sohomghosh/FinRAD_Financial_Readability_Assessment_Dataset

terms stringlengths 1 156	definitions stringlengths 3 4.2k	source stringclasses 15 values	assigned_readability int64 0 1	flesch_reading_ease float64 -301.79 121	flesch_kincaid_grade float64 -3.5 55.6	smog_index float64 0 26.5	coleman_liau_index float64 -33.81 51.4	automated_readability_index float64 -6.9 65	dale_chall_readability_score float64 0.1 35.3	linsear_write_formula float64 -0.5 73	gunning_fog float64 0.4 56
Average variable cost	Refer to cost, average variable. B	sam	1	-112.28	30.4	0	5.27	4.3	14.46	3	9.07
Balance of international payments	A statement showing all of a nation’s transactions with the rest of the world for a given period. It includes purchases and sales of goods and services, gifts, government transac-tions, and capital movements. Balance of trade. The part of a nation’s balance of payments that deals with imports or exports of goods, including such items as oil, capital goods, and automobiles. When services and other current items are included, this measures the balance on current account. In balance-of-payments accounting, nanced by the nancial account. Balance on current account. See balance of trade.	sam	1	14.93	18.8	14.6	13.53	19.4	9.79	6.25	15.32
Balance sheet	A statement of the financial position of an entity rm, government@ as of a given date, listing assets in one col-umn and liabilities plus net worth in the other. Each item is listed at its actual or estimated money value. Totals of the two columns must balance because net worth is ned as assets minus liabilities.	sam	1	27.11	14.1	12.5	8.82	9.7	10.2	12	11.77
Bank, commercial	Financial inter-mediary whose prime distinguishing feature is that it accepts checkable nancial institutions that hold savings and checkable deposits are called depository institutions. Bank money.	sam	1	-13.13	21.3	0	22.46	23.7	13.09	18.5	18
Money	created by banks, particularly the checking accounts @part of M 1 @ that are gen-erated by a multiple expansion of bank reserves.	sam	1	-0.61	18.6	0	11.14	13.3	13.7	16	17.92
Bank reserves	Refer to reserves, bank.	sam	1	-76.41	24.9	0	4.35	5.3	11.73	1	1.6
Barriers to entry	Factors that impede entry into a market and thereby reduce the amount of competition or the number of producers in an industry. Important examples are legal barriers, regulation, and product differentiation.	sam	1	4.98	16.4	0	14.79	13.2	11.54	11.75	15.23
Barter	The direct exchange of one good for another without using anything as money or as a medium of exchange.	sam	1	60.65	9.5	0	8.36	9.1	6.24	10.5	7.6
Benefit principle	@of taxation@. The principle that people should be taxed in proportion to the bene- ts they receive from government programs.	sam	1	42.72	12.3	0	12.01	13.5	10.16	14	14
Bond	cate issued by a government or corpo-ration, promising to repay a sum of money @the principal@ plus ed date in the future.	sam	1	32.22	14.2	0	8.01	11.2	11.19	14	10.62
Break-even point	(in macroeconom- ics). For an individual, family, or community, that level of income at which 100 percent is spent on con- sumption (i.e., the point where there is neither saving nor dis- saving). Positive saving begins at higher income levels.	sam	1	49.52	9.7	9.7	9.21	9.4	10.22	7	8.32
Capital capital goods, capital equipment	@1@ In economic theory, one of the triad of productive inputs @land, labor, and capital@. Capital consists of durable pro-duced items that are in turn used in production. @2@ In accounting nance, “capital” means the total amount of money subscribed by the shareholder-owners of a corporation, in return for which they receive shares of the compa-ny’s stock.	sam	1	34.09	15.6	0	11.9	17.7	11.7	19.75	16.31
Capital consumption allowance	See depreciation @of an asset@. Capital deepening. In economic-growth theory, an increase in the capital-labor ratio. @Contrast with capital widening. @	sam	1	-23.28	19	0	16.33	14.7	12.82	7.75	12
Capital gains	The rise in value of a capital asset, such as land or com-mon stocks, the gain being the difference between the sales price and the purchase price of the asset.	sam	1	49.49	13.8	0	7.85	14.2	8.28	17	12
Capital markets	@also financial mar-kets @. nancial resources @money, bonds, stocks@ are traded. These, along with nan-cial intermediaries, are institutions through which saving in the econ-omy is transferred to investors. Capital-output ratio. In economic-growth theory, the ratio of the total capital stock to annual GDP.	sam	1	-9.07	19.7	0	16.71	18.8	14.08	10.166667	14.11
Capital widening	A rate of growth in real capital stock just equal to the growth of the labor force @or of the population@, so the ratio between total capital and total labor remains unchanged. @Con-trast with capital deepening. @	sam	1	18.02	19.7	0	10.51	19.7	10.25	23.5	16.62
Capitalism	An economic system in which most property @land and cap-ital@ is privately owned. In such an economy, private markets are the primary vehicles used to allocate resources and generate incomes.	sam	1	30.87	12.7	0	12.29	11.5	12.28	12	16.67
Cardinal utility	See ordinal utility.	sam	1	-24.64	17.4	0	7.32	8.3	14.31	2.5	27.87
Cartel	An organization of indepen- rms producing similar prod-ucts that work together to raise prices and restrict output.	sam	1	28.84	13.5	0	15.19	14.5	13.77	13.5	16.21
Central bank	A government-established agency @in the United States	sam	1	55.91	7.2	0	17.35	13.7	8.5	3.5	8.51
Federal Reserve System	responsible for controlling the nation’s money supply and credit conditions and for supervising the nancial system, especially com-mercial banks and other deposi-tory institutions.	sam	1	-28.02	22.9	0	21.88	22.4	15.76	19.5	19.63
Change in demand vs change in quantity demanded	A change in the quantity buyers want to purchase, prompted by any reason other than a change in price @e.g., increase in income, change in tastes@, is a change in demand. In graphical terms, it is a shift of the demand curve. If, in contrast, the decision to buy more or less is prompted by a change in the good’s price, then it is a change in quantity demanded. In graphical terms, a change in quantity demanded is a movement along an unchanging demand curve.	sam	1	36.8	18.7	0	8.08	20.6	9.09	12.875	19.35
Change in supply vs change in quantity supplied	This distinction for supply is the same as that for demand, so see change in demand vs. change in quantity demanded. Checking accounts @ also checkable deposits and bank money@. A deposit in a commercial bank or nancial intermediary upon which checks can be written and which is therefore transactions money @or M 1 @. Checkable depos-its are about half of M 1 . Chicago School of	sam	1	13.62	19.3	0	10.75	17.7	10.16	6.9	16.55
Economics	A group of economists @among whom Henry Simons, F. A. von Hayek, and Milton Friedman have been the most prominent@ who believe that competitive markets free of government intervention cient oper-ation of the economy. Classical approach. See classical economics. Classical economics. The predomi-nant school of economic thought prior to the appearance of Keynes’s work; founded by Adam gures who followed Smith include David Ricardo, Thomas Malthus, and John Stuart Mill. By and large, this school believed that economic laws @particularly individual self- interest and competition@ determine prices and factor rewards and that the price system is the best possible device for resource allocation.	sam	1	2.82	21.4	19.3	15.56	22.9	13.16	14.6	20.32
Classical macroeconomics	See clas-sical theories.	sam	1	9.21	12.7	0	13.12	14.6	19.58	2.5	14.53
Classical theories	Theories emphasizing the self-correcting forces in the econ-omy. In the classical approach, there is generally full employ-ment, and policies to stimulate aggregate demand have no impact upon output.	sam	1	14.97	14.7	0	16.29	14.5	13.92	11.5	15.6
Clearing market	A market in which ciently exible to equilibrate supply and demand very quickly. In markets that clear, there is no rationing, unemployed resources, or excess demand or supply. In practice, this is thought to apply to many commodity and nancial markets but not to labor or many product markets.	sam	1	46.47	10.8	9.7	10.61	10.3	9.6	8.5	9.79
Closed economy	See open economy. Collective bargaining. The process of negotiations between a group of workers @usually a union@ and their employer. Such bargain-ing leads to an agreement about ts, and work-ing conditions.	sam	1	4.98	16.4	0	13.86	13.2	12.05	6.833333	15.23
Collusion	An agreement between rms to cooperate by raising prices, dividing mar-kets, or otherwise restraining competition.	sam	1	-19.9	19.8	0	18.84	17.2	14.91	12.5	16.67
Collusive oligopoly	A market struc-ture in which a small number rms @i.e., a few oligopolists@ collude and jointly make their sam11290_glo.indd 656sam11290_glo.indd 6562/24/09 2:58:31 PM2/24/09 2:58:31 PM 657decisions. When they succeed in ts, the price and quantity in the market closely approach those prevailing under monopoly.	sam	1	23.77	15.4	0	15.14	18.2	14.06	13.5	15.16
Command economy	A mode of eco-nomic organization in which the key economic functions— what, how, and for whom — are principally determined by government direc-tive. Sometimes called a centrally planned economy. Commodity money.	sam	1	-3.49	17.6	0	14.96	13.8	12.05	13.25	15.23
Common currency	A situation where several countries form a mone-tary union with a single currency ed central bank; e.g., the European Monetary Union @EMU@, which introduced the Euro in 1999.	sam	1	17.68	17.8	0	11.61	17.3	14.05	21	18.34
Common stock	Financial instru-ment representing ownership and, generally, voting rights in a corpo-ration. A certain share of a com-pany’s stock gives the owner title to that fraction of the votes, net earn-ings, and assets of the corporation.	sam	1	28.33	13.7	0	13.22	13.7	12.63	12.75	12.71
Communism	A communist eco-nomic system @also called Soviet-style central planning @ is one in which the state owns and controls the means of production, par-ticularly industrial capital. Such economies are also characterized by extensive central planning, with the state setting many prices, output levels, and other important economic variables. Comparative advantage @in interna-tional trade@ . The law of compar-ative advantage says that a nation should specialize in producing and exporting those commodi-ties which it can produce at rela-tively lower cost and that it should import those goods for which it is a relatively high-cost producer. Thus it is a comparative advantage, not an absolute advantage, that should dictate trade patterns. Compensating differentials. Differ-ences in wage rates among jobs that serve to offset or compensate for the nonmonetary differences of the jobs. For example, unpleas-ant jobs that require isolation for many months in Alaska pay wages much higher than those for simi-lar jobs nearer to civilization. Competition, imperfect. Term ap-plied to markets in which per-fect competition does not hold because at least one seller @or buyer@ is large enough to affect the market price and therefore faces a downward-sloping demand @or supply@ curve.	sam	1	-1.92	25.3	21.6	15.68	29.3	13.17	15	24.85
Imperfect competition	refers to any kind of market imperfection—pure monopoly, oligopoly, or monopo-listic competition.	sam	1	-59.15	24.5	0	21.45	18.3	13.44	11	18.13
Competition, perfect	Term applied rm or con-sumer is large enough to affect the market price. This situation arises where @1@ the number of sellers and buyers is very large and @2@ the products offered by sellers are homogeneous @or indistinguish-able@. Under such conditions, rm faces a horizontal @or perfectly elastic@ demand curve. Competitive equilibrium. The bal-ancing of supply and demand in a market or economy characterized by perfect competition. Because perfectly competitive sellers and buyers individually have no power uence the market, price will move to the point at which it equals both marginal cost and marginal utility. Competitive market. See competi-tion, perfect.	sam	1	3.43	21.2	17.9	14.52	21.8	11.09	14	19.42
Complements	Two goods which “go together” in the eyes of consumers @e.g., left shoes and right shoes@. Goods are substitutes when they compete with each other @as do gloves and mittens@. Compound interest.	sam	1	46.78	10.7	0	9.97	10.4	9.86	8.5	8.9
Constant returns to scale	See returns to scale.	sam	1	75.88	3.7	0	1.45	1.8	11.73	1	1.6
Consumer price index CPI	A price index that measures the cost of a xed basket of consumer goods in which the weight assigned to each commodity is the share of expen-ditures on that commodity in a base year. Consumer surplus. The difference between the amount that a con-sumer would be willing to pay for a commodity and the amount actu-ally paid. This difference arises because the marginal utilities @in dollar terms@ of all but the last unit exceed the price. Under certain conditions, the money value of consumer surplus can be measured @using a demand curve diagram@ as the area under the demand curve but above the price line.	sam	1	35.95	16.9	14.1	10.34	18.6	9.28	15.25	15.9
Consumption	In macroeconomics, the total spending, by individuals or a nation, on consumer goods during a given period. Strictly speaking, consumption should apply only to those goods totally used, enjoyed, or “eaten up” within that period. In practice, consump-tion expenditures include all consumer goods bought, many of which last well beyond the period in question—e.g., furniture, cloth-ing, and automobiles.	sam	1	26.51	14.4	14.1	15.32	16.2	11.13	13.333333	12.55
Core rate of inflation	ation after uence of vola-tile elements like food and energy prices. This concept is often used by ation targeting.	sam	1	61.83	7	0	9.65	7.4	11.59	5.25	10.12
Corporate income tax	A tax levied on the annual net income of a corporation.	sam	1	68.77	6.4	0	4.74	3.3	8.49	6.5	11.67
Corporation	The dominant form of business organization in modern capitalist economies. A corpora- rm owned by individu-als or other corporations. It has the same rights to buy, sell, and make contracts as a person would have. It is legally separate from those who own it and has limited liability.	sam	1	42.38	10.3	11.7	9.61	7.9	9.5	7.25	11.47
Correlation	The degree to which two variables are systematically associated with each other.	sam	1	25.46	12.7	0	14.72	11.7	9.5	7	11.47
Total cost	@refer to cost, total @ divided by the number of units produced.	sam	1	9.55	14.7	0	7.35	6.8	11.36	6	8.04
Fixed cost	@refer to xed @ divided by the num-ber of units produced.	sam	1	44.41	9.6	0	6.18	5.7	15.19	5.5	8
Variable	cost.@refer to cost, variable @ divided by the number of units produced.	sam	1	9.55	14.7	0	11.06	10.2	11.36	6	8.04
Cost, fixed	rm would incur even if its output for the period in question were zero. T xed cost is made up of such individual contractual costs as interest payments, mortgage pay-ments, and directors’ fees.	sam	1	37.81	12.1	0	9.86	9.8	12.11	10.75	12.66
Cost, marginal	The extra cost @or the increase in total cost@ required to produce 1 extra unit of output @or the reduction in total cost from producing 1 unit less@.	sam	1	59.98	11.8	0	7.43	13.2	10.1	16	14.06
Cost, minimum	The lowest attain-able cost per unit @whether aver-age, variable, or marginal@. Every point on an average cost curve is a minimum in the sense that it is the rm can do with respect to cost for the output which that point represents. Minimum aver-age cost is the lowest point, or points, on that curve.	sam	1	61.67	9.1	12.5	7.77	9.2	8.92	11.666667	10.16
Cost, total	The minimum attainable total cost, given a particular level of technology and set of input prices. Short-run total cost takes xed costs as given. Long-run total cost is the cost that would be incurred if the exibility with respect to all inputs and decisions.	sam	1	1.44	24	0	11.27	23.7	11.2	8.333333	23.05
Cost, variable	A cost that varies with the level of output, such as raw-material, labor, and fuel costs.	sam	1	55.24	9.5	0	7.42	8.4	9.36	8	8.9
Cost-push inflation	See supply-shock ation.	sam	1	34.59	9.2	0	11.15	13	14.31	0.5	1.2
Credit	@1@ In monetary theory, the use of someone else’s funds in exchange for a promise to pay @usually with interest@ at a later date. The major examples are short-term loans from a bank, credit extended by suppliers, and commercial paper. @2@ In balance-of-payments accounting, an item such as exports that earns a coun-try foreign currency.	sam	1	35.1	15.2	0	11.09	16.6	11.89	19.25	18.27
Cross elasticity of demand	A mea- uence of a change in one good’s price on the demand for another good. More precisely, the cross elasticity of demand equals the percentage change in demand for good A when the price of good B changes by 1 per-cent, assuming other variables are held constant.	sam	1	55.58	11.5	0	8.65	12	9.76	14.5	12.93
Currency	Coins and paper money.	sam	1	75.88	3.7	0	2.9	2.9	7.78	1	1.6
Current account	See balance of trade.	sam	1	75.88	3.7	0	1.45	1.8	7.78	1	1.6
Cyclical budget	See actual, cyclical, and structural budget. Cyclical unemployment. See fric-tional unemployment. D Deadweight loss. The loss in real income or consumer and pro-ducer surplus that arises because of monopoly, tariffs and quotas, taxes, or other distortions. For example, when a monopolist raises its price, the loss in con-sumer satisfaction is more than the gain in the monopolist’s rev-enue—the difference being the deadweight loss to society due to monopoly.	sam	1	-13.8	23.6	0	15.39	22.8	12.06	8.6	18.89
Debit	@1@ An accounting term signifying an increase in assets or decrease in liabilities. @2@ In balance-of-payments accounting, a debit is an item such as imports that reduces a country’s stock of foreign currencies. Decreasing returns to scale. See returns to scale.	sam	1	-3.99	24	0	13.48	24.6	13.37	8.166667	21.28
Deficit spending	Government’s expen-ditures on goods and services and transfer payments in excess of its receipts from taxation and other rev-enue sources. The difference must nanced by borrowing from the public.	sam	1	48.3	10.1	0	14.72	12.9	11.98	8.75	9.94
Deflating	@of economic data@. The process of converting “nominal” or current-dollar variables into “real” terms. This is accomplished by dividing current-dollar variables by a price index.	sam	1	24.95	12.9	0	15.94	13.8	11.2	5.5	13
Deflation	A fall in the general level of prices. Demand curve @ or demand sched-ule@. A schedule or curve show-ing the quantity of a good that buyers would purchase at each price, other things equal. Nor-mally a demand curve has price on sam11290_glo.indd 658sam11290_glo.indd 6582/24/09 2:58:31 PM2/24/09 2:58:31 PM 659the vertical or Y axis and quantity demanded on the horizontal or X axis. Also see change in demand vs. change in quantity demanded.	sam	1	22.04	16.1	13	11.38	15	11.48	8	12.86
Demand for money	A summary term used by economists to explain why individuals and businesses hold money balances. The major moti-vations for holding money are @1@ transactions demand, signifying that people need money to pur-chase things, and @2@ asset demand, relating to the desire to hold a very liquid, risk-free asset. Demand-pull inflation. a-tion caused by an excess demand for goods in general, caused, e.g., by a major increase in aggregate demand. Often contrasted with ation.	sam	1	12.97	17.5	15	12.71	16.4	11.11	12.375	15.2
Demography	The study of the behav-ior of a population.	sam	1	63.36	6.4	0	5	3.8	9.95	5	8.2
Depression	A prolonged period characterized by high unemploy-ment, low output and investment, dence, falling prices, and widespread business failures. A milder form of business downturn is a recession, which has many of the features of a depression to a lesser extent.	sam	1	34.26	13.5	0	13.17	14.2	12.13	13	14
Derived demand	The demand for a factor of production that results @is “derived”@ from the demand nal good to which it con-tributes. Thus the demand for tires is derived from the demand for automobile transportation.	sam	1	63.19	8.5	0	11.08	10.8	9.72	10.25	9.02
Developing country	A country with a per capita income far below that of “developed” nations @the latter usu-ally includes most nations of North America and Western Europe@. Same as less developed country. Differentiated products. Products which compete with each other and are close substitutes but are not identical. Differences may be manifest in the product’s func-tion, appearance, location, quality, or other attributes. Diminishing marginal utility, law of. The law which says that as more and more of any one com-modity is consumed, its marginal utility declines.	sam	1	9.22	18.9	17.5	14.1	18.8	10.85	10.166667	17.87
Diminishing returns, law of	A law stating that the additional out-put from successive increases of one input will eventually dimin-ish when other inputs are held constant. Technically, the law is equivalent to saying that the mar-ginal product of the varying input declines after a point. Direct taxes. Taxes levied directly rms, including taxes on income, labor earnings, ts. Direct taxes contrast with indirect taxes, which are levied on goods and services and thus only indirectly on people, such as sales taxes and taxes on property, alcohol, imports, and gasoline.	sam	1	17.37	17.9	15.5	13.06	18.1	11.54	14.125	16.97
Discount rate	@1@ The interest rate charged by a Federal Reserve Bank @the central bank@ on a loan that it makes to a commercial bank. @2@ The rate used to calculate the present value of some asset.	sam	1	61.33	13.4	0	6.86	16.3	10.34	21.5	18.57
Discounting	@of future income@. The process of converting future income into an equivalent pres-ent value. This process takes a future dollar amount and reduces ects the appropriate interest rate. For example, if someone promises you $121 in 2 years, and the appropri-ate interest rate or discount rate is 10 percent per year, then we can calculate the present value by dis-counting the $121 by a discount factor of @1.10@ 2 . The rate at which future incomes are discounted is called the discount rate.	sam	1	50.67	11.3	12.2	10.39	12.3	10.24	10.3	12.1
Discrimination	Differences in earn-ings that arise because of personal characteristics that are unrelated to job performance, especially those related to gender, race, ethnicity, sexual orientation, or religion.	sam	1	-22.6	22.9	0	19.61	22.6	12.82	24	27.32
Disequilibrium	The state in which an economy is not in equilibrium. This may arise when shocks @to income or prices@ have shifted demand or supply schedules but the market price @or quantity@ has not yet adjusted fully. In mac-roeconomics, unemployment is often thought to stem from mar-ket disequilibria.	sam	1	39.16	13.6	0	11.9	14.8	10.18	10.166667	15.36
Disinflation	The process of reducing ation rate. For example, the deep recession of 1980–1983 ation over that period. Disposable income @ DI @. Roughly, take-home pay, or that part of the total national income that is avail-able to households for consump-tion or saving. More precisely, it is equal to GDP less all taxes, busi-ness saving, and depreciation plus government and other transfer payments and government inter-est payments. sam11290_glo.indd 659sam11290_glo.indd 6592/24/09 2:58:31 PM2/24/09 2:58:31 PM660	sam	1	13.58	17.3	14.6	15.84	19	13.71	8.7	15.11
Economic efficiency	See effciency.	sam	1	-49	20.6	0	4.2	10.2	11.63	1	20.8
Economic good	A good that is scarce relative to the total amount of it that is desired. It must therefore be rationed, usually by charging a positive price. Economic growth. An increase in the total output of a nation over time. Economic growth is usually measured as the annual rate of increase in a nation’s real GDP @or real potential	sam	1	43.43	12	12.5	8.7	9.9	9.77	8.25	11.86
Economic regulation	See regulation.	sam	1	-49	20.6	0	7.1	12.5	11.63	1	20.8
Economic rent	Refer to rent, eco-nomic.	sam	1	-93.33	27.3	0	4.35	6.5	15.68	2	1.6
Economic surplus	A term denoting the excess in total satisfaction or utility over the costs of production; equals the sum of consumer surplus @the excess of consumer satisfac-tion over total value of purchases@ and producer surplus @the excess of producer revenues over costs@.	sam	1	21.4	20.5	0	13.77	24.4	11.45	28.5	23.23
Economies of scale	Increases in pro-ductivity, or decreases in average cost of production, that arise from increasing all the factors of pro-duction in the same proportion.	sam	1	14.29	17	0	14.8	16.9	11.64	19.5	21.37
Effective tax rate	Total taxes paid as a percentage of the total income or other tax base; also known as average tax rate.	sam	1	51.18	11.1	0	6.5	8.4	7.79	12	12
Efficiency	Absence of waste, or the use of economic resources that produces the maximum level of satisfaction possible with the given inputs and technology. A shorthand expression for Pareto ef ciency. Disposable personal income. Same as disposable income.	sam	1	-6.53	18.8	0	14.68	14.4	10.96	5.875	14.97
Dissaving	Negative saving; spending more on consumption goods dur-ing a period than the disposable income available for that period nanced by borrowing or drawing on past savings@.	sam	1	28.17	15.8	0	14.45	17.9	11.61	19	18.09
Distribution	In economics, the man-ner in which total output and income is distributed among indi-viduals or factors @e.g., the distri-bution of income between labor and capital@.	sam	1	12.26	17.8	0	13.64	17.8	13.09	17.5	14.8
Dominant equilibrium	See dominant strategy.	sam	1	-24.64	17.4	0	11.15	11.5	14.31	2.5	27.87
Dominant strategy	In game theory, a situation where one player has a best strategy no matter what strat-egy the other player follows. When all players have a dominant strat-egy, we say that the outcome is a dominant equilibrium. Downward-sloping demand, law of. The rule which says that when the price of some commod-ity falls, consumers will purchase more of that good, other things held equal.	sam	1	22.58	17.9	0	11.09	17.9	10.21	10.375	15.77
Duopoly	A market structure in which there are only two sellers. @Compare with oligopoly. @ E	sam	1	23.43	13.5	0	9.45	9.1	8.84	7.5	8.46
Econometrics	The branch of econom-ics that uses the methods of statistics to measure and estimate quantita-tive economic relationships.	sam	1	20.38	14.6	0	17.57	16.5	13.77	14.5	18.56
Efficient financial market	Financial market displaying the charac-teristics of an ef cient market.	sam	1	19.03	13.1	0	16.04	12.8	13.61	7	16
Efficient market	efficient-market theory@. A market or theory in which all new information is quickly absorbed by market par-ticipants and becomes immedi-ately incorporated into market cient-market theory holds that all cur-rently available information is already incorporated into the price of common stocks @or other assets@.	sam	1	-22.94	27.1	0	18.41	29.4	12.38	33.5	22.78
Elasticity	A term widely used in eco-nomics to denote the responsive-ness of one variable to changes in another. Thus the elasticity of X with respect to Y means the percentage change in X for every 1 percent change in Y . For espe-cially important examples, see price elasticity of demand and price elasticity of supply.	sam	1	36.59	12.6	13.6	9.8	10.2	10.77	12.333333	10.1
Employed	persons are employed if they perform any paid work or if they hold jobs but are absent because of illness, strike, or vacations.	sam	1	48.13	12.3	0	9	11.8	9.58	12.5	10.94
Equal-cost line	A line in a graph showing the various possible com-binations of factor inputs that can be purchased with a given quantity of money.	sam	1	39.67	13.4	0	9.99	12.4	10.96	15.5	14.42
Equal-product curve	or isoquant@. A line in a graph showing the vari-ous possible combinations of fac-tor inputs which will yield a given quantity of output.	sam	1	31.21	14.6	0	10.74	13.6	13.02	15.5	12.68
Equation of exchange	A definitional equation which states that MVP PQ, or the money stock times veloc-ity of money equals the price level times output. This equation forms the core of monetarism.	sam	1	48.3	10.1	0	10.55	9.5	10.89	7.75	8.56
Exchange rate	See foreign exchange rate. Exchange-rate system. The set of rules, arrangements, and institu-tions under which payments are made among nations. Historically, the most important exchange-rate systems have been the gold exchange standard, the Bretton Woods system, and today’ exible-exchange-rate system.	sam	1	-8.05	19.3	0	18.85	19.6	10.16	8	12
Excise tax vs sales tax	An excise tax is one levied on the purchase c commodity or group of commodities @e.g., alcohol or tobacco@. A sales tax is one levied on all commodities with only a few c exclusions @e.g., all pur-chases except food@.	sam	1	43.22	12.1	0	7.43	9.9	9.87	13.25	11.9
Exclusion principle	A criterion by which public goods are distin-guished from private goods. When a producer sells a commodity to person A and can easily exclude B, C, D, etc., from enjoying the ben- ts of the commodity, the exclu-sion principle holds and the good is a private good. If, as in public health or national defense, people cannot easily be excluded from ts of the good’s production, then the good has public-good characteristics. Exogenous vs. induced variables. Exogenous variables are those determined by conditions outside the economy. They are contrasted with induced variables, which are determined by the internal work-ings of the economic system. Changes in the weather are exog-enous; changes in consumption are often induced by changes in income.	sam	1	30.4	14.9	16.2	12.48	15.4	10.26	12.166667	15.57
Expectations	Views or beliefs about uncertain variables @such as future interest rates, prices, or tax rates@.	sam	1	64.71	8	0	12.29	12.1	12.8	8.5	11.33
Equilibrium	The state in which an economic entity is at rest or in which the forces operating on the entity are in balance so that there is no tendency for change.	sam	1	57.95	12.6	0	6.69	12.7	8.28	20	17.33
Equimarginal principle	A principle for deciding the allocation of income among different consump-tion goods. Under this principle, a consumer’s utility is maximized by choosing the consumption information.	sam	1	16.49	14.1	0	17.56	14.6	11.2	11.25	16.2

Average variable cost

Refer to cost, average variable. B

sam

1

-112.28

30.4

0

5.27

4.3

14.46

3

9.07

Balance of international payments

A statement showing all of a nation’s transactions with the rest of the world for a given period. It includes purchases and sales of goods and services, gifts, government transac-tions, and capital movements. Balance of trade. The part of a nation’s balance of payments that deals with imports or exports of goods, including such items as oil, capital goods, and automobiles. When services and other current items are included, this measures the balance on current account. In balance-of-payments accounting, nanced by the nancial account. Balance on current account. See balance of trade.

sam

1

14.93

18.8

14.6

13.53

19.4

9.79

6.25

15.32

Balance sheet

A statement of the financial position of an entity rm, government@ as of a given date, listing assets in one col-umn and liabilities plus net worth in the other. Each item is listed at its actual or estimated money value. Totals of the two columns must balance because net worth is ned as assets minus liabilities.

sam

1

27.11

14.1

12.5

8.82

9.7

10.2

12

11.77

Bank, commercial

Financial inter-mediary whose prime distinguishing feature is that it accepts checkable nancial institutions that hold savings and checkable deposits are called depository institutions. Bank money.

sam

1

-13.13

21.3

0

22.46

23.7

13.09

18.5

18

Money

created by banks, particularly the checking accounts @part of M 1 @ that are gen-erated by a multiple expansion of bank reserves.

sam

1

-0.61

18.6

0

11.14

13.3

13.7

16

17.92

Bank reserves

Refer to reserves, bank.

sam

1

-76.41

24.9

0

4.35

5.3

11.73

1

1.6

Barriers to entry

Factors that impede entry into a market and thereby reduce the amount of competition or the number of producers in an industry. Important examples are legal barriers, regulation, and product differentiation.

sam

1

4.98

16.4

0

14.79

13.2

11.54

11.75

15.23

Barter

The direct exchange of one good for another without using anything as money or as a medium of exchange.

sam

1

60.65

9.5

0

8.36

9.1

6.24

10.5

7.6

Benefit principle

@of taxation@. The principle that people should be taxed in proportion to the bene- ts they receive from government programs.

sam

1

42.72

12.3

0

12.01

13.5

10.16

14

Bond

cate issued by a government or corpo-ration, promising to repay a sum of money @the principal@ plus ed date in the future.

sam

1

32.22

14.2

0

8.01

11.2

11.19

14

10.62

Break-even point

(in macroeconom- ics). For an individual, family, or community, that level of income at which 100 percent is spent on con- sumption (i.e., the point where there is neither saving nor dis- saving). Positive saving begins at higher income levels.

sam

1

49.52

9.7

9.21

9.4

10.22

7

8.32

Capital capital goods, capital equipment

@1@ In economic theory, one of the triad of productive inputs @land, labor, and capital@. Capital consists of durable pro-duced items that are in turn used in production. @2@ In accounting nance, “capital” means the total amount of money subscribed by the shareholder-owners of a corporation, in return for which they receive shares of the compa-ny’s stock.

sam

1

34.09

15.6

0

11.9

17.7

11.7

19.75

16.31

Capital consumption allowance

See depreciation @of an asset@. Capital deepening. In economic-growth theory, an increase in the capital-labor ratio. @Contrast with capital widening. @

sam

1

-23.28

19

0

16.33

14.7

12.82

7.75

12

Capital gains

The rise in value of a capital asset, such as land or com-mon stocks, the gain being the difference between the sales price and the purchase price of the asset.

sam

1

49.49

13.8

0

7.85

14.2

8.28

17

12

Capital markets

@also financial mar-kets @. nancial resources @money, bonds, stocks@ are traded. These, along with nan-cial intermediaries, are institutions through which saving in the econ-omy is transferred to investors. Capital-output ratio. In economic-growth theory, the ratio of the total capital stock to annual GDP.

sam

1

-9.07

19.7

0

16.71

18.8

14.08

10.166667

14.11

Capital widening

A rate of growth in real capital stock just equal to the growth of the labor force @or of the population@, so the ratio between total capital and total labor remains unchanged. @Con-trast with capital deepening. @

sam

1

18.02

19.7

0

10.51

19.7

10.25

23.5

16.62

Capitalism

An economic system in which most property @land and cap-ital@ is privately owned. In such an economy, private markets are the primary vehicles used to allocate resources and generate incomes.

sam

1

30.87

12.7

0

12.29

11.5

12.28

12

16.67

Cardinal utility

See ordinal utility.

sam

1

-24.64

17.4

0

7.32

8.3

14.31

2.5

27.87

Cartel

An organization of indepen- rms producing similar prod-ucts that work together to raise prices and restrict output.

sam

1

28.84

13.5

0

15.19

14.5

13.77

13.5

16.21

Central bank

A government-established agency @in the United States

sam

1

55.91

7.2

0

17.35

13.7

8.5

3.5

8.51

Federal Reserve System

responsible for controlling the nation’s money supply and credit conditions and for supervising the nancial system, especially com-mercial banks and other deposi-tory institutions.

sam

1

-28.02

22.9

0

21.88

22.4

15.76

19.5

19.63

Change in demand vs change in quantity demanded

A change in the quantity buyers want to purchase, prompted by any reason other than a change in price @e.g., increase in income, change in tastes@, is a change in demand. In graphical terms, it is a shift of the demand curve. If, in contrast, the decision to buy more or less is prompted by a change in the good’s price, then it is a change in quantity demanded. In graphical terms, a change in quantity demanded is a movement along an unchanging demand curve.

sam

1

36.8

18.7

0

8.08

20.6

9.09

12.875

19.35

Change in supply vs change in quantity supplied

This distinction for supply is the same as that for demand, so see change in demand vs. change in quantity demanded. Checking accounts @ also checkable deposits and bank money@. A deposit in a commercial bank or nancial intermediary upon which checks can be written and which is therefore transactions money @or M 1 @. Checkable depos-its are about half of M 1 . Chicago School of

sam

1

13.62

19.3

0

10.75

17.7

10.16

6.9

16.55

Economics

A group of economists @among whom Henry Simons, F. A. von Hayek, and Milton Friedman have been the most prominent@ who believe that competitive markets free of government intervention cient oper-ation of the economy. Classical approach. See classical economics. Classical economics. The predomi-nant school of economic thought prior to the appearance of Keynes’s work; founded by Adam gures who followed Smith include David Ricardo, Thomas Malthus, and John Stuart Mill. By and large, this school believed that economic laws @particularly individual self- interest and competition@ determine prices and factor rewards and that the price system is the best possible device for resource allocation.

sam

1

2.82

21.4

19.3

15.56

22.9

13.16

14.6

20.32

Classical macroeconomics

See clas-sical theories.

sam

1

9.21

12.7

0

13.12

14.6

19.58

2.5

14.53

Classical theories

Theories emphasizing the self-correcting forces in the econ-omy. In the classical approach, there is generally full employ-ment, and policies to stimulate aggregate demand have no impact upon output.

sam

1

14.97

14.7

0

16.29

14.5

13.92

11.5

15.6

Clearing market

A market in which ciently exible to equilibrate supply and demand very quickly. In markets that clear, there is no rationing, unemployed resources, or excess demand or supply. In practice, this is thought to apply to many commodity and nancial markets but not to labor or many product markets.

sam

1

46.47

10.8

9.7

10.61

10.3

9.6

8.5

9.79

Closed economy

See open economy. Collective bargaining. The process of negotiations between a group of workers @usually a union@ and their employer. Such bargain-ing leads to an agreement about ts, and work-ing conditions.

sam

1

4.98

16.4

0

13.86

13.2

12.05

6.833333

15.23

Collusion

An agreement between rms to cooperate by raising prices, dividing mar-kets, or otherwise restraining competition.

sam

1

-19.9

19.8

0

18.84

17.2

14.91

12.5

16.67

Collusive oligopoly

A market struc-ture in which a small number rms @i.e., a few oligopolists@ collude and jointly make their sam11290_glo.indd 656sam11290_glo.indd 6562/24/09 2:58:31 PM2/24/09 2:58:31 PM 657decisions. When they succeed in ts, the price and quantity in the market closely approach those prevailing under monopoly.

sam

1

23.77

15.4

0

15.14

18.2

14.06

13.5

15.16

Command economy

A mode of eco-nomic organization in which the key economic functions— what, how, and for whom — are principally determined by government direc-tive. Sometimes called a centrally planned economy. Commodity money.

sam

1

-3.49

17.6

0

14.96

13.8

12.05

13.25

15.23

Common currency

A situation where several countries form a mone-tary union with a single currency ed central bank; e.g., the European Monetary Union @EMU@, which introduced the Euro in 1999.

sam

1

17.68

17.8

0

11.61

17.3

14.05

21

18.34

Common stock

Financial instru-ment representing ownership and, generally, voting rights in a corpo-ration. A certain share of a com-pany’s stock gives the owner title to that fraction of the votes, net earn-ings, and assets of the corporation.

sam

1

28.33

13.7

0

13.22

13.7

12.63

12.75

12.71

Communism

A communist eco-nomic system @also called Soviet-style central planning @ is one in which the state owns and controls the means of production, par-ticularly industrial capital. Such economies are also characterized by extensive central planning, with the state setting many prices, output levels, and other important economic variables. Comparative advantage @in interna-tional trade@ . The law of compar-ative advantage says that a nation should specialize in producing and exporting those commodi-ties which it can produce at rela-tively lower cost and that it should import those goods for which it is a relatively high-cost producer. Thus it is a comparative advantage, not an absolute advantage, that should dictate trade patterns. Compensating differentials. Differ-ences in wage rates among jobs that serve to offset or compensate for the nonmonetary differences of the jobs. For example, unpleas-ant jobs that require isolation for many months in Alaska pay wages much higher than those for simi-lar jobs nearer to civilization. Competition, imperfect. Term ap-plied to markets in which per-fect competition does not hold because at least one seller @or buyer@ is large enough to affect the market price and therefore faces a downward-sloping demand @or supply@ curve.

sam

1

-1.92

25.3

21.6

15.68

29.3

13.17

15

24.85

Imperfect competition

refers to any kind of market imperfection—pure monopoly, oligopoly, or monopo-listic competition.

sam

1

-59.15

24.5

0

21.45

18.3

13.44

11

18.13

Competition, perfect

Term applied rm or con-sumer is large enough to affect the market price. This situation arises where @1@ the number of sellers and buyers is very large and @2@ the products offered by sellers are homogeneous @or indistinguish-able@. Under such conditions, rm faces a horizontal @or perfectly elastic@ demand curve. Competitive equilibrium. The bal-ancing of supply and demand in a market or economy characterized by perfect competition. Because perfectly competitive sellers and buyers individually have no power uence the market, price will move to the point at which it equals both marginal cost and marginal utility. Competitive market. See competi-tion, perfect.

sam

1

3.43

21.2

17.9

14.52

21.8

11.09

14

19.42

Complements

Two goods which “go together” in the eyes of consumers @e.g., left shoes and right shoes@. Goods are substitutes when they compete with each other @as do gloves and mittens@. Compound interest.

sam

1

46.78

10.7

0

9.97

10.4

9.86

8.5

8.9

Constant returns to scale

See returns to scale.

sam

1

75.88

3.7

0

1.45

1.8

11.73

1

1.6

Consumer price index CPI

A price index that measures the cost of a xed basket of consumer goods in which the weight assigned to each commodity is the share of expen-ditures on that commodity in a base year. Consumer surplus. The difference between the amount that a con-sumer would be willing to pay for a commodity and the amount actu-ally paid. This difference arises because the marginal utilities @in dollar terms@ of all but the last unit exceed the price. Under certain conditions, the money value of consumer surplus can be measured @using a demand curve diagram@ as the area under the demand curve but above the price line.

sam

1

35.95

16.9

14.1

10.34

18.6

9.28

15.25

15.9

Consumption

In macroeconomics, the total spending, by individuals or a nation, on consumer goods during a given period. Strictly speaking, consumption should apply only to those goods totally used, enjoyed, or “eaten up” within that period. In practice, consump-tion expenditures include all consumer goods bought, many of which last well beyond the period in question—e.g., furniture, cloth-ing, and automobiles.

sam

1

26.51

14.4

14.1

15.32

16.2

11.13

13.333333

12.55

Core rate of inflation

ation after uence of vola-tile elements like food and energy prices. This concept is often used by ation targeting.

sam

1

61.83

7

0

9.65

7.4

11.59

5.25

10.12

Corporate income tax

A tax levied on the annual net income of a corporation.

sam

1

68.77

6.4

0

4.74

3.3

8.49

6.5

11.67

Corporation

The dominant form of business organization in modern capitalist economies. A corpora- rm owned by individu-als or other corporations. It has the same rights to buy, sell, and make contracts as a person would have. It is legally separate from those who own it and has limited liability.

sam

1

42.38

10.3

11.7

9.61

7.9

9.5

7.25

11.47

Correlation

The degree to which two variables are systematically associated with each other.

sam

1

25.46

12.7

0

14.72

11.7

9.5

7

11.47

Total cost

@refer to cost, total @ divided by the number of units produced.

sam

1

9.55

14.7

0

7.35

6.8

11.36

6

8.04

Fixed cost

@refer to xed @ divided by the num-ber of units produced.

sam

1

44.41

9.6

0

6.18

5.7

15.19

5.5

8

Variable

cost.@refer to cost, variable @ divided by the number of units produced.

sam

1

9.55

14.7

0

11.06

10.2

11.36

6

8.04

Cost, fixed

rm would incur even if its output for the period in question were zero. T xed cost is made up of such individual contractual costs as interest payments, mortgage pay-ments, and directors’ fees.

sam

1

37.81

12.1

0

9.86

9.8

12.11

10.75

12.66

Cost, marginal

The extra cost @or the increase in total cost@ required to produce 1 extra unit of output @or the reduction in total cost from producing 1 unit less@.

sam

1

59.98

11.8

0

7.43

13.2

10.1

16

14.06

Cost, minimum

The lowest attain-able cost per unit @whether aver-age, variable, or marginal@. Every point on an average cost curve is a minimum in the sense that it is the rm can do with respect to cost for the output which that point represents. Minimum aver-age cost is the lowest point, or points, on that curve.

sam

1

61.67

9.1

12.5

7.77

9.2

8.92

11.666667

10.16

Cost, total

The minimum attainable total cost, given a particular level of technology and set of input prices. Short-run total cost takes xed costs as given. Long-run total cost is the cost that would be incurred if the exibility with respect to all inputs and decisions.

sam

1

1.44

24

0

11.27

23.7

11.2

8.333333

23.05

Cost, variable

A cost that varies with the level of output, such as raw-material, labor, and fuel costs.

sam

1

55.24

9.5

0

7.42

8.4

9.36

8

8.9

Cost-push inflation

See supply-shock ation.

sam

1

34.59

9.2

0

11.15

13

14.31

0.5

1.2

Credit

@1@ In monetary theory, the use of someone else’s funds in exchange for a promise to pay @usually with interest@ at a later date. The major examples are short-term loans from a bank, credit extended by suppliers, and commercial paper. @2@ In balance-of-payments accounting, an item such as exports that earns a coun-try foreign currency.

sam

1

35.1

15.2

0

11.09

16.6

11.89

19.25

18.27

Cross elasticity of demand

A mea- uence of a change in one good’s price on the demand for another good. More precisely, the cross elasticity of demand equals the percentage change in demand for good A when the price of good B changes by 1 per-cent, assuming other variables are held constant.

sam

1

55.58

11.5

0

8.65

12

9.76

14.5

12.93

Currency

Coins and paper money.

sam

1

75.88

3.7

0

2.9

7.78

1

1.6

Current account

See balance of trade.

sam

1

75.88

3.7

0

1.45

1.8

7.78

1

1.6

Cyclical budget

See actual, cyclical, and structural budget. Cyclical unemployment. See fric-tional unemployment. D Deadweight loss. The loss in real income or consumer and pro-ducer surplus that arises because of monopoly, tariffs and quotas, taxes, or other distortions. For example, when a monopolist raises its price, the loss in con-sumer satisfaction is more than the gain in the monopolist’s rev-enue—the difference being the deadweight loss to society due to monopoly.

sam

1

-13.8

23.6

0

15.39

22.8

12.06

8.6

18.89

Debit

@1@ An accounting term signifying an increase in assets or decrease in liabilities. @2@ In balance-of-payments accounting, a debit is an item such as imports that reduces a country’s stock of foreign currencies. Decreasing returns to scale. See returns to scale.

sam

1

-3.99

24

0

13.48

24.6

13.37

8.166667

21.28

Deficit spending

Government’s expen-ditures on goods and services and transfer payments in excess of its receipts from taxation and other rev-enue sources. The difference must nanced by borrowing from the public.

sam

1

48.3

10.1

0

14.72

12.9

11.98

8.75

9.94

Deflating

@of economic data@. The process of converting “nominal” or current-dollar variables into “real” terms. This is accomplished by dividing current-dollar variables by a price index.

sam

1

24.95

12.9

0

15.94

13.8

11.2

5.5

13

Deflation

A fall in the general level of prices. Demand curve @ or demand sched-ule@. A schedule or curve show-ing the quantity of a good that buyers would purchase at each price, other things equal. Nor-mally a demand curve has price on sam11290_glo.indd 658sam11290_glo.indd 6582/24/09 2:58:31 PM2/24/09 2:58:31 PM 659the vertical or Y axis and quantity demanded on the horizontal or X axis. Also see change in demand vs. change in quantity demanded.

sam

1

22.04

16.1

13

11.38

15

11.48

8

12.86

Demand for money

A summary term used by economists to explain why individuals and businesses hold money balances. The major moti-vations for holding money are @1@ transactions demand, signifying that people need money to pur-chase things, and @2@ asset demand, relating to the desire to hold a very liquid, risk-free asset. Demand-pull inflation. a-tion caused by an excess demand for goods in general, caused, e.g., by a major increase in aggregate demand. Often contrasted with ation.

sam

1

12.97

17.5

15

12.71

16.4

11.11

12.375

15.2

Demography

The study of the behav-ior of a population.

sam

1

63.36

6.4

0

5

3.8

9.95

5

8.2

Depression

A prolonged period characterized by high unemploy-ment, low output and investment, dence, falling prices, and widespread business failures. A milder form of business downturn is a recession, which has many of the features of a depression to a lesser extent.

sam

1

34.26

13.5

0

13.17

14.2

12.13

13

14

Derived demand

The demand for a factor of production that results @is “derived”@ from the demand nal good to which it con-tributes. Thus the demand for tires is derived from the demand for automobile transportation.

sam

1

63.19

8.5

0

11.08

10.8

9.72

10.25

9.02

Developing country

A country with a per capita income far below that of “developed” nations @the latter usu-ally includes most nations of North America and Western Europe@. Same as less developed country. Differentiated products. Products which compete with each other and are close substitutes but are not identical. Differences may be manifest in the product’s func-tion, appearance, location, quality, or other attributes. Diminishing marginal utility, law of. The law which says that as more and more of any one com-modity is consumed, its marginal utility declines.

sam

1

9.22

18.9

17.5

14.1

18.8

10.85

10.166667

17.87

Diminishing returns, law of

A law stating that the additional out-put from successive increases of one input will eventually dimin-ish when other inputs are held constant. Technically, the law is equivalent to saying that the mar-ginal product of the varying input declines after a point. Direct taxes. Taxes levied directly rms, including taxes on income, labor earnings, ts. Direct taxes contrast with indirect taxes, which are levied on goods and services and thus only indirectly on people, such as sales taxes and taxes on property, alcohol, imports, and gasoline.

sam

1

17.37

17.9

15.5

13.06

18.1

11.54

14.125

16.97

Discount rate

@1@ The interest rate charged by a Federal Reserve Bank @the central bank@ on a loan that it makes to a commercial bank. @2@ The rate used to calculate the present value of some asset.

sam

1

61.33

13.4

0

6.86

16.3

10.34

21.5

18.57

Discounting

@of future income@. The process of converting future income into an equivalent pres-ent value. This process takes a future dollar amount and reduces ects the appropriate interest rate. For example, if someone promises you $121 in 2 years, and the appropri-ate interest rate or discount rate is 10 percent per year, then we can calculate the present value by dis-counting the $121 by a discount factor of @1.10@ 2 . The rate at which future incomes are discounted is called the discount rate.

sam

1

50.67

11.3

12.2

10.39

12.3

10.24

10.3

12.1

Discrimination

Differences in earn-ings that arise because of personal characteristics that are unrelated to job performance, especially those related to gender, race, ethnicity, sexual orientation, or religion.

sam

1

-22.6

22.9

0

19.61

22.6

12.82

24

27.32

Disequilibrium

The state in which an economy is not in equilibrium. This may arise when shocks @to income or prices@ have shifted demand or supply schedules but the market price @or quantity@ has not yet adjusted fully. In mac-roeconomics, unemployment is often thought to stem from mar-ket disequilibria.

sam

1

39.16

13.6

0

11.9

14.8

10.18

10.166667

15.36

Disinflation

The process of reducing ation rate. For example, the deep recession of 1980–1983 ation over that period. Disposable income @ DI @. Roughly, take-home pay, or that part of the total national income that is avail-able to households for consump-tion or saving. More precisely, it is equal to GDP less all taxes, busi-ness saving, and depreciation plus government and other transfer payments and government inter-est payments. sam11290_glo.indd 659sam11290_glo.indd 6592/24/09 2:58:31 PM2/24/09 2:58:31 PM660

sam

1

13.58

17.3

14.6

15.84

19

13.71

8.7

15.11

Economic efficiency

See effciency.

sam

1

-49

20.6

0

4.2

10.2

11.63

1

20.8

Economic good

A good that is scarce relative to the total amount of it that is desired. It must therefore be rationed, usually by charging a positive price. Economic growth. An increase in the total output of a nation over time. Economic growth is usually measured as the annual rate of increase in a nation’s real GDP @or real potential

sam

1

43.43

12

12.5

8.7

9.9

9.77

8.25

11.86

Economic regulation

See regulation.

sam

1

-49

20.6

0

7.1

12.5

11.63

1

20.8

Economic rent

Refer to rent, eco-nomic.

sam

1

-93.33

27.3

0

4.35

6.5

15.68

2

1.6

Economic surplus

A term denoting the excess in total satisfaction or utility over the costs of production; equals the sum of consumer surplus @the excess of consumer satisfac-tion over total value of purchases@ and producer surplus @the excess of producer revenues over costs@.

sam

1

21.4

20.5

0

13.77

24.4

11.45

28.5

23.23

Economies of scale

Increases in pro-ductivity, or decreases in average cost of production, that arise from increasing all the factors of pro-duction in the same proportion.

sam

1

14.29

17

0

14.8

16.9

11.64

19.5

21.37

Effective tax rate

Total taxes paid as a percentage of the total income or other tax base; also known as average tax rate.

sam

1

51.18

11.1

0

6.5

8.4

7.79

12

Efficiency

Absence of waste, or the use of economic resources that produces the maximum level of satisfaction possible with the given inputs and technology. A shorthand expression for Pareto ef ciency. Disposable personal income. Same as disposable income.

sam

1

-6.53

18.8

0

14.68

14.4

10.96

5.875

14.97

Dissaving

Negative saving; spending more on consumption goods dur-ing a period than the disposable income available for that period nanced by borrowing or drawing on past savings@.

sam

1

28.17

15.8

0

14.45

17.9

11.61

19

18.09

Distribution

In economics, the man-ner in which total output and income is distributed among indi-viduals or factors @e.g., the distri-bution of income between labor and capital@.

sam

1

12.26

17.8

0

13.64

17.8

13.09

17.5

14.8

Dominant equilibrium

See dominant strategy.

sam

1

-24.64

17.4

0

11.15

11.5

14.31

2.5

27.87

Dominant strategy

In game theory, a situation where one player has a best strategy no matter what strat-egy the other player follows. When all players have a dominant strat-egy, we say that the outcome is a dominant equilibrium. Downward-sloping demand, law of. The rule which says that when the price of some commod-ity falls, consumers will purchase more of that good, other things held equal.

sam

1

22.58

17.9

0

11.09

17.9

10.21

10.375

15.77

Duopoly

A market structure in which there are only two sellers. @Compare with oligopoly. @ E

sam

1

23.43

13.5

0

9.45

9.1

8.84

7.5

8.46

Econometrics

The branch of econom-ics that uses the methods of statistics to measure and estimate quantita-tive economic relationships.

sam

1

20.38

14.6

0

17.57

16.5

13.77

14.5

18.56

Efficient financial market

Financial market displaying the charac-teristics of an ef cient market.

sam

1

19.03

13.1

0

16.04

12.8

13.61

7

16

Efficient market

efficient-market theory@. A market or theory in which all new information is quickly absorbed by market par-ticipants and becomes immedi-ately incorporated into market cient-market theory holds that all cur-rently available information is already incorporated into the price of common stocks @or other assets@.

sam

1

-22.94

27.1

0

18.41

29.4

12.38

33.5

22.78

Elasticity

A term widely used in eco-nomics to denote the responsive-ness of one variable to changes in another. Thus the elasticity of X with respect to Y means the percentage change in X for every 1 percent change in Y . For espe-cially important examples, see price elasticity of demand and price elasticity of supply.

sam

1

36.59

12.6

13.6

9.8

10.2

10.77

12.333333

10.1

Employed

persons are employed if they perform any paid work or if they hold jobs but are absent because of illness, strike, or vacations.

sam

1

48.13

12.3

0

9

11.8

9.58

12.5

10.94

Equal-cost line

A line in a graph showing the various possible com-binations of factor inputs that can be purchased with a given quantity of money.

sam

1

39.67

13.4

0

9.99

12.4

10.96

15.5

14.42

Equal-product curve

or isoquant@. A line in a graph showing the vari-ous possible combinations of fac-tor inputs which will yield a given quantity of output.

sam

1

31.21

14.6

0

10.74

13.6

13.02

15.5

12.68

Equation of exchange

A definitional equation which states that MVP PQ, or the money stock times veloc-ity of money equals the price level times output. This equation forms the core of monetarism.

sam

1

48.3

10.1

0

10.55

9.5

10.89

7.75

8.56

Exchange rate

See foreign exchange rate. Exchange-rate system. The set of rules, arrangements, and institu-tions under which payments are made among nations. Historically, the most important exchange-rate systems have been the gold exchange standard, the Bretton Woods system, and today’ exible-exchange-rate system.

sam

1

-8.05

19.3

0

18.85

19.6

10.16

8

12

Excise tax vs sales tax

An excise tax is one levied on the purchase c commodity or group of commodities @e.g., alcohol or tobacco@. A sales tax is one levied on all commodities with only a few c exclusions @e.g., all pur-chases except food@.

sam

1

43.22

12.1

0

7.43

9.9

9.87

13.25

11.9

Exclusion principle

A criterion by which public goods are distin-guished from private goods. When a producer sells a commodity to person A and can easily exclude B, C, D, etc., from enjoying the ben- ts of the commodity, the exclu-sion principle holds and the good is a private good. If, as in public health or national defense, people cannot easily be excluded from ts of the good’s production, then the good has public-good characteristics. Exogenous vs. induced variables. Exogenous variables are those determined by conditions outside the economy. They are contrasted with induced variables, which are determined by the internal work-ings of the economic system. Changes in the weather are exog-enous; changes in consumption are often induced by changes in income.

sam

1

30.4

14.9

16.2

12.48

15.4

10.26

12.166667

15.57

Expectations

Views or beliefs about uncertain variables @such as future interest rates, prices, or tax rates@.

sam

1

64.71

8

0

12.29

12.1

12.8

8.5

11.33

Equilibrium

The state in which an economic entity is at rest or in which the forces operating on the entity are in balance so that there is no tendency for change.

sam

1

57.95

12.6

0

6.69

12.7

8.28

20

17.33

Equimarginal principle

A principle for deciding the allocation of income among different consump-tion goods. Under this principle, a consumer’s utility is maximized by choosing the consumption information.

sam

1

16.49

14.1

0

17.56

14.6

11.2

11.25

16.2