ABC
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TermDefinitionReference
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Absolute poverty
having insufficient income to meet basic human needs
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Absolute poverty
live below a certain level of income that is necessary to meet basic needs.
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Aggregate demand (AD)
is the total demand for all goods and services produced in an economy.
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Bilateral aid
It is aid that is given directly from one country to another.
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Budget deficits
are when government expenditure exceeds government revenue.
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Concessional long-term loans
is a form of aid that has a very low rate of interest and is repayable over a long time period.
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Consumption
is spending by individuals and households on consumer goods and services over a period of time.
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Currency appreciation
is a rise in the value of a currency in terms of another currency in a floating exchange rate system.
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Current account
is a measure of the flow of funds from trade in goods and services, and net income flows.
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Current account deficit
is when the export revenue from goods and services is less than the import expenditure on goods and services.
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Current account deficit
the outflows of money from trade in goods and services, income flows and transfers are larger than the inflows of money.
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Current account surplus
net exports of goods and services, net investment income and net current transfers are greater than zero. ORrevenue from the export of goods and services is greater than the expenditure on the import of goods and services
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Current account surplus
is where the value of exports of goods and services exceeds the value of imports of goods and services, (or when there is net income flow and current transfers)
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Custom Union
is a form of economic integration where member countries agree to liberalize trade amongst themselves and adopt common trade policies towards non members.
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Deflation
is a sustained decrease in the general price level in an economy.
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Depreciation
is a fall in the value of one currency in terms of another currency in a floating exchange rate system.
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Direct taxes
are taxes (paid to the government) on income (household and firms)
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Diversification
a strategy to reduce reliance on the export of a narrow range of goods and services to reduce the risks of over- specialisation.
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Dumping
is when producers export a product to another country at a price that is either below its cost of production or below the price charged in its home market.
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Economic development
is a broad concept involving improvement in standards of living, improved health and education, reduction in poverty and reduction in unemployment.
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Economic growth is the growth in the value of real output over time as measured by increase in real GDP N15/3/ECONO/SP2/ENG/TZ0/XX/M
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Entrepreneurship
is the factor of production involving organizing of the other factors and risk taking.
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Exchange rate
is the value of one currency expressed in terms of another currency (in a floating exchange rate system)
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Factors of production
are the four types of resources used in the production process: land, labour, capital and entrepreneurship.
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Fiscal policy
is a policy that uses changes in government spending (G) and/or taxation (T) to affect aggregate demand.
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Fiscal policy
is a demand-side policy that uses changes in government spending and/or direct taxation to shift the AD curve
achieve government economic objectives.
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Fixed exchange rate
a currency’s value is fixed against
• the value of another currency
• OR a basket of other currencies
• OR gold
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Foreign currency reserves
are reserves of foreign currencies held by the central bank or the government of a country.
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Foreign direct investment (FDI)
The purchase of financial investments (shares and bonds) in order to gain a financial return (interest or dividends). • It is part of the financial account.
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Foreign direct investment (FDI)
long-term investment in another country by a multinational corporation (MNC) representing at least 10% ownership.
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Free market
is a market in which resource allocation, price and output are determined by the price mechanism.
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Free trade
exists where there is trade between different countries, or exporting and importing, without government intervention/regulation.
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Free trade area (FTA)
it is when a trading bloc abolishes trade barriers between members, but each member country maintains its own trade barriers towards non-member countries.
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Functions of WTO
• to set and enforce rules for international trade
• to provide a forum for negotiating trade liberalization
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Gross Domestic Product
The total value of all final goods and services produced in an economy in a given time period.
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Gross Domestic Product
is the value of all final goods and services produced in an economy in a given time period.
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Gross National Income (GNI)
is the total value of incomes earned by a nation’s factors of production regardless of where the assets are located plus net property income from abroad.
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Indebtedness
is the amount of money that a country owes to other countries or international institutions.
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Indirect taxes
taxes placed by government on goods and services
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Indirect taxes
are taxes placed by the expenditure by the government, and are paid indirectly to the government through producers
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Indirect taxes
is a tax on expenditure, and is added to the selling price of a good or service.
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Inflation
a sustained increase in the general price level.
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Informal Sector
is economic activity that is unrecorded in national income accounts by government, such as moonlighting
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Infrastructure
is an addition to the capital stock of a nation through large scale public systems, which are necessary for economic activity and usually supplied by the government.
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Infrastructure
essential facilities that add to the capital stock of the economy; capital typically provided by government to make economic activity possible.
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Interest rates
is the price of borrowed or loaned money.
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Interest rates
are the cost of borrowing money and any second point, and are usually expressed as a percentage.
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Interest rates
are the cost of borrowing and/or the reward for lending (saving) money.
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Investment
is expenditure on capital equipment, injection into the economy or an addition to the capital stock of the economy.
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Market
is the interaction between buyers and sellers in order to exchange goods or services (to make an economic transaction).
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Merit goods
are goods or services considered to be beneficial for society that would be under-provided by the market and so under-consumed.
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Minimum price
price floor imposed by the government, and is set above the equilibrium market price.
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Monetary policy
is a demand-side policy using changes in the money supply or interest rates to achieve economic objectives relating to inflation and unemployment.
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Multi-national Cooperations (MNCs)
are companies that conduct economic activity in more than one country.
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Negative externalities
are costs imposed on third parties when a good or service is produced or consumed

(which can be shown by marginal social cost being greater than marginal private cost or marginal social benefit being lower than marginal private benefit.)
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NGOs
are non-government organizations that exist to: promote economic development and/or humanitarian ideals and/or sustainable development.
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Opportunity cost
is the value of the next best alternative foregone when an economic decision is made.
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Poverty cycle
is any logical circular chain of events starting and ending in one of the causes of poverty, such as low income, low savings levels or low education levels.
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Quota
is a physical limit on the number or value of a good that can be imported into a country.
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Quota
are import barriers that set limits on the quantity or value of imports that may be imported into a country
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Recession
Two consecutive quarters of negative economic growth
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Recession
is when an economy experiences negative economic growth for at least two consecutive quarters.
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Savings
are income that is not spent, but is stored in financial institutions.
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Structural unemployment
unemployment that occurs when there is a mismatch between the skills of unemployed workers and the jobs available.
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Subsidies
are payments by the government to firms aiming at lowering their production costs or increasing output.
(or lowering the price of a product.)
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Subsidies
is money given to a firm by the government in order to reduce production costs or increase supply or reduce price.
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Supply
is the willingness and ability of a producer to produce a quantity of a good or service at a given price (in a given time period).
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Sustainable Development
is development that meets the needs of the present without compromising the ability of future generations to meet their own needs.
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Sustainable Development
is the development needed to meet the needs of the present generation without compromising the ability of future generations to meet their own needs.
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Tariff
tax placed on imported goods
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Trade protection
Protectionism

involves government intervention in order to restrict trade between countries.
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Transfer payments
a payment made by the government to individuals for the purpose of redistributing income.
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Unemployment
is the number of people without a job, who are actively seeking work and are able and willing to work.
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Unemployment rate
is the number of unemployed workers who are without a job but willing and able to work, expressed as a percentage of the labor force.
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