Dictionary of Basic Economic Concepts

Apuntes

Dictionary of Basic Economic Concepts Appreciation / Depreciation Appreciation refers to the increase in the value of a currency relative to another, while depreciation is the opposite. Example: In 1994, the Mexican peso experienced a sharp depreciation in the “Tequila Crisis”. Asset An economic resource owned or controlled by an entity with the expectation that it will provide future benefit. Balance of Payments (BoP) A record of all economic transactions between the residents of a country and the rest of the world, including trade, investment, and transfers. Public budget A government’s estimation of revenue and expenditure for a given fiscal year. It can be in surplus, balanced, or in deficit. Carry Trade A strategy where investors borrow in low-interest-rate currencies and invest in high-yielding assets. Example: In the 2000s, many investors borrowed yen to invest in higher- yielding currencies like the Australian dollar. Commodity A basic good used in commerce, interchangeable with others of the same type, such as oil, gold, or wheat. Comparative Advantage The ability of a country or agent to produce a good at a lower opportunity cost than another. Historical example: ...