THIRD GROUP

THIRD GROUP

THIRD GROUP
 I I S, N O VI TA , SA L SA B I L A , Y O SA
I I S, N OV I TA , SA L SA B I L A , Y O SA

I I S , N O V I TA , S A L S A B I L A , Y O S A
 M O D U L E 4 P R E S E N TAT I O N
M O D U L E 4 P R E S E N TAT I O N

M O D U L E 4 P R E S E N TAT I O N

ECONOMIC TERMS FROM G TO I

ECONOMIC TERMS FROM G TO I
Learning Activity 1: Economic Terms 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.

B.GAME THEORY
It is a mathematical method of decision-making in which a competitive situation is analysed to determine the optimal course of action for an
interested party, often used in political, economic, and military planning. Also called theory of games.

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. The
first GATT round began in 1945. The last led to the establishment of the World Trade Organization in 1995.

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).

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.

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 different 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. The price of gilts can vary considerably over time,
however, creating a degree of risk for investors. 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. It varies from zero, which indicates perfect equality,
with every household earning exactly the same, to one, which implies absolute inequality, with a single household earning a country's entire income.

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.

N. GNI
Short for gross national income, a term now used instead of GNP in national accounts.

O. GNP
Short for gross national product, another measure of a country's economic performance. It is calculated by adding to GDP the income earned by residents from
investments a broad, less the corresponding income sent home by foreigners who are living in the country.
P. GOLD
For much of human history gold has been an important ingredient of economic activity. Governments and investors have traditionally held gold as a hedge against
inflation and to provide security at times of international crisis. But its role as a store of value has been tarnished.

Q. GOLD STANDARD
Gold standard is a monetary system in which the standard unit of currency is a fixed quantity of gold or is freely convertible into gold at a fixed price. A monetary
system in which a country backs its currency with a reserve of gold, and allows currency holders to exchange their notes and coins for gold.

R. GOLDEN RULE
Over the economic cycle, a government should borrow only to invest and not to finance current spending. This rule is certainly a prudent approach to fiscal policy,
provided that governments are honest in describing spending as investment, that they invest in appropriate things and do so efficiently, and that they are careful to
avoid crowding out superior private investment.

S. GOVERNMENT
Most economists agree that there is a need for some government role in the economy. A market economy can function only if there is an adequate legal system, and,
in particular, clearly defined, enforceable property rights. The legal system is probably an example of what economists call a public good (although the existence in
many countries and industries of some self- regulation shows it is not always so).

T. GOVERNMENT EXPENDITURE
It is spending by national and local government and some government- backed institutions.

U. GREENSPAN, ALAN
He is the most famous of all central bank bosses, so far. A former jazz musician turned economist, he became chairman of the board of governors of America's
Federal Reserve in 1987, shortly before Wall Street crashed. In 2003, he was reappointed until 2005. He won admirers for delivering monetary policy that helped to
bring down inflation and create the conditions for strong economic growth.

V. GRESHAM'S LAW
It is an economic principle proposed by an English financier, Sir Thomas Gresham, that bad money will drive good money out of circulation
W. GROWTH
What economic activity is all about, but how can it be made to happen? Economists have plenty of theories, but none of them has all the answers. Adam Smith
attributed growth to the invisible hand, a view shared by most followers of classical economics. neo-classical economics had a different theory of growth, devised by
Robert Solow during the 1950s.

X. HARD CURRENCY
It is money you can trust. A hard currency is expected to retain its value, or even benefit from appreciation, against softer currencies. This makes it a popular choice
for people involved in international transactions.

Y. HAWALA
Hawala is an ancient system of moving money based on trust. It predates western bank practices. Although it is now more associated with the middle east, a version
of hawala existed in china in the second half of the Tang Dynasty (618-907), known as fei qian, or flying money.

Z. HAYEK, FRIEDRICH
He is an influential economist of the Austrian school, who won the Nobel prize for economics in 1974 for his theory of the business cycle many years after this body
of work seemed to have been disproved by Keynes.

AA. HEDGE
An example of a hedge would be if you owned a stock, then sold a futures contract stating that you will sell your stock at a set price, therefore avoiding market
fluctuations Reducing your risks. Hedging involves deliberately taking on a new risk that offsets an existing one, such as your exposure to an adverse change in an
exchange rate, interest rate or commodity price.

AB. HEDGE FUNDS

A hedge fund is a private investment fund open to a limited range of investors that is permitted by regulators to undertake a wider range of activities than other
investment funds and also pays a performance fee to its investment manager.

AC. HERFINDAHL-HIRSCHMAN INDEX

The Herfindahl index, also known as Herfindahl-Hirschman Index or HHI, is a measure of the size of firms in relationship to the industry and an indicator of the
amount of competition among them.
AD. HORIZONTAL EQUITY
It is the theory stating that people in the same income bracket should be taxed at the same rate. One way to keep taxation fair. Horizontal equity means that people
with a similar ability to pay taxes should pay the same amount.

AE. HORIZONTAL INTEGRATION

It is when a company expands its business into different products that are similar to current lines. Merging with another firm just like yours, for example, two biscuit
makers becoming one.

AF. HOT MONEY

It is money that is moved by its owner quickly from one form of investment to another, as to take advantage of changing international exchange rates or gain high
short-term returns on investments.

AG. HOUSE PRICES

House prices often rise after interest rate reductions, which lower mortgage payments and thus give buyers the ability to fund a larger amount of borrowing and so
offer a higher price for their new home. Strangely, people often regard house-price inflation as good news, even though it creates as many losers as gainers. They
argue that rising house prices help to boost consumer confidence, and are part of the wealth effect: as house prices rise, people feel wealthier and so spend more.

AH. HUMAN CAPITAL

Human capital is skills acquired by a worker through formal education and experience that improve the worker's productivity and increase his or her income. The
stuff that enables people to earn a living. Human capital can be increased by investing in education, training and health care.
 
AI. HUMAN DEVELOPMENT INDEX
The Human Development Index (HDI) is an index combining normalized measures of life expectancy, literacy, educational attainment, and GDP per capita for
countries worldwide. It is claimed as a standard means of measuring human development a concept that, according to the United Nations Development Program
(UNDP), refers to the process of widening the options of persons, giving them greater opportunities for education, health care, income, employment, etc. The good
life‖ guide.
AJ. HYPER-INFLATION
It is extremely high monetary inflation. Very, very bad. Although people debate when, precisely, very rapid inflation turns into hyper-inflation (a 100% or more
increase in prices a year, perhaps?) nobody questions that it wreaks huge economic damage.
AK. HYPOTHECATION
More recent use of the word is as a contraction of \"hypothetical dedication,\" as in a \"dedicated tax\" to be collected for a specific purpose. Examples of
hypothecation in the latter sense include the gasoline tax in the United States, which is dedicated to the funding of transportation infrastructure.

AL. HYSTERESIS
Some economic systems show signs of hysteresis. For example, export performance is subject to strong hysteresis effects: it may take a big push (ie sizable changes
in incentives) to start a country's exports, but once the transition is made, not much may be required to keep them going.

AM. ILO
Short for International Labour Organization, founded in 1919 as part of the Treaty of Versailles, which created the League of Nations. In 1946, it became the first
specialized agency of the UN. Based in Geneva, it formulates international labour standards, setting out desired minimum rights for workers: freedom of association;
the right to organize and engage in collective bargaining; equality of opportunity and treatment; and the abolition of forced labour. It also compiles international
labour statistics.
 
AN. IMF
Short for International Monetary Fund, referee and, when the need arises, rescuer of the world’s financial system. The IMF was set up in 1944 at Breton woods, along
with the World Bank, to supervise the newly established fixed exchange rate system.

AO. IMPORTS
Imports are purchases of foreign goods and services; the opposite of exports.
Learning Activity 2: Economic Terms Started with I
A. INCOME
It is the amount of money received during a period of time in exchange for labour or services, from the sale of goods or property, or as a profit from financial
investments.

B. INCOME EFFECT
In economics, effect upon the purchasing power of a consumer because of a change in the price of a good that he consumes. If the price of beef falls, the consumer
has money left over to buy more of other goods, as well as more beef.

C. INCOME TAX
A much-loathed method of taxation based on earnings. It was first collected in 1797 by the Dutch Batavian Republic. In the UK it was introduced in 1799 as a
―temporary‖ measure to finance a war against Napoleon, abolished in 1816 and reintroduced, forever, in 1842.

D. INCUMBENT ADVANTAGE
An incumbent advantage is an advantage gained by someone already in a position, as compared to newcomers. The importance of being there already.

E. INDEX NUMBERS
In econometrics, a figure reflecting a change in value or quantity as compared with a standard or base. The base usually equals 100 and the index number is usually
expressed as a percentage. For example, if a commodity cost twice as much in 1970 as it did in 1960, its index number would be 200 relative to 1960.

F. INDEXATION
The automatic adjustment of an economic variable, such as wages, taxes, or pension benefits, to a cost-of-living index, so that the variable rises or falls in accordance
with the rate of inflation.

G. INDIFFERENCE CURVE
It is a curve that joins together different combinations of goods and services that would each give the consumer the same amount of satisfaction (utility). In other
words, consumers are indifferent to which of the combinations they get.
 
H. INDIRECT TAXATION
Indirect taxation is a tax, such as a sales tax or value-added tax, that is levied on goods or services rather than individuals and is ultimately paid by consumers in the
form of higher prices.

I. INELASTIC
It is when the supply or demand for something is insensitive to changes in another variable, such as price.

J. INEQUALITY
Equality of opportunity, which, in theory, should make a difference to growth, because it is about giving people the chance to make the most of their human capital, is
probably beyond the ability of statisticians to analyze rigorously. The most often used measure of income inequality is the gini coefficient.

K. INFERIOR GOODS
Inferior goods is good of which less is consumed (rather than more) when the consumer's income increases. For some consumers hamburger is an inferior good
because when income increases, they can afford to consume more steak and, so, less hamburger.

L. INFLATION
Inflation is the rate at which the general level of prices for goods and services is rising, and, subsequently, purchasing power is falling. Rising prices across the board.
Inflation means less bang for your buck, as it erodes the purchasing power of a unit of currency. Inflation usually refers to consumer prices, but it can also be applied
to other prices (wholesale goods, wages, assets, and so on).

M. INFLATION TARGET
Inflation targeting is a monetary policy in which a central bank attempts to keep inflation in a declared target range typically by adjusting interest rates. The goal of
monetary policy in many countries is to ensure that inflation is neither too high nor too low.

N. INFORMATION
The oil that keeps the economy working smoothly. Economic efficiency is likely to be greatest when information is comprehensive, accurate and cheaply available.
Many of the problems facing economies arise from people making decisions without all the information they need. One reason for the failure of the command
economy is that government planners were not good at gathering and processing information.
O. INFRASTRUCTURE
Transportation, communication, sewage, water and electric systems are all a part of infrastructure. These systems tend to be high-cost investments; however, they are
needed for a country to be efficient and productive. The economic arteries and veins. Roads, ports, railways, airports, power lines, pipes and wires that enable people,
goods, commodities, water, energy and information to move about efficiently. Increasingly, infrastructure is regarded as a crucial source of economic
competitiveness. investment in infrastructure can yield unusually high returns because it increases people’s choices: of where to live and work, what to consume,
what sort of economic activities to carry out, and of other people to communicate with.

P. INNOVATION
Innovation is the basic driving force behind entrepreneurship and the creation of small businesses. A vital contributor to economic growth. The big challenge for
firms and governments is to make it happen more often.

Q. INSIDER TRADING
It is practice of buying and selling shares in a company's stock by that company's management or board of directors, or by a holder of more than 10% of the
company's shares. A practice that was made illegal in the United States in 1934 and in the UK in 1980, and is now banned (for shares, at least) in most countries.

R. INSTITUTIONAL INVESTORS
It is a non-bank person or organization that trades securities in large enough share quantities or dollar amounts that they qualify for preferential treatment and lower
commissions. Institutional investors face fewer protective regulations because it is assumed that they are more knowledgeable and better able to protect themselves.

S. INSURANCE
In economic terms, anything used to reduce the downside of risk. In its most familiar form, insurance is provided through a policy purchased from an insurance
company. But a fuller definition would also include, say, a financial security (or anything else) used to hedge, as well as assistance available in the event of disaster.

T. INTANGIBLE ASSETS
It is an asset that is not physical in nature.
U. INTELLECTUAL CAPITAL
Intellectual capital refers to the commercial value of trademarks licenses, brand names, formulations, and patent.

V. INTEREST
Interest is money paid for the use of money, expressed as a percentage rate for the period of time in use, generally an annual rate.

W. INTEREST RATE
It is the percentage of a sum of money charged for its use. Rate, ussualy expressed as a percentage per annum charged on money borrowed or lent. The interest rate
may be variable or fix.

X. INTERNATIONAL AID
It is a helping hand for poor countries from rich countries. This, at least, is the intention.
 
Y. INTERVENTION
It is when central banks try to influence an exchange rate by buying the currency they want to appreciate and selling the one they want to weaken.
 
Z. INVESTMENT
It is putting money to work, in the hope of making even more money. Investment takes two main forms: direct spending on buildings, machinery and so fort, and
indirect spending on financial securities, such as bonds and shares.

AA. INVISIBLE HAND

It is Adam Smith’s shorthand for the ability of the free market to allocate factors of production, goods, and services to their most valuable use.

AB. INVISIBLE TRADE

It is exports and imports of things you cannot touch or see: services, such as banking or advertising and other intangibles, such as copyrights. Invisible trade accounts
for a glowing slice of the value of world trade.

AC. INWARD INVESTEMENT

Investment form abroad; the opposite of outward investment.
 T H A N K S F O R Y O U R AT T E N T I O N
T H A N K S F O R Y O U R AT T E N T I O N

T H A N K S F O R Y O U R AT T E N T I O N
 ANY QUESTIONS?
ANY QUESTIONS?

ANY QUESTIONS?
 T H AT ’ S A L L A N D T H A N K Y O U
T H AT ’ S A L L A N D T H A N K Y O U

T H AT ’ S A L L A N D T H A N K Y O U