Read definitions first, follow the mechanism, then use the diagram and judgement. The rapid recap gives the essential relationship; the reference indexes locate the fuller explanation.
Purchasing power parity: A conversion that adjusts for differences in price levels, allowing comparisons of what income can buy.
Terms of trade: Export prices relative to import prices, normally expressed as an index; not the value of exports minus imports.
Competitiveness: Ability to compete relative to rivals through price, cost, quality or other product characteristics.
Flow and stock: Flows are measured over a period; stocks at a date. A fiscal deficit is a flow and public debt a stock.
Binding constraint: An obstacle whose removal would materially enable the activity or improvement being considered.
Pass-through: The extent to which a cost, tax or exchange-rate change appears in the price charged.
Absolute and relative measures: An absolute threshold concerns a specified real standard; a relative measure compares positions within a distribution.
Sustainability: Whether an outcome can be maintained, considering finance, productive resources, institutions and environmental effects.
How to use an economic claim
Identity: true by definition, such as TR = P × Q. It organises quantities but does not explain what caused them to change.
Model prediction: follows from stated assumptions. Identify the market structure, time horizon and what is held constant.
Contextual judgement: apply the mechanism to evidence, explain a condition that changes its strength, then reach a conclusion tied to the question.