MODULE 4

ECONOMIC TERMS FROM G TO I

LEARNINH ACTIVITY 1

Economic Terme Started with G

A. G7, G8, G10, G21, G22, G26

The G7 (also known as the G-7 or Group of Seven) is the meeting of the finance ministers from a group
of seven industrialized nations. It was formed in 1976, when Canada joined the Group of Six: France,
Germany, Italy, Japan, United Kingdom, and United States of America. The finance ministers of these
countries meet several times a year to discuss economic policies. Their work is supported by regular,
functional meetings of officials, including the G7 Finance Deputies.

B. GAME THEORY

It is a mathematical method of decision-making in which a competitive situation is analyzed to

determine the optimal course of action for an interested party, often used in political, economic, and
military planning.

The theory helps each firm to develop its optimal strategy for, say, pricing its products and deciding how
much to produce; it can help the firm to anticipate in advance what its competitor will do and shows
how best to respond if the competitor does something unexpected. It is particularly useful for
understanding behaviour in monopolistic competition.

C. GATT

GATT is an agreement signed in 1947 whose purpose was to promote global trade between members
through a reduction in tariffs. GATT is the vehicle for promoting international free trade, through a
series of rounds of negotiations between the governments of trading countries.

D. GDP

Gross domestic product, a measure of economic activity in a country.

It is calculated by adding the total value of a country's annual output of goods and services. GDP =
private consumption + investment + public spending + the change in inventories + (exports - imports). It
is usually valued at market prices; by subtracting indirect tax and adding any government subsidy
nowever, GDP can be calculated at factor cost. This measure more accurately reveals the income paid to
factors of production.

The effect of inflation can be eliminated by measuring GDP growth in constant real prices. However,
some economists argue that hitting a nominal GDP target should be the main goal of macroeconomic
policy. This is because it would remind policymakers to take into account the effect of their decisions on
inflation, as well as on growth.

E. GEARING

A company's debt expressed as a percentage of its equity; also known as leverage.

F. GENERAL AGREEMENT ON TARIFFS AND TRADE

Or GATT, the vehicle for promoting international free trade, through a series of rounds of negotiations
between the governments of trading countries. The first GATT round began in 1945. The last led to the
establishment of the world trade organization in 1995

G. GENERAL EQUILIBRIUM

Economic perfection. This is when demand and supply are in balance (the market is in equilibrium) for
each and every good and service in the economy. Nobody thinks that real-world economies can ever be
that perfect at best there is "partial equilibrium". But most economists think that general equilibrium is
something worth aspiring to

H. GENERATIONAL ACCOUNTING

It is a relatively new way of analyzing fiscal policy by identifying the financial costs and benefits of
government policies to people of differen ages, now living or yet to be born.

I. GIFFEN GOODS

In economics and consumer theory, a Giffen good is that which people consume more of as price rises,
violating the law of demand.

J. GILTS

Gilts are risk-free bonds issued by the British government. They are the equivalent of U.S. Treasury
securities. Usually the term is applied only to government bonds.

K. GINI COEFFICIENT

It is an inequality indicator. The Gini coefficient measures the inequality of income distribution within a
country. Latin America is the world's most unequal region.

L. GLOBAL PUBLIC GOODS

A global public good is a good that has the three following properties:

1. It is non-rivalrous. Consumption of this good by anyone does not reduce the quantity available to
other agents.

2. It is non-excludable. It is impossible to prevent anyone from consuming that good.

3. It is available worldwide.

M. GLOBALISATION.

Globalization is the process by which the economies of countries around the world become increasingly
integrated over time.