Prebisch
13. The process by which the economic well being and quality of life of a nation are improved
Economic development
14. A sense of national consciousness that boosts the culture and interests of one country over
those of all other countries
Nationalism
15. A statement of objectives and the methods of achieving these objectives by the government
Economic policy
16. A sustained improvement in the level of per capita income
Growth
17. The price of a nation’s currency in terms of another nation’s currency
Exchange rate
18. The average per person and is often used in place of per person in statistical observances
Per capita
19. The full integration of two or more economics into a single economic entity
Economic union
20. The purchase, sale, or exchange of goods and services across national borders
International trade
21. The set of decisions that a government makes relating to things that directly affect the people
in its own country
Domestic policy
22. The goods produced domestically and sold abroad
Exports
23. A consequence of specialization or the division of labor
Economic interdependence

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24. An increase in the amount of goods and services produced per head of the population over a
period of time
Economic growth
25. The total value of goods produced and services provided by a country during one year, equal
to the gross domestic product plus the net income from foreign investments
GNP
26. An approach to economics focusing on the determination of goods, outputs, and income
distributions in markets through supply and demand
Neoclassical theory
27. A way of explaining underdevelopment with regards to historical factors and the influence
that developed capitalist countries from the center have on the less developed countries in
the periphery
Neocolonial dependence theory
28. The expansion of economic, political, and cultural processes to the point that they become
global in scale and impact
Globalization
29. Developed the structural change model
Arthur Lewis
30. The structural transformation of highly nationalized socialist economies to privatized
capitalist markets
Economic transition
31. The market value of all final goods and services an economy produces in one year
GDP
32. The goods and services that are bought from other countries
Imports
33. A barrier to the attainment of a set economic growth target in a particular period of time
Economic constraint
34. A written document containing government policy decisions on how resources shall be
allocated among various uses
Economic plan
35. The total domestic output claimed by residents of a country plus factor income earned by
foreign residents minus income earned in the domestic economy by nonresidents
GNI
36. A situation when a nation exports more than it imports
Trade surplus
37. The level of wealth, comfort, material goods and necessities available to a certain
socioeconomic class or a certain geographic area
Standard of living
38. An economic theory that compares different countries' currencies through a "basket of
goods” approach
PPP
39. Collectively the international laws and multilateral trade agreements that govern the sale of
goods between different countries
International trade policy
40. The partial or complete prohibition of commerce and trade with a particular country or a
group of countries
Embargo
41. The union of countries seeking to coordinate fiscal and monetary policies as a step toward a
common currency
Economic community
42. A trade penalty imposed by one nation onto one or more other nations
Sanction
43. These are corporations that move resources, goods, services, and skills across national
boundaries without regard to the country in which their headquarters are located
Multinational corporations
44. A sub-field of economics that analyzes the patterns of international trade, its origins, and its

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 welfare implications
International trade theory
45. Developed the neoclassical theory?
Adam Smith
46. A field of study that assesses the implications of international trade in goods and services and
international investment
International economics
47. A dramatic shift in the way an industry or market functions, usually brought on by major
economic developments
Structural change model
48. A situation when a nation imports more than it exports
Trade deficit
49. The ability to meet basic human needs including shelter, food, health, education, and safety

Sustenance
50. A business that has the legal right to exchange one currency for another to its customers
Currency exchange

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