ECON Glossary

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1 ability-to-pay principle of taxation: belief that taxes should be paid according to level of income regardless of benefits received
2 absolute advantage: country's ability to produce more of a given product than can another country
3 accelerated depreciation: schedule that spreads depreciation over fewer years than normal to generate larger tax reductions
4 accelerator: change in investment spending cuased by a change in overall spending
5 acid rain: pollution in form of rainwater mixed with sulfur dioxide, a mild form of sulfuric acid
6 agency shop: arrangement under which non-union members must pay union dues
7 aggregate demand: the total quantity of goods and services demanded at different price levels
8 aggregate demand curve: hypothetical curve showing different levels of real GDP that could be purchased at various price levels
9 aggregate supply: the total value of goods and services that all firms would produce in a specific period of time at various price levels
10 aggregate supply curve: hypothetical curve showing different levels of real GDP that could be produced at various price levels
11 alternative minimum tax: personal income tax rate that applies to cases where taxes would otherwise fall below a certain level
12 appropriations bill: legislation earmarking funds for certain purposes
13 aquifer: underground water-bearing rock formation
14 arbitration: agreement by two parties to place a dispute before a third party for a binding settlement
15 ASEAN: group of ten Southeast Asian nations working to promote regional cooperation, economic growth, and trade
16 assets: properties, possessions and claims on others; usually listed as entries on a balance sheet
17 automatic stabilizer: program that automatically provides benefits to offset a change in people's incomes; unemployment insurance, entitlement programs
18 automation: production with mechanical or other processes that reduces the need for workers
19 average tax rate: total taxes paid divided by the total taxable income
20 baby boom: historically high birthrate years in the U.S. from 1946-1964
21 balance of payments: difference between money paid to, and received from, other nations in trade; balance on current account includes goods and services, merchandise trade balance counts only goods
22 balance sheet: condensed statement showing assets, liabilities, and net worth of an economic unit
23 balanced budget: annual budget in which expenditures equal revenues
24 balanced budget amendment: constitutional amendment requiring government to spend no more than it collects in taxes and other revenues, excluding borrowing
25 bank holiday: brief period during which all banks or depository institutions are closed to prevent bank runs
26 bankruptcy: court-granted permission to an individual or business to cease or delay payment on some or all debts for a limited amount of time
27 barter economy: moneyless economy that relies on trade or barter
28 base year: year serving as point of comparison for other years in a price index or other statistical measure
29 bear market: period during which stock market prices move down for several months or years in a row
30 benefit principle of taxation: belief that taxes should be paid according to benefits received regardless of income
31 Better Business Bureau: business-sponsored nonprofit organization providing information on local companies to consumers
32 bill consolidation loan: popular type of consumer loan used to pay off multiple existing loans
33 black market: market in which economic products are sold illegally
34 bond: formal contract to repay borrowed money and interest on the borrowed money at regular future intervals
36 break-even point: production needed if the firm is to recover its costs; production level where total cost equals total revenue
37 bull market: period during which stock market prices move up for several months of years in a row
38 business cycle: systematic changes in real GDP marked by alternating periods of expansion and contraction
39 business fluctuation: changes in real GDP marked by alternating periods of expansion and contraction that occur on a less than systematic basis
41 capital: tools, equipment, and factories used in the production of goods and services; one of four factors of production
42 capital flight: legal or illegal export of a nation's currency and foreign exchange
43 capital gains: profits from the sale of an asset held for 12 months
44 capital good: tool, equipment, or other manufactured good used to produce other goods and services; a factor of production
45 capital-intensive: production method requiring relatively large amounts of capital relative to labor
46 capital market: market in which financial capital is loaned and/or borrowed for more than one year
47 capitalism: economic system in which private citizens own and use the factors of production in order to generate profits
48 capital-to-labor ratio: measure obtained by dividing the total capital stock by the labor force
49 cartel: group of sellers or producers acting together to raise prices by restricting availability of a product; OPEC
50 cash flow: total amount of new funds the business generates from operations; broadest measure of profits for a firm, includes both net income and non-cash charges
51 cease and desist order: ruling requiring a company to stop an unfair business practice that reducese or limits competition
52 census: complete count of population, including place of residence
53 center of population: point where the country would balance if it were flat and everyone weighed the same
54 central bank: bank that can lend to other banks in times of need, a "blankers' bank"
55 certificate of deposit: receipt showing that an investor has made an interest-bearing loan to a financial institution
56 chamber of commerce: nonprofit organization of local businesses whose purpose is to promote their interests
57 change in demand: consumers demand different amounts at every price, causing the demand curve to shift to the left or the right
58 change in quantity demanded: movement along the demand curve showing that a different quantity is purchased in response to a change in price
59 change in quantity supplied: change in amount offered for sale in response to a price change; movement along the supply curve
60 change in supply: different amounts offered for sale at each and every possible price in the market; shift of the supply curve
61 charter: written government approval to establish a corporation; includes company name, address, purpose of business, # of shares of stock, and other features of the business
62 civilian labor force: non-institutionalized part of the population, aged 16 and over, either working or looking for a job
63 closed shop: illegal arrangement under which workers must join a union before they are hired
64 coins: metallic forms of money such as pennies, nickels, dimes, and quarters
65 collateral: property or other security used to guarantee repayment of a loan
66 collective bargaining: process of negotiation between union and management representatives over pay, benefits, and job-related matters
67 collective farm: small farms in the former Soviet Union owned by the state, but operated by families who shared in some of the profits
68 collectivization: forced common ownership of factors of production; used in the former Soviet Union in agriculture and manufacturing under Stalin
69 collusion: agreements, usually illegal, among producers to fix prices, limit output, or divide markets
70 command economy: economic system characterized by a central authority that makes most of the major economic decisions
71 commercial bank: depository institution that, until the mid-1970s, had the exclusive right to offer checking accounts
72 commodity money: money that has an alternative use as a commodity; gunpowder, flour, corn
73 communism: economic and political system in which factors of production are collectively owned and directed by the state; theoretically classless society in which everyone works for the common good
74 company union: union organized, supported, and even financed by an employer
75 comparable worth: doctrine stating that equal pay should be given for jobs of comparable difficulty
76 comparative advantage: country's ability to produce a given product relatively more efficiently than another country; production at a lower opportunity cost
77 competition: the struggle among sellers to attract consumers while lowering costs
78 complements: products that increase the value of other products; products related in such a way that an increase in the price of one reduces the demand for both
79 conglomerate: firm with four or more businesses making unrelated products, with no single business responsible for a majority of its sales
80 constant dollars: dollar amounts or prices that have been adjusted for inflation; same as real dollars
81 consumer good: good intended for final use by consumers rather than businesses
82 consumer price index: index used to measure price changes for a market basket of frequently used consumer items
83 consumer sovereignty: role of consumer as ruler of the market when determining the types of goods and services produced
84 cooperative: nonprofit association performing some kind of economic activity for the benefit of its members
85 corporate income tax: tax on corporate profits
86 corporation: form of business organization recognized by law as a separate legal entity with all the rights and responsibilities of an individual, including the right ot buy and sell property, enter into legal contracts, sue and be sued
87 cost-benefit analysis: way of thinking that compares the cost of an action to its benefits
88 Countil of Economic Advisers: three-member group that devises strategies and advises the President of the United States on economic matters
89 coupon: stated interest on a corporate, municipal or government bond
90 craft union: labor union whose workers perform the same kind of work; same as trade union
91 credit union: nonprofit service cooperative that accepts deposits, makes loans, and provides other financial services
92 creditor: person or institution to whom money is owed
93 creeping inflation: relatively low rate of inflation, usually 1 to 3 percent annually
94 crowding-out effect: higher than normal interest rates and diminished access to financial capital faced by private investors when government increases its borrowing in financial markets
95 crude birthrate: number of live births per 1000 people
96 currency: paper component of the money supply, today consisting of Federal Reserve notes
97 current dollars: dollar amounts or prices that are not adjusted for inflation
98 current GDP: Gross Domestic Product measured in current prices, unadjusted for inflation
99 current yield: bond's annual coupon interest divided by purchase price; measure of a bond's return
100 customs duty: tax on imported products
101 customs union: group of countries that have agreed to reduce trade barriers
102 cyclical unemployment: unemployment directly related to swings in the business cycle
103 default: the act of not repaying borrowed money
104 deficiency payment: cash payment making up the difference between the market price and the target price of an agricultural crop
105 deficit spending: annual government spending in excess of taxes and other revenues

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Number of cards 103