| A | B |
|---|
| recession | drop in real GDP for two consecutive quarters |
| economic integration | elimination of trade and investment barriers within a certain region |
| resource allocation | using scarce resources in the most efficient and productive manner to maximize satisfaction |
| scarcity | human wants exceed ability to produce |
| subsidy | payment made by govt to firms to encourage production |
| supply | quantity that a firm is willing to produce at a given price |
| tariff | tax on imports which causes domestic prices to rise |
| trade balance | difference between value of exports and imports of goods and services |
| transfer payments | welfare and unemployment payments; not reflected in GDP |
| unemployment | individuals who are seeking but can't find work |
| WTO | international org. that promotes liberalized trade |
| absolute advantage | a country can produce more of a good with the same resources as another country |
| aggregate demand | total planned spending on domestic goods and services |
| aggregate supply | level of planned output of goods and services at possible price levels |
| appreciation | increase in currency value |
| ceteris paribus | all other factors remaining constant |
| comparative advantage | country has lower opportunity costs of producing a good than another country |
| cost-push inflation | inflation resulting from adverse supply shocks |
| current account of the BOP | records value of exports and imports of a country |
| demand-pull inflation | inflation resulting from aggregate demand rising faster than aggregate supply |
