Holt 7525-9 S15_IT

Absolute advantage – when one nation can
produce a good with greater productivity than
another nation.
Absolute economic growth – an increase in
Real GDP.
Accounting profit – the difference between
total revenue and explicit costs.
Actual money multiplier – measures the
change in the money supply for a given dollar
change in monetary base.
Adverse selection – a party on one side of
the market is confronted by a different
selection than expected.
Agent – a person who agrees to act for the
benefit of another, the principal.
Aggregate demand (AD) – the quantity
demanded of all goods and services at
different price levels.
Aggregate supply – the quantity supplied of
all goods and services at different price levels.
Antitrust law – legislation intended to prohibit
attempts to monopolize markets or to engage
in anti-competitive behavior.
Arbitrage – buying at a low price in one
market and selling at a higher price in another.
Asymmetric information – one party to an
exchange has information that the other party
doesn’t have.
Automatic stabilizers – taxes and transfer
payments that automatically tend to move
equlibrium Real GDP toward Natural Real
GDP.
Barriers to entry – factors that block the entry
of new firms into a market.
Barter – the direct exchange of goods.
Budget constraint – a curve showing the
different combinations of two goods that a
consumer can purchase with a certain amount
of income.
Budget deficit – when government
expenditures are greater than tax revenues.
Budget surplus – when tax revenues are
greater than government expenditures.
Capital – produced goods that are used in the
production of other goods.
Cartel – an organization through which
members jointly make decisions about prices
and production.
Ceteris paribus (k´ ter is- pair´ u bus) – all
other things held constant.
Change in demand – a shift in the demand
curve caused by a change in one of the
determinants of demand.
Glossary
Change in quantity demanded – a
movement along the demand curve caused by
a change in price.
Change in quantity supplied – a movement
along the supply curve caused by a change in
price.
Change in supply – a shift in the supply
curve caused by a change in the cost of
production.
Checkable deposits – deposits in banks or
other financial institutions on which checks
can be written.
Choice architecture – the context in which
people make decisions.
Closed shop – requires union membership as
a condition for employment.
Collective bargaining – where a union
bargains with management on behalf of the
workers.
Common goods – rivalrous in consumption
and nonexcludable.
Comparative advantage – when one nation
can produce a good at a lower opportunity
cost than another nation.
Compound interest – interest paid on
interest.
Conglomerate merger – a merger of firms
that are not in the same industry.
Consumer’s surplus – the difference
between the highest price a buyer is willing to
pay and the price actually paid.
Consumption function – the curve showing
the relationship between disposable income
and consumption.
Continued inflation – when the price level
increases at a high rate year after year.
Contraction – the phase of the business cycle
when Real GDP is decreasing.
Contractionary fiscal policy – a decrease in
government expenditures or an increase in
taxation.
Contractionary monetary policy – a
decrease in the money supply.
Copyright – a government granted monopoly
on the production and sale of a creative work
granted to the creator.
Corporation – an organization owned by
stockholders that is considered a legal person,
separate from its owners.
Craft union – a union made up of workers
who practice the same craft.
Creative destruction – the short run
upheaval caused by new technology.
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Glossary - 1