IB Economics

A poverty cycle (poverty trap) Arises when low incomes result in low savings, permitting only low...

An improvement in economic welfare. It is wider than economic growth and involves, for instance: ...

Import substitution To reduce domestic consumers’ dependence on imported goods, for which they su...

Multinational competition Companies that have established a presence has productive units in more...

Non-government organization The private organizations that pursue activities to relieve suffering...

Market based supply-side policies They can be used as a development strategy when the government ...

International trade It means the exchange of goods and services between countries. Cost and Benef...

Balance of payment Definition: Record of all economic transactions between the residents of a cou...

Economic integration It describes a process whereby countries coordinate and link their economic ...

Exchange rate The price of one currency in term of another currency. Exchange rate index: the pri...

Tariffs A tax impose on imported goods. (regressive tax). It is regressive because the tariff on ...

Utility The happiness of satisfaction that consumer receives from the consumption of one product....

Firm A business organization that buys or hires factors of production in order to produce goods a...

Market A place, physical or virtual, where buyers and sellers of goods and services meet to make ...

Elasticities The responsiveness of an economic variable (such as the quantity demanded or supplie...

Positive economics Positive economics deals with areas of the subject that can be proven to be r...

Taxes Charges that are imposed by governments on people and business. Direct taxes Taxes the i...

Market failure The failure of the market to allocate resources efficiently. Market failure result...

Monopolistic competition A market is monopolistically competitive if there are many firms produci...

A monopoly A market where one firm dominates the market for a good that has no substitutes and wh...

Oligopoly A market where a few large sellers dominate the market for an identical or differentiat...

Perfecr competition Characteristics of perfect competition There are many buyers and sellers The...

Aggregate demand (AD) The total planned expenditures (spending) by households, firms, government ...

Governments earns revenue primarily from: Taxes (direct and indirect) Sale of goods and services...

Economic growth An increase in the total output of goods and services (real GDP) in an economy ov...

Inequality & equity Equality in distribution of income = a narrow wealth gap Equity in distributi...

Inflation A persistent increase in the average price level in the economy, usually measured throu...

Supply-side policies Supply-side policies aim at increasing potential output (the overall product...

The circular flow of income model A simple model of the economy showing flows of goods and servic...

Aggregate demand for labor (ADL) The total demand for all the labor that produce an economy’s goo...