Macroeconomics Chapter 38
Purchasing Power Parity (PPP)
A method of comparing income by looking at the domestic purchasing power of money in differnent countries.
Restructuring
Changing the underlying economic institutions.
Dual Economy
The existence of two sectors: a traditional sector and an internationally oreinted modern market sector.
Regime Change
A change in the entire atmosphere within which the government and the economy interrelate.
Policy Change
A change in one aspect of the government’s actions, such as monetary policy or fiscal policy.
Inflation Tax
An inplicit tax on the holders of cash and the holders of any obligations specified in nominal terms.
Full Convertibility
Individuals may change dollars into any currency they want for whatever legal purpose they want.
Convertibility on the Current Account
A system that allows people to exchange currencies freely to buy goods and services, but not to buy assets in other countries.
Limited Capital Account Convertibility
A system that allows full acount convertability and partial capial account convertability.
Conditionality
The making of loans that are subject to specific conditions.
Balance of Payments Constraint
Limitations on expansionary domestic macroeconomic policy due to a shortage of international currency reserves.
Foreign Aid
Funds that developed countries lend or give to developing countries.
Infrastructure Investment
Investment in the underlying structure of the economy.
Economic Takeoff
A stage when the development process becomes self-sustaining.
Credentialism
The degrees, or credentials, become more important than the knowledge learned.
Brain Drain
The outflow of the best and brightest students from developing countries to developed countries.