Course glossary

During lectures you will learn new words. Using this link you are welcome to add them to our "course glossary", so that other students will be able to see them and learn. Let's make our own useful glossary and help each other to learn new words! By the way, there are already some worlds which should be familiar for you till the end of the course, try to cover them when you mill have free time.

Browse the glossary using this index

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Absolute (or money) prices

The price of a good measured in units of currency.

Absolute Advantage

Exists if a producer can produce more of a good than all other producers.

Aggregate Demand (AD)

The inverse relationship between all spending on domestic output and the average price level of that output. AD measures the sum of consumption spending by households, investment spending by firms, government purchases of goods and services, and the net exports bough by foreign customers.

Aggregate Income (AI)

The sum of all income earned by suppliers of resources in the economy. AI=GDP.

Aggregate Spending (GDP)

The sum of all spending from four sectors of the economy. GDP = C+I+G+Xn.

Aggregate Supply (AS)

The positive relationship between the level of domestic output produced and the avg. price level of that output.


The process of summing the microeconomic activity of households and firms into a more macroeconomic measure of economic activity.

All else equal

To predict how a change in one variable affects a second, we hold all other variables constant. This is also referred to as the “ceteris paribus” assumption.

Allocative efficiency

Production of the combination of goods and services that provides the most net benefit to society.

Appreciating (depreciating) currency

When the value of a currency is rising (falling) relative to another currency, it is said to be appreciating (depreciating)

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