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The document defines several economic terms including autarky, average product, capital-labor ratio, capital-output ratio, closed economy, dependence, dominance, net savings ratio, open economy, periphery, production function, self-sustaining growth, surplus labor, structural transformation, marginal product, dualism, modern sector, traditional economy, and labor-intensive production.

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Romulus Garcia
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14 views

Bee Assign

The document defines several economic terms including autarky, average product, capital-labor ratio, capital-output ratio, closed economy, dependence, dominance, net savings ratio, open economy, periphery, production function, self-sustaining growth, surplus labor, structural transformation, marginal product, dualism, modern sector, traditional economy, and labor-intensive production.

Uploaded by

Romulus Garcia
Copyright
© © All Rights Reserved
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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Autarky – A closed economy that attempts to be completely reliant.

Average product – Total output or product divided by total factor input.

Capital-labor ratio – The number of units of capital per unit of labor.

Capital-output ratio - A ratio that shows the units of capital required to produce a unit of output over a
given period of time.

Closed economy - An economy in which there are no foreign trade transactions or other economic
contacts with the rest of the world.

Dependence - The reliance of developing countries on developed-country economic policies to stimulate


their own economic growth.

Dominance - In international affairs, a situation in which the developed countries have much greater
power than the less developed countries in decisions affecting important international economic issues,
such as the prices of agricultural commodities and raw materials in world markets.

Net savings ratio - Savings expressed as a proportion of disposable income over some period of time.

Open economy - An economy that practices foreign trade and has extensive financial and nonfinancial
contacts with the rest of the world.

Periphery - In dependence theory, the developing countries.

Production function - A technological or engineering relationship between the quantity of a good


produced and the quantity of inputs required to produce it.

Self-sustaining growth - Economic growth that continues over the long run based on saving, investment,
and complementary private and public activities.

Surplus labor - The excess supply of labor over and above the quantity demanded at the going free-
market wage rate.

Structural transformation - The process of transforming an economy in such a way that the contribution
to national income by the manufacturing sector eventually surpasses the contribution by the agricultural
sector.

Marginal product - The increase in total output resulting from the use of one additional unit of a variable
factor of production (such as labor or capital).

Dualism - The coexistence of two situations or phenomena (one desirable and the other not) that are
mutually exclusive to different groups of society.

Modern Sector - The modern sector is characterized by a neo-classical labor market. It is also described
as “industrial” sector.

Traditional economy – In Traditional economy, everyone is “equally poor.” An economy that emphasizes
utility, profit maximization, market efficiency, and determination of equilibrium.

Labor-intensive production – The kind of production that mainly relies to human workers or resources.
Discuss one theory on economic development discussed in Chapter 3 which is readily observable given
the situation of the Philippines. *

The Lewis two-sector model theory prescribed that an underdeveloped economy has surplus
labor from overpopulated traditional agricultural sectors that are being shifted to the modern industrial
sector. The theory is quite observable to the Philippines because it is an agricultural country being
converted to an industrialized economy. Based on the Philippine Statistics Authority (PSA), in 2015, the
level of urbanization in the country reached 51.2%, which increases by 5.9% compared to last 2010.
Also, in 2015, the population in urban areas reaches 51,728,697, leading the population in rural areas
tallied by 49,250,606. Thus, the country is subject to the adaptation of the theory as it progresses its
economy by transferring the surplus labor from rural sectors to the urban or modern sectors. In support,
each year, the country has consistently improved its urban areas, inferring that it is spontaneously
diverging its agricultural form to industrialization.

An economy in which foreign trade transactions or other economic contacts with the rest of the world
are unobservable.

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