Absolute Advantage A country has an absolute advantage if its output per unit of input of all goods and services produced is higher than that of another country.
Absolute Poverty is a situation where a population or section of a population is able to meet only its bare subsistence essentials of food, clothing, and shelter in order to maintain minimum levels of living.
Absorptive Capacity is the ability of a country to effectively absorb, foreign, private or public financial assistance (i.e., to use the funds in a productive manner)

Adjustment Assistance is public financial assistance to workers and industries hurt by imports of lower priced foreign goods. Such assistance allows them to adjust new occupation during a transitional period.
Ad Valor-em Tax (to the value added) a tax based on the value (or assessed value) of property.
Advanced Capitalism is an economic system characterized by private ownership but with a major role played by the Public sector. Most developed market economies like those in America, Western Europe, Japan, and Australia are examples of advanced capitalism.
African Development Bank is a regional bank, established in 1963, to assist independent African countries through the provision of loans and technical assistance.
Aggregate Demand is a measure of the real purchasing power of the community. Commonly referred to as the effective demand or total expenditure, it normally comprises private consumption (C), private and public component (I), government expenditure (G), plus net exports (X-M)
Alternative Minimum Tax. An IRS mechanism created to ensure that high-income individuals, corporations, trusts, and estates pay at least some minimum amount of tax, regardless of deductions, credits or exemptions.
Andean Group is a common market formed by Bolivia, Colombia, Ecuador, Peru, and Venezuela in an effort to promote economic integration, coordinate . industrial development, regulate foreign investment, and maintain a common external tariff among the member countries.
Asset is anything of monetary value that is owned by a person. It includes real property, personal property, and enforceable claims against others (including bank accounts, stocks, mutual funds and so on).
Asset Ownership is the ownership of land, physical capital (factories, buildings, machinery, etc.) human capital, and financial resources which generate income for owners. The distribution of asset ownership is a major determinant of the distribution of personal income in any non socialist society
Autarchy is a closed economy that attempts to be completely self-reliant.
Average Product is the total output or product divided by total factor input (e.g., the average product of labour is equal to the total output divided by the total amount of labour used to produce that output).
Average Propensity to Consume is the proportion of income the average family spends on goods and services.
Average Propensity to Save is the proportion of income the average family saves (does not spend on consumption).
Average Total Cost is the sum of all the production costs divided by the number of units produced.
Balance of Trade is the difference in the value over a period of time between a country’s imports and exports.
Barter System. System where there is an exchange of goods without involving money.
Base Year. In the construction of an index, the year from which the weights assigned to the different components of the index is drawn. It is conventional to set the value of an index in its base year equal to 100.
Bill of Exchange is a written, dated, and signed three-party instrument containing an unconditional order by a drawer that directs a drawee to pay a definite sum of money to a payee on demand or at a specified future date. Birth Rate is the number of births in a year per 1,000 population.
Boom is a state of economic prosperity.
Break-even is a term used to describe a point at which revenues equal costs (fixed and variable).
Bretton Woods is an international monetary system operating from 1946-1973. The value of the dollar was fixed in term of gold, and every other country held its currency at a fixed exchange rate against the dollar.
Budget is a summary of intended expenditures along with proposals for how to meet them.
Call Money is a price paid by an investor for a call option. There is no fixed rate for call money. It depends on the type of stock, its performance prior to the purchase of the call option, and the period of the contract.
Calorie Requirement (daily per ca-pita) refers to the calories needed to sustain the population at normal levels of activity and health, taking account its age and sex distributions, average body weights, and physical environment.
Calorie Supply (daily per ca-pita) is calculated by dividing the calorie equivalent of the available food supplies in a country by its total population.
Capital is a wealth in the form of money or property owned by a person or business and human resources of economic value.

Development Banks are specialized public and private financial intermediaries providing medium and long-term credit for development project.
Development Plan is the documentation by a government planning agency of the current national economic conditions, proposed public expenditures, likely developments in the private sector, a macroeconomic projection of the economy, and a review of government policies. Many LDCs publish five-year development plans to announce their economic objectives to their citizens and others.

Diminishing Returns is the principle that if one factor of production is fixed and constant additions of other factors are combined with it, the marginal productivity of variable factors will eventually decline.
Direct Tax is a tax that one pays directly to the taxing authority. The income tax is a direct tax, as are property taxes.
Direct Investment. Foreign capital inflows in the form of investment by foreign based companies into domestic based companies.
Double Taxation Corporate earnings taxed at both the corporate level and again as a stockholder dividend.
Dual Price System is government-operated pricing mechanism whereby producers of, say, a staple crop are paid a different price from the one consumers (mostly urban consumers) are charged. In short, any two-price system, one for sellers and the other for buyers.
Duopoly is a market structure in which two producers of a commodity compete with each other.
Economic Growth is an increase in the nation’s capacity to produce goods and services.
Economic Infrastructure is the underlying amount of capital accumulation embodied in roads, railways, waterways, airways, and other forms of transportation and communication plus water supplies, financial institutions, electricity, the public services such as health and education. The level of infrastructural development in a country is a crucial factor determining the pace and diversity of economic development.
Economy Integration. The merging to various degrees of the economies and economic policies of two or more countries in a given region.
Economic Policy is a statement of objectives and the methods of achieving these objectives (policy instruments) by government, political party, business concern, etc.
Elasticity of Demand. The degree of which consumer demands for a product or service responds to a change in price, wage or other independent variables.
Enclave Economies are those economies found among L.D.Cs where there exist small pockets of economically developed regions (often due to the presence of colonial or foreign engaged in plantation and mining activities) with that of the larger outlying areas experiencing very little progress.
Energy Consumption per Dollar of GDP refers to the ratio of total energy consumption of GDP in constant dollars. This indicator shows the intensity of energy use in the economy.
Equilibrium Price is the price at which the quantity demanded of a good is exactly equal to the quantity supplied. It is often referred to as the price at which the market clears itself.
Equilibrium Wage Rate is the wage rate that equates the demand for and supply of labour i.e., the wage at which all the people who want to work at that wage are able to find jobs and also at which the employers are able to find all the workers they desire to employ. In other words, it is the wage rate that clears the labour market.
Eurodollars are the dollar deposits of European banks in American ones, or dollar deposits in European banks, which in European banks may use as reserves for dollar loans.
Exchange Control is a governmental policy designed to restrict the outflow of domestic currency and prevent a worsened balance of payments position by controlling the amount of foreign exchange that can be obtained or held by domestic citizens. It often results from overvalued exchange rates.

Exchange Rate is the rate at which central banks will exchange one country's currency for another (i.e., the “official” rate).
Exports (of goods and non-factor services) represent the value of all goods and non factor services sold to the rest of the world; they include merchandise, freight, insurance, travel, and other non factor services. The value of factor services (such as investment receipts and workers remittances from abroad) is excluded from this measure.
Export Dependence is a situation in which a country relies heavily on exports as the major source of finance needed for carrying out development activities. This is a situation of many L.D.Cs which must export primary products to earn valuable foreign exchange.
Export Incentives are the public subsidies, tax rebates, and other kinds of financial and non-financial measures which designed to promote a greater level of economic activity in export industries.
Export Promotion is the purposeful governmental effort to expand the volume of a country’s exports through export incentives and other means in order to generate more foreign exchange and improve the current account of its balance of payments.
Externalities are a cost or benefit not accounted for in the price of goods or services. Often ‘externality’ refers to the cost of pollution and other environmental impacts.
Factors of Production are the resources or inputs required to produce a good or services. Basic categories of factors of production are land, labour, and capital.
Fiscal Deficit is the gap between the government’s total spending and the sum of its revenue receipts and non-debt capital receipts. It represents the total amount of borrowed funds required by the government to completely meet its expenditure.
Fiscal Policy is the use of government expenditure and taxation to try to influence the level of economic activity.
Fixed Cost is the cost incurred in the general operations of the business that is not directly attributable to the costs of producing goods and services.
Fixed Exchange rate is the exchange value of a national currency fixed in relation to another, (usually the US$) not free to fluctuate on the international money market.
Foreign Aid is the international transfer of public funds in the form of loans or grants either directly from one government to another (bilateral assistance or indirectly through the vehicle of a multi-lateral assistance agency like the World Bank.
Foreign Direct Investment (F.D.I) is overseas investment by private multinational corporations.
Foreign Reserves are the total value (usually expressed in dollars) of all gold, dollars, and Special Drawing Rights held by a country as both a reserve and a fund from which international payments can be made.
Free Trade. Trade in which goods can be imported and exported without any barriers in the forms of tariff, quotas or other restrictions.
Free Trade Area is a form of economic integration in which there exists free trade among member countries but each member is free to levy different external tariffs against non-member nations.
Fringe Benefit is a benefit in addition to salary offered to employees such as use of company’s car, house, lunch coupons, health care subscriptions etc.
Full Employment is a situation where everyone who wants to work at the prevailing wage rate is able to get a job or, alternatively, it is a situation whereby some job seekers cannot get employment at the going wage rate but open unemployment has been reduced to a desired level (e.g., 2 percent).
GATT (General Agreement on Tariffs and Trade). An international body set up in 1947 to probe into the ways and means of reducing tariffs on internationally traded goods and services.
Gross Domestic Investment consists of the outlays for additions to the fixed assets of both the private and public sectors plus the net value of inventory changes.
Gross Domestic Product (GDP) measures the total final outputs of goods and services produced by the country’s economy i.e., within the country’s territory by residents and nonresidents, regardless of its allocation between domestic and foreign claims. See also gross national product.
Gross Domestic Savings shows the amount of gross domestic investment financed from domestic output. It is calculated as the difference between gross domestic investment and the deficit on current account of goods and non-factor services (excluding net current transfers). It comprises both public and private savings.
Gross National Product (GNP) measures the total domestic and foreign output claimed by residents of the country. It comprises gross domestic product plus factor incomes accruing to residents from abroad, less the income and in the domestic economy accruing to persons abroad.
Imperfect Competition. A market situation or structure in which producers have some degree of control over the price of their product e.g. monopoly, oligopoly.
Imperfect Market is a market where the theoretical assumptions of perfect competition are violated by the existence of, for example, a small-number of buyers and sellers, barriers to entry, non homogeneity of products, and imperfect information. The three imperfect markets commonly analysed in economic theory are monopoly, oligopoly, and monopolistic competition.
Import Substitution is a deliberate effort to replace major consumer imports by promoting the emergence and expansion of domestic industries such as textiles, shoes, household appliances. Requires the imposition of protective tariffs and physical quotas to get the new industry started.

Overvalued Exchange Rate is an official exchange rate set at a level higher than its real or shadow value.
Performance Budget is a budget format that relates the input of resources and the output of services for each organizational unit individually.
Political Economy is the attempt to merge economic analysis with practical policies, i.e., to view economic activity in its political context. Much of “classical” economics was political economy and today “political economy” is increasingly being recognized as necessary for any realistic examination of development problems.
Portfolio Investment is type of financial investments by private individuals, corporations, pension funds, and mutual funds in stocks, bonds, certificates of deposit, and notes issued by private companies and the public agencies of L.D.Cs.
Poverty Gap is the sum of the difference between the poverty line and actual income levels of all people living below that line.
Poverty Line is a level of income below which people are deemed poor.
Price is the monetary or real value of a resource, commodity, or service.
Quota is a physical limitation on the quantity of any item that can be imported into a country.
Real Income is the income that a household or firm receives in terms of the real goods and services it can purchase. Alternatively, it is simply money income adjusted by some price index.
Recession is a period of slack general economic activity as reflected in rising unemployment and excess productive capacity in a broad spectrum of industries.
Redistribution Policies are the policies geared to reducing inequality of incomes and expanding economic opportunities in order to promote development. Examples include progressive tax policies, provision of services financed out of such taxation to benefit persons in the lower-income groups, rural development policies, giving emphasis to raising levels of living for the rural poor through land reform, and other forms of asset and wealth redistribution.
Regressive Tax. If the ratio of taxes to income as income increase tends to decrease, the tax is called “regressive”, i.e. relatively poor people will pay a larger proportion of their income in taxes than will relatively rich people. A regressive tax therefore is pro-rich.
Repo Rate is one of the credit management tools used by the RBI to regulate liquidity in the economy. The Reserve Bank only makes a certain amount of money available and this determines the repo rate. Repos are repurchase agreements for the sale and subsequent repurchase of a security.
Revenue Expenditure is expenditure on recurring items, including the running of services and financing capital spending that is paid for by borrowing.
Revenue Receipts addition to assets that do not incur an obligation that must be met at some future date and do not represent exchanges of property for money. Savings are that portion of disposable income not spent on consumption by households plus profits retained by firms. Savings are normally assumed to be positively related to the level of income (personal or national)
Savings Ratio an savings expressed as a proportion of disposable income over some period of time. It shows the fraction of national income saved over any period. The savings ratio is sometimes used synonymous with the average propensity to save.
Special Drawing Rights (S.D.Rs) is a new form of international financial asset - often referred to as paper gold created by the International Monetary Fund (IMF) in 1970 and designed to supplement gold and dollars in setting international balance of payments accounts.
Structural Adjustment Loans are loans by the World Bank designed to foster structural adjustment in the LDCs by supporting measures to remove excessive governmental controls, getting factor and product prices to better reflect scarcity values and promoting market competition.
Structural Inflation is an inflation that arises as a result of supply in-elasticity and structural rigidity (e.g., inefficient marketing and distribution systems) in the industrial sectors of the economy. A form of demand-pull inflation, but can exist with considerable excess capacity and unemployment.
Structural Theory of Underdevelopment hypothesis that underdevelopment in Third World countries is due to under utilization of resources arising from structural and/or institutional factors that have their origins in both domestic and international dualistic situations. Development, therefore, requires more than just accelerated capital formation as espoused in the “stage of growth” and “false paradigm” models of development.
Structural Transformation is the process of transforming the basic industrial structure of an economy so that contribution to national income by the manufacturing sector increasingly becomes higher than that by the agricultural sector. More generally, an alteration in the industrial composition of any economy. Subsidy is a payment by the government to producers or distributors in an industry to prevent the decline of that industry (e.g. as a result of continuous unprofitable operations) or an increase in the prices of its products, or simply to encourage it to hire more labour (as in the case of a wage subsidy). Examples of subsidies are export subsidies to encourage the sale of exports, subsidies on some foodstuffs to keep down the cost of living especially in urban areas, farm subsidies to encourage expansion of farm production and achieve self-reliance in food production.
Tax Avoidance is a legal action designed to reduce or eliminate the taxes that one owes.
Tax Base is the total property and resources subject to taxation.
Tax Evasion is an illegal strategy to decrease tax burden by under-reporting income, overstating deductions, or using illegal tax shelters.
Terms of Trade is the ratio of a country’s average export price to its average import price.
Total Factor Productivity is the total monetary value of all units of output per unit of each and every factor of production in an economy. It is a measure of the average productivity of all factors employed in an economy.
Trade off is the necessity of sacrificing (“trading off’) something in order to get more of something else - e.g., sacrificing consumption now for consumption later by devoting some resources to investment.
Transfer Payment is any payment from one economic entity to another that takes the form of a gift - i.e. it is not for a service rendered and it need to be repaid. Examples include unemployment insurance, food stamps, welfare payments, subsidies, bilateral grants.
Transfer Pricing is an accounting procedure usually designed to lower total taxes paid by multinational corporations (MNCs) in which intra-corporate sales and purchases of goods and services are artificially invoiced so that profits accure to those branch offices located in low tax countries, tax havens while offices in high tax countries show little or no taxable profits.
Treasury Bill is a short-term debt issued by a national government with a maximum maturity of one year. Treasury bills are sold at discount, such that the difference between purchase price and the value at maturity is the amount of interest.
Trickle Down Theory of Development is the notion that development is purely an economic phenomenon in which rapid gains from the overall growth of GNP and per ca-pita income would automatically bring benefits (i.e. trickle down) to the masses in the form of jobs and other economic opportunities. The main preoccupation is therefore to get the growth job done while problems of poverty, unemployment, and income distribution are perceived to be of secondary importance.
VAT is a form of indirect sales tax paid on products and services at each stage of production or distribution, based on the value added at the stage and included in the cost to the ultimate customer.
Vicious Circle is a self reinforcing situation in which there are factors that tend to perpetuate a certain undesirable phenomenon e.g., low incomes in poor countries lead to low consumption which then leads to poor health and low labour productivity and eventually to the persistence of the poverty.


1. Stock Exchange: The Stock Exchange is the market for the buying and selling of existing securities, including government bonds, loan stock of foreign govts, and local authorities, and company shares and debentures.
2. Securities : An instrument in the form of a document conferring ownership of specific assets. Two types: Shares and Bonds or Debentures
3. Bear: A pessimistic market operator. It also refers to those who sell shares which they do not possess. They are sold in the hope of buying the shares back at a lower price.
4. Ready Forward : Sale of securities and simultaneous repurchase price is also fixed at the time of sale.
5. Bonds: An instrument of acknowledging loan raised at a specific interest rate and repayment date.
6. Broker : A stock exchange member acts as an agent for clients and buys and sells shares on their behalf in the market on brokerage (commission).
7. Bull: An optimistic operator who first buys and sells shares. This is in expectation of the share prices going up. The term is supposed to come from the bull’s method of attack which is to toss upwards on his horns.

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Capital Account is that portion of a country’s balance of payments table that shows the volume of private foreign investment and public grants and loans that flow into and out of a country over a given period, usually one year.
Capital Accumulation increases a country’s stock of real capital (i.e., net investment in fixed assets). To increase the production of capital goods necessitates a reduction in the production of consumer goods. “Economic” development largely depends on the rate of Capital accumulation.
Capital Budget: is a plan of proposed capital, outlays and the means of financing them for the current fiscal period.
Capital Gain Tax: Tax paid on the gain realized upon the sale of an asset.
Capital-intensive Technique is a more capital-using process of production; that is, one using a higher proportion of capital relative to other factors of production such as labour or land per unit output.
Capital/Output ratio is a ratio that shows the units of capital required to produce a unit of output over a given period of time.
Capital-saving Technological Progress arises as a result of some invention or innovation that facilitates achievement of higher output levels using the same quantity of capital inputs.
Capital Stock is the total amount of physical goods existing at a particular time period which have been produced for use in the production of other goods (including services).
Cartel is an organization of producers seeking to limit or eliminate competition among its members most often by agreeing to restrict output to keep prices higher than would occur under competitive conditions.
Cash Account is the “balancing” portion of a country’s balance of payments table showing how cash balances (foreign reserves) and short-term financial claims have changed in response to current and capital account transactions.
Cash Crops are crops produced entirely for the market (e.g., coffee, tea, coca, cotton, rubber, pyrethrum, jute, wheat).
Census is official gathering of information about the population in a particular area.
Central Bank is a major financial institution responsible for issuing currency, managing foreign reserves, implementing monetary policy, and providing banking services to the government and commercial banks.
Ceteris Paribus is a Latin expression widely used in economics managing “all else being equal” - i.e., all other variable are held constant.
Classical Economics is the economics of Adam Smith, David Ricardo, Thomas Malthus, and later followers such as John Stuart Mill. The theory concentrated on the functioning of the market economy spelling out a rudimentary explanation of consumer and producer behaviour in particular market.
Collateral Security is an additional security a borrower supplies to obtain a loan.
Closed Economy is an economy in which there are no foreign trade transactions or any other form of economic contacts with the rest of the world.
Commercial Policy Encompassing instruments of trade protection employed by countries to foster industrial promotion export diversification, employment creation, and other desired development - oriented strategy. They include tariffs, subsidies and quotas.
Comparative Advantage. The ability to produce a good at a lower cost, relative to other goods, compared to another country.
Compound Interest. Interest paid on the original principal and on interest accrued from time it became due.
Conditionality. is a requirement imposed by the IMF that a borrowing country undertake fiscal, monetary, and commercial reforms as a condition to receiving a loan for balance of payments difficulties.
Copyright. is a legal right (usually of the author or composer or publisher of a work) to exclusive publication production, sale, and distribution of some work. What is protected by the copyright is the “expression”, not the idea.
Cost-benefit Analysis is a basic tool of economic analysis in which the actual and potential costs (both private and social) of various economic decisions are weighed against actual’and potential private and social benefits of those decisions or projects yielding the highest benefit/cost ratio are usually thought to be most desirable.
Cost-push Inflation results primarily from the upward pressure of production costs, usually because of rising raw material prices (e.g., oil) or excessive wage increases resulting from trade union pressures.
Countervailing Duties are duties (tariff) that are imposed by a country to counteract subsidies provided to a foreign producer current accounts.
Crowding Out is the possible tendency for government spending on goods and services to put upward pressure on interest rates, thereby discouraging private investment spending.
Currency Appreciation is an increase in the value of one currency relative to another currency. Opposite is the case with currency depreciation.
Currency Board Form of central bank that issues domestic currency for foreign exchange affixed rates.
Current Account is that portion of a balance of payments table which portrays the market value of a country’s ‘visible’ (e.g., commodity trade) and “invisible” (e.g., shopping services) exports and imports with the rest of the world.
Current Account Balance is the difference between (a) exports of goods and services plus inflows of unrequited official and private transfers, and (b) imports of goods and services plus unrequited transfers to the rest of the world included in this figure are all interest payments on external public and publicly guaranteed debt.
Customs Duty is a duty levied on the imports of certain goods. Includes excise equivalents. Unlike tariffs customs duties are used mainly as a means to raise revenue for the government rather than protecting domestic producers from foreign competition.
Death Rate. Numbers of people dying per thousand population.
Debt Outstanding (external public) is the amount of public and publicly guaranteed loans that has been disbursed net of cancelled loan commitments and repayments of principal.
Debt Renegotiation changes the terms of existing loans, usually by extending repayment dates without increases in nominal interest rates.
Debt Service is the sum of interest payments and repayments of principal on external public and publicly guaranteed debt.
Debt-Service ratio of interest and principal payments due in a year to export receipts for that year.
Decreasing Costs. If increasing returns exists then a given proportionate change in output will require a smaller proportionate change in quantities of factor inputs thus implying a fall in cost per unit of output. In short, a fall in average costs of production as output expands.
Deficit Expenditure amount by which planned government expenditure exceeds realized tax revenues. Deficit expenditure is normally financed by borrowed funds and its major object .is to stimulate economic activity by-increasing aggregate demand.
Deflation is a reduction in the level of national income and output, usually accompanied by a fall in the general price level.
Developing Country (less developed country, underdeveloped country or third world country) is a country characterized by low levels of GDP and per capita income; typically dominated by agriculture and mineral products and majority of the population lives near subsistence levels.
Demand-Pull Inflation arises because of the existence of excess Keynesian aggregate demand, i.e., when total effective demand exceeds the productive capacity (aggregate supply of the economy).
Devaluation is a lowering of the “official” exchange rate between one country currency and those of the rest of the world.
Development is the process of improving the quality of all human lives. Three equally important aspects of the development are (1) raising people’s living levels, i.e., their incomes and consumption levels of food, medical services, education, etc., through “relevant” economic growth processes; (2) creating conditions conducive to the growth of people’s self-esteem through the establishment of social, political, and economic systems and institutions which promote human dignity and respect; and (3) increasing people’s freedom to choose by enlarging the range of their choice variable e.g., increasing varieties of consumer goods and services.

Income Effect is the implicit change in real income resulting from the effects of a change in a commodity’s price on the quantity demanded.
Income Elasticity of demand is the responsiveness 01 the quantity demanded of a commodity to bring changes in the consumer’s income, measured by the proportionate change in quantity divided by the proportionate change in income.
Income Gap is the gap between the incomes accruing to the bottom poor and the top rich sections of a population. The wider the gap the greater the inequality in the income distribution. Also used to refer to the gap between income per ca-pita levels in rich and poor nations.
Income Inequality is the existence of disproportionate distribution of total national income among households whereby the share going to rich persons in a country is far greater than that going to the poorer persons (a situation common to most L.D.Cs). This is largely due to differences in the amount of income derived from ownership of property and to a lesser extent the result of differences in earned income. Inequality of personal incomes can be reduced by steeply progressive income and wealth taxes.
Income Per Ca-pita is the total GNP of a country divided by the total population. Per ca-pita income is often used as an economic indicator of the levels of living and development. It however, can be “biased” index because it takes no account of income distribution and the ownership of the assets which are employed to generate that part of income.
Index of Industrial Production is a quantity index that is designed to measure changes in the physical volume of production levels of industrial goods over time.
Inflation is the percentage increase in the prices of goods and services.
Indirect Tax is a type of tax in which one does not pay directly, but which is passed on to him by an increase in expenses.
International Commodity Agreement. Formal agreement by sellers of a common internationally traded commodity (coffee, sugar) to coordinate, supply to maintain price stability.
International Labour Organization (ILO) is one of the functional organizations of the UN, based in Geneva, Switzerland, whose central task is to look into problems of world labour supply, its training, utilization, domestic and international distribution, etc.
International Monetary Fund (IMF) is an autonomous international financial institution that originated in the Bretton Woods Conference of 1944. Its main purpose is to regulate the international monetary exchange system.
Land Reforms is a deliberate attempt to reorganize and transform existing agrarian systems with the intention of improving the distribution of agricultural incomes and thus fostering rural development.
Macroeconomic Stabilization Policies are designed to eliminate macroeconomic instability.
Macroeconomics. The branch of economics that considers aggregates such as national income, total volumes of saving, investment, consumption, expenditure, employment and money supply. It is also concerned with determinants of the magnitude of these and aggregates of their rate of change over time. Marginal Cost is the addition to total cost incurred by the producer as a result of varying output by one more unit.
Marginal Product is the increase in total output resulting from the use of one additional unit of a variable factor of production. In the Lewis model, surplus labour is defined as workers whose marginal product is zero.
Marginal Utility is the satisfaction derived from consuming one additional unit of good. In neoclassical theory, a consumer’s marginal utility is said to be maximized if his or her marginal utility per last unit of expenditure on that good is equal to marginal utilities of all other goods consumed, divided by their respective prices.
Market Economy is a free private-enterprise economy governed by consumer sovereignty, a price system, and the forces of supply and demand.
Market Failure is a phenomenon that results from the existence of market imperfections (e.g., monopoly power, factor immobility, significant externalities, lack of knowledge) that weaken the functioning of a free market economy i.e., it “fails” to realize its beneficial results. Market failure often provides the justification for government interference with the working of the free market.
Market Mechanism is the system whereby prices of commodities or services freely rise or fall when the buyer’s demand for them rises or falls or the seller’s supply of them decreases or increases.
Market Prices. Prices established by demand and supply in a free market economy.
Market Socialism is an economic system in which all resources are owned by the state but their allocation in the economy is done primarily by a market price system.
Merchandise Trade. All international charges in ownership of merchandise passing across the custom borders of the trading countries.

Exports are valued f.o.b. (free on board). Imports are valued c.i.f. (cost, insurance, and freight).
Middle-Income Countries (M.I.Cs). L.DC.s with per ca-pita income above $ 826 and below 10,065 in 2004 according to World Bank measures.
Mixed Economic Systems are a mixture of both capitalist and socialist economies.
Monetary Policy. The regulation of the money supply and interest rates by a central bank in order to control inflation and stabilize currency.
Money Supply is the total stock of money in the economy; currency held by the public plus money is accounts in banks. It consists primarily currency in circulation and deposits in savings and checking accounts.
Monopoly is a market situation in which a product that does not have close substitutes is being produced and sold by a single seller.
Multi Fiber Arrangement (MFA) is a set of non-tariff bilateral quotas established by developed countries on imports of cotton, wool, and synthetic textiles and clothing from individual L.D.Cs.
Multinational Corporation (M.N.C) is an international or transnational corporation with headquarters in one country but branch offices is a wide range of both developed and developing countries. Examples include General Motors, Coca-Cola.
National Expenditure is the total expenditure on final goods and services in an economy over a given time period. National expenditure (lii) includes consumption expenditure (C), investment expenditure (I) government expenditure (G), and expenditure on exports by foreigners (X), less expenditure on imports by domestic residents (M). Thus, E = C+I+G+X-M.
National Income is the total monetary value of all final goods and services produced in an economy over some period of time, usually a year. See also gross national product (GNP) and national expenditure.
Newly Industrializing Countries are small group of Countries at a relatively advanced level of economic development with substantial and dynamic industrial sector and with close links to the international trade, and investment system (Argentina, Brazil, Greece, Mexico, Portugal, Singapore, South Korea, Spain, and Taiwan).
Non-Tariff Trade Barrier is a barrier to free trade that takes a form other than a tariff, such as quotas.
Official Development Assistance (O.D.A) is net disbursements of loans or grants made on concessional terms by official agencies of member countries of the organization for Economic Cooperation and Development (OECD).
Official Exchange Rate is a rate at which the central bank will buy and sell the domestic currency in terms of a foreign currency such as the U.S. dollar.
Open Economy is an economy that encourages foreign trade and has extensive financial and non-financial contacts with the rest of the world in areas such as education, culture, and technology.
Organization for Economic Cooperation and Development (O.E.C.D) is an organization of 20 countries from the Western World including all of those in Europe and North America. Its major objective is to assist the economic growth , of its member nations by promoting cooperation and technical analysis of national and international economic trends.