Here are Economics Terms beginning with F

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Here are Economics Terms beginning with F

Please note these economics dictionary definitions are all copyright of  BusinessEconomics.com and no one is allowed to use them without express written confirmation from BusinessEconomics.com.

Copyright BusinessEconomics.com

Factor price equalization theorem predicts that with free movement of goods ciombined with no factor mobility bwetween nations wil nonethless lead to equaliztion of wages and equalization of returns to cpaital in the two countries. That is wages in Country1 will more equal to wages in Country 2 and the return to Capital in country 1 will be equal to the return on Capital in Country 2.

Factors of production  are the inputs to the production process of goods and services. There is labour, capital, land (including natural resources) and the entrepeneur.

Fallacy of composition
an argument that what is true at the micro level may well know be true at the macro level. In Keynesian economics the idea that cutting wages will increase in emplyment may well work at the micro lvel but it will not work at the macro level due to the effect of increasing aggregate demand.

Final expenditure refers to consumer expenditure on the output of goods and servies and gross capital formation part of investment expenditure.

Financial account of the balance of payments records the flows of foreign direct investment and other capital flows both into and out of the country.

Financial flexibility when the governemnt of a firms has the ability toi change wages, alter the terms of emplyment or the nature of work done by their employees.

Financial intermediaries are financial institutions whcih channel money from economic agents with surplus finds to deficit agents that need to borrrow funds.

Fine tuning the use of fiscal and monetary policy adjustments in an attempt to reduce the fluctuations of economic activity in the business cycle.

First best policy the best policy to correct an economic distortion in an economy, that is, the policy with the highest gap between benfits and costs.

First degree price discrimination occurs when a firm charge a range of consumers the maximumk that each consumer ois willing to pay for each good. As such there ius no consumer surplus for consumers.

First mover advantage is the advantage a firm has for being the first to enter the market to produce a good or service.

Fiscal drag refers to the effects of taxes in slowing an economic recovery, this is beacuse as people get jobs they will be taxed so slowing down a recover. Also employed people may move up the inome scale during a recovery and may face higher marginal tax rates.

Fiscal policy the use of changes in taxes and givernment expenditure to influence aggragate demand in the economy.

Fiscal stance describes whether the fiscal policy is expansionary, contractionary or neutral.

Fixed costs are those short run costs that a firm will incur regrdless of its short run level of output.

Fixed exchange rate system is when an exchange rate is fixed against another currency (usually with small margins of fluctuation allowed either side of the central parity).

Fixed factor of production is the factor of production that a firm cannot vary in the short run. In most economics models the fixed factor of production is capital while the variable factor is the amount of labor.

Flat organization is an orgainization where the management structure is such that the senior managers in the orgainsation deal directly with workers and there is a large set of middle mangers in between.

Floating exchange rate system is a system whereby the exchange rate is left to be determined by market forces with no intervention by the central bank.

Flow variable is the change in a variable over a specific period of time. For example, monthly output of a firm, annual national income, increase in stocks, change in umeployment rate.

Flow of funds equation shows the changes in the money supply resulting from changes in various components.

Forward exchange rate is the exchnage rate at which two parties agree to buy/sell a currency at some time in the future. There are a variety of forwwrd exchange rates, for example, 1 month, 3 months, 6 months and one year
forward rates.

Free Trade Area an area in which two or more
countries agree to have free trade in substantially all products but maintain their own independent tariffs against the rest of the world.

Free market economy is one in which there is a very limited role for government/ minimal regulation. In such an economy it is the forces of supply and demand that determine what goods and servies are produced, how they are produced and who gets the goods and services.

Free rider problem occurs when an economic agent is able to enjoy the benefits of a good/service without paying for it. For example, if someone pays for new road the other
people can benefit form it.

Frictional unemployment is the irreducible minimum level of unemployment that occurs in an economy due to labor market imperfections. For example, Some students normally take a while to find a job upon finishing their
education.

Full employment describes a situation where all who wish to work at the equilibrium exchange rate have got a job.

Functional distribution of income measures the distribution the national income according to its source - profits, wages, rent or profits.






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