Economic Glossary

Karen Farfán

Negocios Internacionales- Universidad Santo Tomas

Macroeconomía

Dr. Henrry Moran

6 de septiembre del 2022

 Economic glossary

Balance of payments.
We speak of balance of payments to refer to an accounting document that collects all the
information on economic operations of all kinds (for sales and purchases of goods and
services, capital movements and other concepts) that a country carries out with the rest of the
world. Therefore, it collects the economic relations between residents in the country and non-
residents.
It is an important macroeconomic indicator that indicates, in a very reliable way, what the
economic situation of the country is.
It allows knowing the inflows of money into the country from abroad and the outflows of
money from the country as a result of import and export of goods, provision of services,
capital movements in a specific period of time.

Inflation
Inflation is the generalized and sustained increase in the prices of goods and services in a
country over a sustained period of time, usually one year. When the general price level rises,
each unit of currency buys fewer goods and services. In other words, inflation reflects the
decrease in the purchasing power of the currency: a loss of the real value of the internal
medium of exchange and unit of measure of an economy. Indices are used to measure the
growth of inflation, which reflect the percentage growth of a weighted 'basket of goods'. The
inflation measurement index is the Consumer Price Index (CPI).

Fiscal policy:
In a nutshell, fiscal policy is the way a government manages spending and tax levels in a way
that can influence the economy.

Monetary policy:
Monetary policy is the set of measures adopted by the monetary authority of a country with
the purpose of seeking stability in the value of money and, likewise, avoiding prolonged
imbalances in the balance of payments.

The measures that this authority can adopt affect the money supply. The money supply is the
volume of money that is available in the economy of a country at a given time.
This corresponds, in its simplest form, to cash held by the public and deposits in bank
checking accounts, which are transferable by check. The money supply has a strong influence
on aspects such as inflation and the slowdown of the economy, among others.

Economic Indicators.
The economic indicator is a type of economic data, through which we can extract an analysis
and, in line with others, analyze the economic evolution. Thanks to economic indicators, an
analyst can control the evolution of the economy and the economic cycle, as well as make
predictions about the possible movements that the economy is expected to experience. Its
statistical nature allows its handling throughout the historical series.

Public Expenditures
Public expenditures constitute the financial transactions carried out by jurisdictions and
public entities in a given period to acquire the goods or services required for production, or
to transfer the resources collected to different economic agents.

Aggregate supply
Aggregate supply (AO) is the total amount of a good or service that, as a whole, companies
in a sector would be willing to sell. This, taking as defined different variables such as average
prices, production costs and business expectations.

Economy.
Economics is a social science that studies how to manage available resources to meet human
needs. It analyzes the behavior, decisions and actions of humans, that is, it studies how
people, companies and governments make decisions related to production, distribution and
consumption.
Added Value
Added value or added value is a concept used in economics, finance and accounting with two
different meanings.
From an accounting point of view, the large difference between the amount of sales and
purchases, that is, the difference between market prices and production costs. At the business
level of cost-benefit analysis, it means the difference between a company's income and the
costs of raw materials, fixed and variable capital.

Nominal GDP.
Nominal GDP is the value, at market prices, of the production of final goods and services
produced in a country during a certain period of time, which is usually one year, while real
GDP is the value of said production at market prices. constants. This means that the first, the
nominal, reflects the increases or decreases in these prices, if there is inflation or deflation
respectively, while the real GDP is based on the prices of a year and allows a comparison of
the production of a given country. in different periods of time, by isolating the changes caused
in prices, perfectly reflecting the net purchasing power, regardless of price changes over time.