Edexcel (A) A-Level Economics Revision Definitions: Theme 4: A Global Perspective: Detailed and Verified Solutions

Absolute Advantage When a country can produce a good more cheaply in absolute terms than another country. Absolute Poverty When people are unable to afford sufficient necessities to maintain life; those on less than $1.90 a day. Aid When a country voluntarily transfers resources to another or gives loans on a concessionary basis. Appreciation An increase in the value of the currency using floating exchange rates. Asymmetric Information When one party has more knowledge than another; this causes market failure in the financial sector. Automatic Stabilisers Mechanisms which reduce the impact of changes in the economy on national income. Balance of Payments A record of all financial dealings over a period of time between economic agents of one country and another. Buffer Stock Systems When a maximum and minimum price are imposed together in order to bring about price stability. Capital Account A part of the balance of payments; records debt forgiveness, inheritance taxes, transfers of financial assets and sales of assets. Capital Expenditure Government spending on investment goods such as new roads, schools and hospitals, which will be consumed in over a year. Capital Flight When large amounts of money are taken out of the country, rather than being left there for people to borrow and invest. Central Banks A financial institution that has direct responsibility to control the money supply and monetary policy, to manage gold reserves and foreign currency and to issue government debt. Common Market Members trade freely in all economic resources and impose a