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IB Economics - Glossary of terms
This resource is designed to help you make accurate use of specialist economics terms in your work.
It is up to you how much use you make of it. Some of you will benefit from it hugely; others will find it more use as a revision tool rather than one that will help them use terminology more accurately. If I find that you are not making sense or that you are using words inaccurately then I may insist that you start to complete this and use it.
It is useful for both native and non-native speaker alike. In economics many words have a specific meaning that is not the same as the one they have in every day English.
The booklet is laid out in the same order as the course: Introduction: The Foundations of Economics Microeconomics Macroeconomics International Trade Development Economics
The words are in English. If English is not your ‘home language’, you need to write them in your ‘home language’.
It is up to you to ensure that you are using the right word here. Remember words often have different meanings.
Then you must write in your own definition. Avoid using ‘cut and paste’ or use definitions you happen to find on the Internet! The very act of writing the definition and thinking about what you are writing will go a large way to helping you remember it. Again, take care that you are using the word in the right way. For example, when we talk about a complement do we mean “Your hair looks nice” or “Two goods in joint demand”?
Don’t complete it all in one go, but do it steadily as we go through each unit.
1
Introduction: the Foundations of Economics
English Home Language DefinitionSocial Science
Economics
Macroeconomics
Microeconomics
Positive Statements
Normative Statements
Ceteris Paribus
Scarcity
Choice
Factors of Production
Land2
Labour
Capital
Entrepreneurship
Resource allocation
Opportunity cost
Economic good
Free good
Utility
Production Possibility frontier (PPF)
Public sector
Private sector
Economic growth
3
Economic development
Sustainable development
SECTION 1: Microeconomics
1.1 Competitive Markets: Demand and Supply
English Home Language DefinitionMarket
Price mechanism
Demand
Law of Demand
Substitutes
Complements
Income
Expectations
4
Normal Goods
Inferior Goods
Supply
Law of Supply
Equilibrium
Equilibrium Price
Quantity
Consumer surplus
Producer surplus
Allocative efficiency
1.2 Elasticities
English Home Language DefinitionPrice Elasticity of Demand (PED)
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Elastic Demand
Inelastic Demand
Unitary elasticity
Perfectly Elastic
Perfectly inelastic
Cross Elasticity of Demand (XED)
Income Elasticity of Demand (YED)
Price Elasticity of Supply (PES)
1.2 Government Intervention
English Home Language DefinitionIndirect tax
Specific tax6
Ad valorem tax
Incidence of tax
Subsidy
Price ceiling (maximum price)
Shortage
Parallel market
Price floor (minimum price)
Surplus
1.4 Market Failure
English Home Language DefinitionMarket Failure
Externalities
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Positive externalities
Merit goods
Negative externalities
Demerit goods
Welfare loss
Public goods
Non-rival
Non-excludable
Free rider
Common access resource
Sustainability
Tradable permits (carbon credits)
Asymmetric information8
Monopoly power
1.5 Theory of the Firm (HL only)
English Home Language DefinitionShort run
Long run
Fixed factor
Variable factor
Total product
Average product
Marginal product
Law of diminishing returns
Economic costs
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Fixed costs
Variable costs
Total costs
Average costs
Marginal costs
Increasing returns to scale
Decreasing returns to scale
Constant returns to scale
Economies of Scale
Diseconomies of scale
Total revenue
Average revenue
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Marginal revenue
Profit
Economic profit (abnormal profit/supernormal profit)
Normal Profit
Subnormal profit/economic loss
Profit Maximisation
Perfect Competition
Homogenous
Barriers to entry
Shut-down price
Break-even price
Productive efficiency
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Allocative efficiency
Deadweight loss
Monopoly
Natural Monopoly
Revenue maximisation
Dynamic efficiency
Monopolistic Competition
Differentiated product
Non-price competition
Oligopoly
Collusive oligopoly
Non-collusive oligopoly
Interdependence
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Cartel
Concentration ratio
Tacit collusion
Price discrimination
SECTION 2: Macroeconomics
2.1 The level of overall economic activity
English Home Language DefinitionNational income
National output
National expenditure
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Gross Domestic Product (GDP)
Gross National Product (GNP) or Gross National Income (GNI)Nominal GDP
Real GDP
Per capita GDP
Green GDP
Business cycle
Potential output
Actual output
Recession
2.2 Aggregate demand and aggregate supplyEnglish Home Language Definition
Aggregate demand
Investment
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Price level
Aggregate supply
Short-run aggregate supply
Long-run aggregate supply
Full employment
Natural rate of unemployment
Macroeconomic equilibrium
Inflationary gap
Recessionary gap
Keynesian multiplier
2.3 Macroeconomic objectivesEnglish Home Language Definition
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Unemployment
Unemployment rate
Full Employment
Underemployment
Hidden unemployment
Structural unemployment
Frictional unemployment
Seasonal unemployment
Cyclical unemployment (demand-deficient unemployment)Inflation
Deflation
Disinflation
Consumer price index
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Core inflation
Underlying inflation
Demand-pull inflation
Cost-push inflation
Phillips Curve
Economic growth
Actual growth
Potential growth
Equity
Absolute poverty
Relative poverty
Direct tax
Indirect tax17
Progressive Tax
Regressive Tax
Proportional Tax
Average rate of tax
Marginal rate of tax
Lorenz Curve
Gini Coefficient
Transfer payments
2.4 Fiscal policyEnglish Home Language Definition
Demand-side policies
Fiscal policy
Expansionary fiscal policy
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Contractionary fiscal policy
Budget surplus
Budget deficit
Public debt
Automatic fiscal stabilisers
Crowding out
2.5 Monetary policyEnglish Home Language Definition
Monetary policy
Central Bank
Expansionary monetary policy
Contractionary monetary policy
Interest rate
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2.6 Supply-side policiesEnglish Home Language Definition
Supply-side policies
Interventionist supply-side policies
Infrastructure
Human capital
Market-based supply side policies
Privatisation
Deregulation
Labour market reform
Tax reform
SECTION 3: International Economics
3.1 International trade
English Home Language Definition20
Trade/free trade
Factor endowment
Absolute Advantage
Comparative advantage
Trade protection
Tariffs
Subsidy
Quotas
Administrative barriers
Dumping
Infant Industry
Diversification
World Trade Organisation
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3.2 Exchange ratesEnglish Home Language Definition
Exchange rate
Fixed Exchange Rate
Floating Exchange Rate
Speculation
Managed exchange rate
3.3 Balance of paymentsEnglish Home Language Definition
Balance of payments
Current Account
Balance of trade
Current account surplus
Current account deficit
Capital Account22
Financial account
Expenditure-switching policies
Expenditure reducing policies
Marshall-Lerner condition
The J-curve effect
3.4 Economic integration
English Home Language DefinitionPreferential trade agreement
Trading bloc
Free trade area
Customs union
Common market
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Trade creation
Trade diversion
Monetary union
3.5 Terms of trade (HL only)
English Home Language DefinitionTerms of trade
SECTION 4: Development Economics
4.1 Economic development
English Home Language DefinitionEconomic growth
Economic development
Physical capital
Human capital24
Poverty cycle/trap
Millennium Development Goals
4.2 Measuring development
English Home Language DefinitionPurchasing Power Parity exchange rates
Composite indicators
Human Development Index (HDI)
4.3 The role of domestic factors
English Home Language DefinitionMicro-credit
Corruption
Capital flight
4.4 The role of international trade25
English Home Language DefinitionImport substitution
Export promotion (export led growth)
Trade liberalization
4.5 The role of foreign direct investment (FDI)English Home Language Definition
Foreign direct investment
Multinational corporation
4.6 The role of foreign aid and multilateral development assistance
English Home Language DefinitionBilateral aid
Multilateral aid
Official Development Assistance (ODA)
NGO
Humanitarian aid26
Development aid
Grants
Soft loans
Project aid
Programme aid
Tied aid
International Monetary Fund (IMF)
World Bank
4.7 The role of international debt
English Home Language DefinitionForeign debt
Debt rescheduling
Debt forgiveness27
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