Some important definitions

The law of diminishing marginal utility states that as a consumer consumes more units of a good the extra satisfaction or marginal utility derived from each additional unit consumed will eventually decline.

The law of diminishing marginal returns states that as more units of a variable factor of production are added to other (fixed) factors of production the returns to the variable factor will eventually fall.

Capital widening is a scenario where there is an increase in the capital stock in the economy but the capital/labour ratio (amount of capital per worker) remains unchanged. This is where capital increases and labour also increases in line with it.

Gross domestic product (GDP) is the total output produced (value of goods and services) by the factors of production in the domestic economy irrespective of whether the factors are owned by Irish nationals or foreign factors of production (MNCs, etc).

Gross national product (GNP) is the total output produced (value of goods and services) by Irish-owned factors of production in Ireland and elsewhere. This excludes any earnings by foreign factors of production in Ireland and it is the measure of the income accruing to a country’s residents.

Primary liquidity ratio/liquidity coverage ratio is the amount of money with respect to short-term deposits that the Central Bank of Ireland requires commercial banks to keep in cash form.

Net factor income from abroad (NFIA) is income earned by Irish factors of production abroad and sent home (repatriated) minus income earned by foreign factors of production in Ireland and sent back to their own country (repatriated). This is the difference between GDP and GNP.

Balanced regional development is when the Government identifies and targets regions which are disadvantaged or economically depressed and then implements policies which positively discriminate in favour of these regions.

Balance of payments on the current account refers to the difference between total exports and total imports. (Visible + invisible exports) – (visible + invisible imports)

Harmonised index of consumer prices (HICP) is an indicator of inflation and price stability for the ECB. It is a consumer price index (CPI) which is compiled according to a methodology that has been harmonised across EU countries.