Economics terms

• Abatement


  Practices to limit or reverse environmental damages
• Abatement policy


  A policy designed to reduce environmental damages
• Absolute advantage


  A person or country has this in the production of a good if the inputs it uses to produce this good are less than in some other person or country
• Accountability


  The obligation of a decision-maker (or body) to be responsive to the needs and wishes of people affected by his, her or its decisions
• Acyclical


  No tendency to move either in the same or opposite direction to aggregate output and employment over the business cycle
• Adjustment gap


  The lag between some outside change in labour market conditions and the movement of the economy to the neighbourhood of the new equilibrium
• Administratively feasible


  Policies for which the government has sufficient information and staff for implementation
• Adverse selection


  The problem faced by parties to an exchange in which the terms offered by one party will cause some exchange partners to drop out
• Aggregate demand


  The total of the components of spending in the economy, added to get GDP: Y = C + I + G + X - M
• Aggregate output


  The total output in an economy, across all sectors and regions
• Allocation


  A description of who does what, the consequences of their actions, and who gets what as a result
• Altruism


  The willingness to bear a cost in order to benefit somebody else
• Antitrust policy


  Government policy and laws to limit monopoly power and prevent cartels
• Arbitrage


  The practice of buying a good at a low price in a market to sell it at a higher price in another
• Artificially scarce good


  A public good that it is possible to exclude some people from enjoying
• Asset


  Anything of value that is owned
• Asset price bubble


  Sustained and significant rise in the price of an asset fuelled by expectations of future price increases
• Asymmetric information


  Information that is relevant to the parties in an economic interaction, but is known by some but not by others
• Austerity


  A policy where a government tries to improve its budgetary position in a recession by increasing its saving
• Automatic stabilizers


  Characteristics of the tax and transfer system in an economy that have the effect of offsetting an expansion or contraction of the economy
• Automation


  The use of machines that are substitutes for labour
• Autonomous consumption


  Consumption that is independent of current income
• Autonomous demand


  Components of aggregate demand that are independent of current income
• Average cost


  The total cost of the firms's output divided by the total number of units of output
• Average product


  Total output divided by a particular input, for example per worker (divided by the number of workers) or per worker per hour (total output divided by the total number of hours of labour put in)
• Balance of payments (BP)


  This records the sources and uses of foreign exchange
• Balance sheet


  A record of the assets, liabilities, and net worth of an economic actor such as a household, bank, firm, or government
• Bank


  A firm that creates money in the form of bank deposits in the process of supplying credit
• Bank bailout


  The government buys an equity stake in a bank or some other intervention to prevent it from failing
• Bank money


  Money in the form of bank deposits created by commercial banks when they extend credit to firms and households
• Bank run


  A situation in which depositors withdraw funds from a bank because they fear that it may go bankrupt and not honour its liabilities
• Bargaining gap


  The difference between the real wage that firms wish to offer in order to provide workers with incentives to work, and the real wage that allows firms the markup that maximizes profits given the degree of competition
• Bargaining power


  The extent of a person's advantage in securing a larger share of the economic rents made possible by an interaction
• Base money


  Cash held by households, firms, and banks, and the balances held by commercial banks in their accounts at the central bank
• Best response


  In game theory, the strategy that will give a player the highest payoff, given the strategies that the other players select
• Beveridge curve


  The inverse relationship between the unemployment rate and the job vacancy rate
• Biodiversity loss (rate of)


  Proportion of species that become extinct every year
• Biologically feasible


  An allocation that is capable of sustaining the survival of those involved
• Biological survival constraint


  This shows all the points that are 'biologically feasible'
• Bond


  A type of financial asset for which the issuer promises to pay a given amount over time to the holder