Introduction to Economics GEN1704.2/ECN1101.2 L, Mussurov Altay

The proportion of a company’s total assets which are “owned” outright by the company’s owners. A company’s equity is equal to its value less its debt owed to bankers, bond- holders, and other lenders.

The “price” at which the currency of one country can be converted into the currency of another country. A country’s currency is “strong,” or its exchange rate is “high,” if it can purchase more of another country’s currency. A country’s currency appreciates when its value (compared to other currencies) grows; it depreciates when its value falls.

An export is the sale of a product from one country (either a good or a service) to a purchaser in another country.

Many economic activities have collateral effects (sometimes positive, but more often negative) on other people who are not directly involved in that activity. Examples of externalities include pollution (which imposes a cost on the natural environment and everyone who uses it), congestion (which slows down travel and productivity), and the spill-over impacts of major investment or plant closure decisions.

The basic productive resources (labor, capital, and natural resources) that are essential inputs to every economic activity.

Products (either goods or services) which are intended for final consumption. They are distinct from intermediate products, which are products used in the production of other products (such as raw materials, capital goods, or producer services).

The spending and taxing activities of government constitute its fiscal policy.

Real capital which is installed permanently in a specific location, including buildings, infrastructure, and major machinery and equipment.

An investment by a company based in one country, in an actual operating business, including real physical capital assets (like buildings, machinery and equipment), located in another country.

The process by which the currency of one nation is converted into the currency of another country.