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Only 10 flashcards are shown at a time! Once you’ve mastered these 10 Economic terms, click the shuffle button below for 10 new terms. There are approximately 330 flashcards in total covering Micro, Macro, International and Development Economics

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When a country’s total spending on imported goods and services exceeds its total revenues from the sale of exports to the rest of the world. Another term for current account deficit in the balance of payments.

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When a government or central bank intevenes in the market for its own currency on foreign exchange market to raise its value relative to another currency or currencies. Measures may include raising domestic interest rates, purchasing the currency using foreign exchange reserves, or restricting the outflow of capital for foreign investment (exchange controls).

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A schedule or curve which shows the total demand for the goods and services of a nation at a range of price levels and at a given period of time.

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When firms produce at the quantity of output at which their total economic profits are at their greatest (or their economic losses are at their lowest). The profit maximizing level of output occurs where a firm’s marginal revenue equals its marginal cost.

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The idea that business firms and households expect monetary and fiscal policies to have certain effects on the economy and take, in pursuit of their own self-interests, actions which make these policies ineffective.

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Includes all natural resources needed to undertake production of goods or services: including soil, timber, minerals, fossil fuels, fresh water, livestock, fish, etc… “the gifts of nature”

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The decrease in the value of factors of production over time. Capital depreciates as it becomes more expensive to maintain over time.

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Refers to movements of curves in an economic diagram either inward or outward, up or down.

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When the scarce capital available to a less developed country leaves for the safety and security of a more developed economy. Financial capital flight occurs when savers prefer to put their money in foreign banks to domestic banks, reducing the supply of loanable funds in a poor county. Human capital flight is also known as “brain drain” when the skilled workers in a poor country prefer to seek work in a richer country, reducing the production possibilities of the less developed country.

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The market in a nation’s circular flow in which households provide firms with the factors of production (land, labor and capital) in exchange for money incomes (rent, wages and interest). Firms are the buyers, households are the sellers in the resource market.

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