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Glossary of IB Economics Terms

To excel in IB Economics, students need to have a good understanding of Economics Terminology. This is can be rather daunting for most students. In this page, we created a glossary of IB Economics terms to help students search for Economics definitions in just a few clicks. We hope you will find this tool useful.

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IB Economics Terms

All | # A B C D E F G H I J K L M N O P Q R S T U V W X Y Z
There are 10 names in this directory beginning with the letter F.
Factor Endowments
The quantity and quality of factors of production (land, labour, human capital, physical capital and entrepreneurship) an economy has at its disposal.

Fiscal Policy
Refers to the manipulation of the level of government spending (G) and of taxation (T) in order to affect aggregate demand; expansionary Fiscal policy is used if government spending (G) rises and / or taxes (T) decrease in order to reflate an economy in or falling into recession

Fixed Exchange Rate
The currency’s value is fixed against the value of another currency, a basket of other currencies or gold

Floating Exchange Rate
If the exchange rate is determined solely through the interaction of demand and supply for the currency with no government (central bank) intervention.

Foreign Direct investment
capital expenditure (long -term investment) by a multi-national company in the productive capacity of a foreign country.

Foreign Exchange Reserves
The value of foreign exchange holdings held at the central bank of a country.

Free Trade
Refers to international trade that is not subject to any type of trade barrier.

Free Trade Area (FTA)
An FTA is formed when two or more countries abolish tariffs (and other barriers) between them while maintaining existing barriers to non-members.

Frictional Unemployment
The term refers to people in between jobs. It is a form of unavoidable unemployment as people are constantly moving between jobs in search of better opportunities. Better and faster information concerning the labour market can lower this type of unemployment

Full employment
The term has come to refer to the situation where there is equilibrium in the labour market and thus any unemployment remaining is not demand-deficient. Any increase in total output beyond that level will prove inflationary and temporary.

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