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AICE Econ AS Unit 6
Review of terms and concepts from Unit 6 of AICE Econ AS Level
Term | Definition |
---|---|
Foreign Exchange Rate | The price of a currency in terms of a different global currency, example, the dollar and the euro. |
Inflation | Can be looked at as either an increse in prices or the decrease in the purchasing power of money. |
Monetary Inflation | Inflation caused by an excessive increase in the money supply. |
Cost-Push Inflation | Inflation caused by an increase in the price of intermediate goods or wages. |
Demand Pull Inflation | Inflation caused by an increase in aggregate demand that is not accompanies with an increase in the supply of goods/services. |
Quantity of Money Theory | A theory that links inflation in the economy to changes in the money supply. |
Hyperinflation | An exceptionally high rate of inflation which results in people losing confidence in money as a medium of exchange. |
Shoe Leather Costs | A cost of inflation when consumers spend time and money trying to find the best prices. |
Menu Costs | Additional costs incurred by a business as a consequence of inflation. |
Anticipated Inflation | Inflation that people expect. |
Unanticipated Inflation | Inflation that people do not expect. |
Floating Exchange Rate | An exchange rate that is determined by the market forces of supply and demand. |
Trade Weighted Exchange Rate | For a given currency, this is calculated using weights that are directly proportional to the other country's shares in trade. |
Appreciation | An increase in the value of a currency as measured by another currency. |
Depreciation | A decrease in the value of a currency as measured by another currency. |
Managed Float Exchange Rate | An exchange rate guided by the market but with some limited manipulation by the government. |
Pegged Exchange Rate System | An exchange rate that is set to remain within an upper and lower limit. |
Fiscal Policy | Economic policy used by the legislature. Primarily concerned with taxes and government spending. |
Expansionary Fiscal Policy | Lowered taxes and/or increased government spending. |
Contractionary Fiscal Policy | Raised taxes and/or decreased government spending. |