Economics Intro Glossary

Absolute Advantage

For countries, it is when a country can produce goods and services more efficiently than another country with the same set of resources.

Absolute poverty

Not having access to basics like food, clothing, shelter and water

Appreciation

Increase in the value of an asset, specifically of a nation's currency relative to another nation's currency.

Circular flow of income

An economic model that provides a theoretical and simplified representation of operations of an economy, depicting interactions between various sectors of the economy (household, business, finance, government, foreign sectors), and flows of resources and income between them.

Coincident Indicator

Provides information about changes in the economy at the same time as a change occuring on the trade cycle.

Comparative Advantage

Ability of an economy to produce a given good or service in a more efficient and economically competitive manner than its peers.

Consumer Price Index (CPI)

Measure of the average change in the price of a selected range (basket) of consumer goods and services.

CPI Formula

CPIt = Ct/C0 *100

Consumer Price Index in Current Period = Cost of Market Basket in Current Period/Cost of Market Basket in Base Period *100

Consumer Protection

Legislation to provide product guarantees, warranties, trade liscenses, after sales service and fair trading legislation.

Contradiction (Downswing)

Phase of the trade cycle characterised by declining levels of business activity, income, output and employment.