Build chains of reasoning: point → because → which means → leading to → therefore. For evaluation, use MICE: Magnitude, It depends, Counter-argument, Economic con…
A–Z Key terms glossary
| Term | Definition |
|---|---|
| Absolute advantage | Being able to produce more of a good with the same resources. |
| Absolute poverty | Income below the level needed for basic necessities. |
| Appreciation | A market-driven rise in a floating exchange rate. |
| Balance of payments | A record of all transactions between a country and the rest of the world. |
| Capital flight | Large, rapid outflows of money/capital from a country. |
| Comparative advantage | Being able to produce a good at a lower opportunity cost. |
| Current account | Trade in goods and services plus income and transfers. |
| Customs union | Free internal trade plus a common external tariff. |
| Depreciation | A market-driven fall in a floating exchange rate. |
| FDI | Foreign direct investment — long-term investment into productive capacity abroad. |
| Fiscal deficit | When government spending exceeds revenue in a year (a flow). |
| Gini coefficient | A measure of inequality from 0 (equal) to 1 (unequal). |
| Globalisation | The increasing integration and interdependence of economies. |
| Harrod-Domar / savings gap | Low savings → low investment → low growth in developing economies. |
| HDI | Human Development Index — a composite of health, education and income. |
| J-curve | A depreciation worsens the current account before improving it. |
| Laffer curve | Shows tax revenue rising then falling as the tax rate increases. |
| Lorenz curve | A graph of cumulative income against cumulative population, showing inequality. |
| Marshall-Lerner condition | A depreciation improves the current account if PEDx + PEDm > 1. |
| National debt | The accumulated stock of past fiscal deficits. |
| Prebisch-Singer hypothesis | A long-run decline in the terms of trade for primary-product exporters. |
| Protectionism | Restricting trade to shield domestic producers. |
| Quota | A physical limit on the quantity of imports. |
| Relative poverty | Income below a set proportion of the median in a society. |
| Tariff | A tax on imports. |
| Terms of trade | (Export price index ÷ import price index) × 100. |
| Trade creation | Switching to a lower-cost member producer within a bloc (a gain). |
| Trade diversion | Switching to a higher-cost member producer because of the external tariff (a loss). |
| Transfer pricing | TNCs shifting profits between countries to reduce tax. |
| TNC | A transnational company operating in more than one country. |
| WTO | The World Trade Organization — promotes trade liberalisation. |
Command words — what each one wants
| Command word | What it expects |
|---|---|
| Define / State | A precise meaning — no development needed. |
| Calculate | Work out a figure; show your method and units. |
| Explain | Give reasons — a short chain of cause and effect. |
| Analyse | Build a developed chain of reasoning, usually with a diagram. |
| Discuss / Assess / Evaluate / Examine | Analyse and weigh both sides to reach a justified judgement (AO4). |
Build chains of reasoning: point → because → which means → leading to → therefore. For evaluation, use MICE: Magnitude, It depends, Counter-argument, Economic context (elasticities, short vs long run, stage of development).
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