Lesson Glossary
Transfer payments
Direct payments from governments to other governments or to individuals; a mechanism for providing social security, income support, and alleviation of regional disparities.
Externalities are the side effects of an economic activity that affect other people who are not directly involved in it. These effects can be positive (helpful) or negative (harmful).
👉 Examples:
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Negative externality: A factory pollutes a river. People living nearby suffer, even though they aren’t part of the factory’s business.
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Positive externality: A homeowner plants a beautiful garden. Neighbors enjoy it, even though they didn’t pay for it.
A general rise in the price levels of an economy.
Deflation
A general fall in the price levels of an economy.
Balance of payments account
National account of international payments and receipts, divided into current account, and capital and financial account.