J-Curve

• A free trade area is a group of countries that have mutually agreed to limit or eliminate trade barriers among themselves.

• Jean-Baptiste Say was a classical French liberal political economist who had a great influence on neoclassical economic thought.

• The K-percentage rule was proposed by economist Milton Friedman, according to which the central bank must increase the money supply by a constant percentage every year.

• Kondratieff waves are apparent long-term (~50 years) undulating patterns in some statistically transformed economic time series data.

• Net foreign assets (NFA) determine whether a country is a creditor or debtor by measuring the difference in its external assets and liabilities.

• Net International Investment Position (NIIP) measures the gap between a country’s holdings of foreign assets and the foreigner’s holdings of that country’s assets.

• An absolute advantage is when a manufacturer can provide a greater quantity of a product or service for the same price or the same quantity at a lower price than its competitors.

• Aggregate demand measures the total demand for all finished goods and services produced in an economy.

• All goods produced at a certain price in a certain period represent the aggregate supply.

• Autarky refers to a state of self-sufficiency and is commonly used to describe countries or economies that seek to reduce their dependence on international trade.

• The balance of payments includes both the current account and the capital account.

• The balance of trade (BOT) is the difference between the value of a country’s imports and exports over a given period and is the largest component of a country’s balance of payments (BOP).

• Base effect refers to the effect that the choice of base of comparison or benchmark can have on the result of a comparison between data points.

• The boom and bust cycle describes the alternating phases of economic growth and recession that characterize modern capitalist economies.

• The Bretton Woods Agreement and the system created a collective international currency exchange regime that operated from the mid-1940s to the early 1970s.

• A buyer’s market refers to a situation in which buyers have an advantage over sellers in price negotiations.

• The circular flow model demonstrates how money moves from producers to households and back in an endless cycle.

• Containment policies are macroeconomic instruments designed to combat economic distortions caused by an overheated economy.

Cost-push inflation occurs when general prices rise (inflation) due to an increase in the cost of wages and raw materials.#

• Cross elasticity of demand is an economic concept that measures the response of the quantity demanded of one good to a change in the price of another good.

• Cyclical unemployment is the effect of an economic recession or growth on the overall unemployment rate.

• When supply and demand are out of balance, creating market inefficiencies, there is a deadweight loss.

• It is believed that inflation is caused by various mechanisms.

• The dependency ratio is a demographic measure of the ratio of the number of dependents to the total working-age population in a country or region.

• The depression is characterized by a sharp decline in economic activity coupled with a sharp decline in growth, employment and output.