The current account item that records income earned by residents from abroad (wages, interest, profits and dividends) minus income paid to non-residents.
46 of the Economics glossary’s terms, each with the part of the syllabus where you first meet it.
Any market structure between perfect competition and pure monopoly, such as oligopoly and monopolistic competition, in which firms have some market power and are price makers.
A situation in which consumers or producers lack full or accurate knowledge of the prices, quality or characteristics of goods, so their decisions may not maximise utility or profit.
A strategy of protecting domestic industries from foreign competition with tariffs, quotas and other barriers, so that goods previously imported are produced at home instead.
Inflation caused by higher prices of imported goods and raw materials, often after a depreciation or devaluation of the domestic currency.
Goods and services produced in other countries and bought by residents of the home country; spending on imports is a leakage from the circular flow of income.
The role of prices in motivating consumers and producers to change their behaviour, for example a higher price encouraging firms to produce more and consumers to buy less.
Rewards or penalties, often financial, that influence the decisions of economic agents, such as the higher take-home pay that encourages people to work more or firms to invest.
The current account item that records income earned by residents from abroad (wages, interest, profits and dividends) minus income paid to non-residents.
A method of measuring national income by adding up all incomes earned by the factors of production (wages, rent, interest and profit), excluding transfer payments.
The change in quantity demanded that results from a change in consumers’ real income (purchasing power) when the price of a good changes.
Demand for which the percentage change in quantity demanded is larger than the percentage change in income, so that YED is greater than 1; typical of luxury goods and many services.
A measure of the responsiveness of the demand for a good to a change in consumers' income, ceteris paribus: the percentage change in quantity demanded divided by the percentage change in income.
Demand for which the percentage change in quantity demanded is smaller than the percentage change in income, so that YED lies between 0 and 1; typical of necessities.
One-fifth (20%) of a population ranked by income, from the poorest fifth (the first quintile) to the richest fifth (the fifth quintile).
The situation where each extra unit of one good costs more and more of the other good given up, because resources are not equally suited to both; shown by a PPC bowed outwards.
The condition of owing large debts, especially foreign-currency debt to foreign lenders, whose interest and repayments take a large share of a country's income, export earnings or government revenue.
A tax on spending on goods and services, paid to the government by the seller, which raises firms' costs and shifts the supply curve upwards.
Government policy that supports the growth of particular industries or sectors judged important for the economy, using tools such as subsidies, tax credits, public investment, protection or state ownership.
A situation in which people’s chances of achieving a high income or good standard of living depend on circumstances they did not choose, such as parents’ income, gender, ethnicity or place of birth.
The Human Development Index adjusted for inequality in the distribution of health, education and income within a country; the gap between it and the HDI shows the loss caused by inequality.
A new industry that has not yet reached the size or experience needed to match the low average costs of established foreign competitors, and so cannot yet compete without temporary protection.
The number of children who die before their first birthday per 1,000 live births in a year; the under-five mortality rate counts deaths before the age of five.
A good for which demand falls when consumers’ incomes rise and rises when incomes fall, ceteris paribus, usually because buyers switch to better-quality alternatives.
A sustained increase in the general (average) level of prices in an economy over time, usually measured as the percentage change in a consumer price index.
A monetary policy framework in which the central bank publicly commits to keeping inflation at, or within a range around, a stated rate, usually about 2% a year, over the medium term.
The situation where equilibrium real GDP is above the full employment level of output, so unemployment is below its natural rate and there is upward pressure on the price level.
Economic activity that is not registered with or regulated by the government and is not recorded in official statistics, such as unregistered trading and cash-in-hand work.
The situation where consumers or producers lack the information they need to make choices that serve their own interest, such as underestimating the harm from smoking.
The physical capital an economy needs to function, such as roads, railways, ports, energy networks, telecommunications, and water and sanitation systems, often provided or financed by the government.
Wealth passed from one person to another, usually from parents to children, on the death of the owner, together with large gifts made during life.
Spending added to the circular flow of income that does not come from households’ consumption: investment, government spending and export revenue.
The formal and informal rules and organisations, such as the legal system, property rights, tax system, banking system and civil service, within which economic activity takes place.
The way individuals, firms, governments and countries depend on each other, so that the decisions of one economic actor affect others, often in ways they did not intend.
The price of borrowing money, or the reward for saving it, expressed as a percentage of the sum borrowed or saved per year.
The difference between the interest rates in two countries, a major influence on short-term financial flows and so on the exchange rate between their currencies.
Fairness in the distribution of resources and well-being between present and future generations, so that people alive today do not gain at the expense of people who will live later.
The coursework part of IB Economics, marked by the teacher and moderated by the IB: a portfolio of three commentaries, worth 30% of the final grade at SL and 20% at HL.
Treaties or accords between countries in which they agree to take joint action, such as limiting emissions, on problems that no single country can solve alone.
The ability of a country's firms to sell goods and services in world markets, which depends on the relative price and quality of its output, including unit labour costs and the exchange rate.
An international institution, founded in 1944, that promotes global monetary and financial stability, monitors member economies and lends to countries facing balance of payments crises, usually with policy conditions.
An income or consumption threshold set by the World Bank in dollars a day at purchasing power parity, below which a person is counted as extremely poor; $3.00 a day (2021 prices) since June 2025.
The exchange of goods and services across national borders, through exports sold to other countries and imports bought from them.
Government involvement in markets or the economy, through laws, regulations, taxes, spending or direct provision, usually to correct market outcomes or pursue goals such as equity.
Supply-side policies in which the government acts directly to raise productive capacity, for example by spending on education, training, health care, research and development, infrastructure or industrial policy.
Spending by firms on capital goods, such as machinery, equipment, buildings and software, that are used to produce other goods and services; it also includes households’ purchases of new housing.
Adam Smith’s image for the way individuals pursuing their own self-interest in competitive markets are guided by prices to promote the interests of society, without intending to.