[Joseph_E._Stiglitz,_Carl_E._Walsh]_Economics(Bookos.org) (1)

devaluation: a reduction in the rate of exchange
between one currency and other
currencies under a fixed exchange-rate
system
developed countries: the wealthiest nations
in the world, including Western
Europe, the United States, Canada, Japan,
Australia, and New Zealand
diminishing marginal utility: the principle
that says that as an individual consumes
more and more of a good, each
successive unit increases her utility, or enjoyment,
less and less
diminishing returns (to scale): the principle
that as one input increases, with other
inputs fixed, the resulting increase in output
tends to be smaller and smaller
discount rate: the interest rate charged on
borrowed reserves
discretion: the ability to make explicit policy
decisions in response to macroeconomic
conditions
discretionary action: deliberate policy
changes by the government, often used to
indicate policy actions not constrained by
past commitments
discretionary spending: government expenditures
that are decided on an annual
basis
disposable income: income after paying
taxes
distribution: the allocation of goods and
services produced by the economy
diversification: spreading one’s wealth
among a large number of different assets
dividends: that portion of corporate profits
paid out to shareholders
dollarization: abandonment of the domestic
currency in favor of the U.S. dollar
dominant strategy: strategy that works
best no matter what the other player does
in a game
dual economies: separations in many less
developed countries (LDCs) between impoverished
rural sectors and urban sectors
that have higher wages and more advanced
technology
dumping: the practice of selling a good
abroad at a lower price than at home, or
below costs of production
dynamic efficiency: an economy that appropriately
balances short-run concerns
(static efficiency) with long-run concerns
(focusing on encouraging R & D)
dynamic inconsistency: the problem of
whether a government will actually carry
out a promised course of action
earned income tax credit: a reduction in
taxes provided to low-income workers
based on the amount of income they earn
and the size of their family
economic rent: payments made to a factor
of production that are in excess of what is
required to elicit the supply of that factor
economies of scope: the situation that exists
when it is less expensive to produce
two products together than it would be to
produce each one separately
efficiency wage: the wage at which total
labor costs are minimized
efficiency wage theory: the theory that
paying higher wages (up to a point) lowers
total production costs, for instance by leading
to a more productive labor force
efficient market theory: the theory that
all available information is reflected in the
current price of an asset
entitlement programs: programs that
provide benefits automatically to individuals
meeting certain criteria (such as age)
entry deterrence: the reduction of competition
by preventing other firms from entering
the market
entry-deterring practices: practices of incumbent
firms designed to discourage the
entry of rivals into the market
equilibrium price: the price at which demand
equals supply
equilibrium quantity: the quantity demanded
and supplied at the equilibrium
price, where demand equals supply
equilibrium: a condition in which there are
no forces (reasons) for change
European Union: an important regional
trade bloc that now covers most of Europe
excess demand: the situation in which the
quantity demanded at a given price exceeds
the quantity supplied
excess reserves: reserves over and above
the amount banks are legally required to
hold (required reserves)
excess supply: the situation in which the
quantity supplied at a given price exceeds
the quantity demanded
exchange: the act of trading that forms the
basis for markets
exchange efficiency: the condition in
which whatever the economy produces is
distributed among people in such a way
that there are no gains to further trade
exchange rate: the rate at which one currency
(such as dollars) can be exchanged
for another (such as euros, yen, or pounds)
excise taxes: taxes on a particular good or
service
expansions: a period in which real GDP is
growing
expected returns: the average return—a
single number that combines the various
possible returns per dollar invested with
the chances that each of these returns will
actually be paid
experimental economics: the branch of
economics which analyzes certain aspects
of economic behavior in a controlled, laboratory
setting
export-led growth: the strategy that government
should encourage exports in
which the country has a comparative advantage
to stimulate growth
exports: goods produced domestically but
sold abroad
externality: a phenomenon that arises
when an individual or firm takes an action
but does not bear all the costs (negative externality)
or receive all the benefits (positive
externality)
factor demand: the amount of an input demanded
by a firm, given the price of the
input and the quantity of output being produced;
in a competitive market, an input
will be demanded up to the point where the
value of the marginal product of that input
equals the price of the input
federal funds market: the market through
which banks borrow and lend reserves
federal funds rate: the interest rate on
overnight interbank loans
GLOSSARY ∂ A-3