Basic terms in Economics

Terms Meaning
Inflation A general rise in price level of all goods and services within a period of time
Demand Consumer's desire to purchase a good or service backed by ability and willingness to pay.
Price It is a amount of money in which a supplier is willing to offer a product and a buyer is willing to pay.
Economic growth Economic growth is the growth in inflation-adjusted gross domestic product within a period of time.
Money supply The total amount of money in circulation or in existence in a country.
Monetary policy Policy by Central Bank to achieve price stability, interest rate stability, and exchange rate stability through the control of money supply.
Microeconomics The part of economics concerned with single factors and the effects of individual decisions.
Quantity theory of money Theory that advocates that as the money in circulation increases, the price level also increases proportionately, and the value of money falls.
Crony capitalism An economic system characterized by close, mutually advantageous relationships between business leaders and government officials.
Currency attack A speculative attack in the foreign exchange market is the massive and sudden selling of a nation's currency, and can be carried out by both domestic and foreign investors.
Pegged exchange rate A pegged exchange rate, also known as a fixed exchange rate, is where the currency of one country is tied to a usually stronger currency, such as the euro, US dollar or pound sterling.
Pump Priming Pump priming is the action taken to stimulate an economy, usually during a recessionary period, through government spending and interest rate and tax reductions.
Compensatory spending Compensatory spending refers to government expenditure which is undertaken with the idea of compensating the decline in private investment.
New classical macroeconomics New classical macroeconomics, sometimes simply called new classical economics, is a school of thought in macroeconomics that builds its analysis entirely on a neoclassical framework. Specifically, it emphasizes the importance of rigorous foundations based on microeconomics, especially rational expectations.

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