Glossary of economics

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This glossary of economics is list of definitions about economics, its sub-disciplines, and related fields.



  • Backward induction
  • Balance of payments
  • Balance of trade – The balance of trade, commercial balance, or net exports (sometimes symbolized as NX), is the difference between the monetary value of a nation's exports and imports over a certain period.[19] Sometimes a distinction is made between a balance of trade for goods versus one for services. "Balance of trade" can be a misleading term because trade measures a flow of exports and imports over a given period of time, rather than a balance of exports and imports at a given point in time. Also, balance of trade does not mean that exports and imports are "in balance" with each other or anything else.
  • Balanced budget – A balanced budget (particularly that of a government) is a budget in which revenues are equal to expenditures. Thus, neither a budget deficit nor a budget surplus exists (the accounts "balance"). More generally, it is a budget that has no budget deficit, but could possibly have a budget surplus.[20] A cyclically balanced budget is a budget that is not necessarily balanced year-to-year, but is balanced over the economic cycle, running a surplus in boom years and running a deficit in lean years, with these offsetting over time.
  • Bank – A bank is a financial institution that accepts deposits from the public and creates credit.[21] Lending activities can be performed either directly or indirectly through capital markets. Due to their importance in the financial stability of a country, banks are highly regulated in most countries. Most nations have institutionalized a system known as fractional reserve banking under which banks hold liquid assets equal to only a portion of their current liabilities. In addition to other regulations intended to ensure liquidity, banks are generally subject to minimum capital requirements based on an international set of capital standards, known as the Basel Accords.
  • Barriers to entry – In theories of competition in economics, a barrier to entry, or an economic barrier to entry, is a cost that must be incurred by a new entrant into a market that incumbents do not have or have not had to incur.[22][23] Because barriers to entry protect incumbent firms and restrict competition in a market, they can contribute to distortionary prices and are therefore most important when discussing antitrust policy. Barriers to entry often cause or aid the existence of monopolies or give companies market power.
  • Barter – In trade, barter (derived from baretor[24]) is a system of exchange where participants in a transaction directly exchange goods or services for other goods or services without using a medium of exchange, such as money.[25] Economists distinguish barter from gift economies in many ways; barter, for example, features immediate reciprocal exchange, not delayed in time. Barter usually takes place on a bilateral basis, but may be multilateral (i.e., mediated through a trade exchange). In most developed countries, barter usually only exists parallel to monetary systems to a very limited extent. Market actors use barter as a replacement for money as the method of exchange in times of monetary crisis, such as when currency becomes unstable (e.g., hyperinflation or a deflationary spiral) or simply unavailable for conducting commerce.
  • Behavioral economics – studies the effects of psychological, cognitive, emotional, cultural and social factors on the economic decisions of individuals and institutions and how those decisions vary from those implied by classical theory.[26]
  • Bellman equation
  • Bequest motive
  • Bertrand–Edgeworth model
  • Black–Scholes model – The Black–Scholes /ˌblæk ˈʃlz/[27] or Black–Scholes–Merton model is a mathematical model for the dynamics of a financial market containing derivative investment instruments. From the partial differential equation in the model, known as the Black–Scholes equation, one can deduce the Black–Scholes formula, which gives a theoretical estimate of the price of European-style options and shows that the option has a unique price regardless of the risk of the security and its expected return (instead replacing the security's expected return with the risk-neutral rate). The formula led to a boom in options trading and provided mathematical legitimacy to the activities of the Chicago Board Options Exchange and other options markets around the world.[28] It is widely used, although often with adjustments and corrections, by options market participants.[29]:751
  • Board of governors – It is the main governing body of the Federal Reserve of the United States that directs the operations of the Fed. Its seven members supervises the 12 Federal Reserve Districts.
  • Bond – In finance, a bond is an instrument of indebtedness of the bond issuer to the holders. The most common types of bonds include municipal bonds and corporate bonds. The bond is a debt security, under which the issuer owes the holders a debt and (depending on the terms of the bond) is obliged to pay them interest (the coupon) or to repay the principal at a later date, termed the maturity date.[30] Interest is usually payable at fixed intervals (semiannual, annual, sometimes monthly). Very often the bond is negotiable, that is, the ownership of the instrument can be transferred in the secondary market. This means that once the transfer agents at the bank medallion stamp the bond, it is highly liquid on the secondary market.[31]
  • Break-even (economics) – The break-even point (BEP) in economics, business—and specifically cost accounting—is the point at which total cost and total revenue are equal, i.e. "even". There is no net loss or gain, and one has "broken even", though opportunity costs have been paid and capital has received the risk-adjusted, expected return. In short, all costs that must be paid are paid, and there is neither profit nor loss.[32][33]
  • Bretton Woods system
  • Budget deficit
  • Budget set
  • Budget surplus
  • Big push model
  • Business cycle – The business cycle, also known as the economic cycle or trade cycle, is the downward and upward movement of gross domestic product (GDP) around its long-term growth trend.[34] The length of a business cycle is the period of time containing a single boom and contraction in sequence. These fluctuations typically involve shifts over time between periods of relatively rapid economic growth (expansions or booms), and periods of relative stagnation or decline (contractions or recessions).
  • Business economics – is a field in applied economics which uses economic theory and quantitative methods to analyze business enterprises and the factors contributing to the diversity of organizational structures and the relationships of firms with labour, capital and product markets.[35]
  • Business sector – the business sector or corporate sector - sometimes popularly called simply "business" - is "the part of the economy made up by companies".[36] It is a subset of the domestic economy,[37]

excluding the economic activities of general government, of private households, and of non-profit organizations serving individuals.[38]







  • Housing starts – The number of new houses being built during a period of time.
  • Hyperinflation – Monetary inflation occurring at an extremely high rate.














  • Underemployment – Working at a job for which one is overqualified, or working part-time when full-time work is desired.
  • Unemployment – Under utilization of a factor of production, including labor.
  • Uniform
    is a type of clothing worn by members of an organization while participating in that organization's activity.
  • Unit of account
  • Unitary elastic
  • Unskilled labor – Labor that requires no specialized skills, education, or training.
  • Utility – Usefulness of a good or service in order to satisfy a need or a want.


  • Variable cost – are costs that change in proportion to the good or service that a business produces.[40] Variable costs are also the sum of marginal costs over all units produced.
  • Velocity of money – The term "velocity of money" (also "The velocity of circulation of money") refers to how fast money passes from one holder to the next. It can refer to the income velocity of money, which is the frequency at which the average same unit of currency is used to purchase newly domestically-produced goods and services within a given time period.[41] In other words, it is the number of times one unit of money is spent to buy goods and services per unit of time.[41]





See also[edit]


  1. ^ Sexton, Robert; Fortura, Peter (2005). Exploring Economics. ISBN 0-17-641482-7. This is the sum of the demand for all final goods and services in the economy. It can also be seen as the quantity of real GDP demanded at different price levels.
  2. ^ O'Sullivan, Arthur; Steven M. Sheffrin (2003). Economics: Principles in action. Upper Saddle River, New Jersey 07458: Pearson Prentice Hall. p. 307. ISBN 0-13-063085-3.
  3. ^ Franklin M. Fisher (1987). "aggregation problem," The New Palgrave: A Dictionary of Economics, v. 1, p. 54. [Pp. 53-55.]
  4. ^ Markovits, Richard (1998). Matters of Principle. New York: New York University Press. ISBN 978-0-8147-5513-6.
  5. ^ Markovits, Richard (2008). Truth or Economics. New Haven: Yale University Press. ISBN 978-0-300-11459-1.
  6. ^ a b Li, Rita Yi Man; Li, Yi Lut (1 June 2013). "The Role of Competition Law: An Asian Perspective". Retrieved 27 June 2017 – via
  7. ^ Taylor, Martyn D. (2006). International competition law: a new dimension for the WTO?. Cambridge University Press. p. 1. ISBN 978-0-521-86389-6.
  8. ^ Cartel Damage Claims (CDC). "Cartel Damage Claims (CDC)". Retrieved 23 June 2014.
  9. ^
  10. ^ Hazeltine, B.; Bull, C. (1999). Appropriate Technology: Tools, Choices, and Implications. New York: Academic Press. pp. 3, 270. ISBN 0-12-335190-1.
  11. ^ Boettke, Peter. "Is Austrian Economics Heterodox Economics?". The Austrian Economists. Archived from the original on 28 March 2009. Retrieved 2009-02-13.
  12. ^ Boettke, Peter J.; Peter T. Leeson (2003). "28A: The Austrian School of Economics 1950–2000". In Warren Samuels; Jeff E. Biddle; John B. Davis. A Companion to the History of Economic Thought. Blackwell Publishing. pp. 446–52. ISBN 978-0-631-22573-7.
  13. ^ "Heterodox economics: Marginal revolutionaries". The Economist. December 31, 2011. Archived from the original on February 22, 2012. Retrieved February 22, 2012.
  14. ^ Carl Menger, Principles of Economics, online at "Archived copy". Archived from the original on 2014-09-14. Retrieved 2014-09-13.
  15. ^ Heath, Joseph (1 May 2018). Zalta, Edward N., ed. The Stanford Encyclopedia of Philosophy. Metaphysics Research Lab, Stanford University. Retrieved 1 May 2018 – via Stanford Encyclopedia of Philosophy.
  16. ^ Ludwig von Mises. Human Action, p. 11, "Purposeful Action and Animal Reaction". Referenced 2011-11-23.
  17. ^ Glossary of International Economics Archived 2007-12-12 at the Wayback Machine..
  18. ^ O'Sullivan, Arthur; Sheffrin, Steven M. (2003). Economics: Principles in Action. Upper Saddle River, New Jersey 07458: Pearson Prentice Hall. p. 399. ISBN 0-13-063085-3.
  19. ^ O'Sullivan, Arthur; Sheffrin, Steven M. (2003). Economics: Principles in Action. Upper Saddle River, New Jersey 07458: Pearson Prentice Hall. p. 462. ISBN 0-13-063085-3.
  20. ^ O'Sullivan, Arthur; Sheffrin, Steven M. (2003). Economics: Principles in Action. Upper Saddle River, New Jersey 07458: Pearson Prentice Hall. pp. 376, 403. ISBN 0-13-063085-3.
  21. ^ "Bank of England". Rulebook Glossary. 1 January 2014. Retrieved 13 July 2018.
  22. ^ "When Are Sunk Costs Barriers to Entry?" (PDF). Archived (PDF) from the original on 27 March 2016. Retrieved 3 May 2018.
  23. ^ "Antitrust Aspects of Barriers to Entry" (PDF). Archived (PDF) from the original on 17 May 2017. Retrieved 3 May 2018.
  24. ^ Wedgwood, Hensleigh (1855). "English Etymologies". Transactions of the Philological Society (8): 109–111.
  25. ^ O'Sullivan, Arthur; Steven M. Sheffrin (2003). Economics: Principles in Action. Pearson Prentice Hall. p. 243. ISBN 0-13-063085-3.
  26. ^ Lin, Tom C. W. (16 April 2012). "A Behavioral Framework for Securities Risk". Seattle University Law Review. SSRN. SSRN 2040946.
  27. ^ "Scholes on". Retrieved March 26, 2012.
  28. ^ MacKenzie, Donald (2006). An Engine, Not a Camera: How Financial Models Shape Markets. Cambridge, MA: MIT Press. ISBN 0-262-13460-8.
  29. ^ Bodie, Zvi; Alex Kane; Alan J. Marcus (2008). Investments (7th ed.). New York: McGraw-Hill/Irwin. ISBN 978-0-07-326967-2.
  30. ^ O'Sullivan, Arthur; Sheffrin, Steven M. (2003). Economics: Principles in action. Upper Saddle River, New Jersey 07458: Pearson Prentice Hall. pp. 197, 507. ISBN 0-13-063085-3.
  31. ^ Bonds, accessed: 2012-06-08
  32. ^ Levine, David; Michele Boldrin (2008-09-07). Against Intellectual Monopoly. Cambridge University Press. p. 312. ISBN 978-0-521-87928-6.
  33. ^ Tapang, Bienvenido, and Lorelei Mendoza. Introductory Economics. University of the Philippines, Baguio.
  34. ^ Madhani, P. M. (2010). ".Rebalancing Fixed and Variable Pay in a Sales Organization: A Business Cycle Perspective". Compensation & Benefits Review. 42 (3): 179–189. doi:10.1177/0886368709359668.
  35. ^ Moschandreas, Maria (2000). Business Economics, 2nd Edition, Thompson Learning, Description and chapter-preview links.
  36. ^ Longman Business English Dictionary
  37. ^ But compare Keese, Mark; Salou, Gérard; Richardson, Pete (1991). The measurement of output and factors of production for the business sector in OECD countries: the OECD business sector database. OECD Department of Economics and Statistics working papers. 95-101. Organisation for Economic Co-operation and Development. p. i. Retrieved 2015-06-07. [...] recent work of the OECD Economics and Statistics Department to construct an international Business Sector Data Base (BSDB) for use in a wide variety of analyses of production and supply issues [...].
  38. ^ "BLS Information". Glossary. U.S. Bureau of Labor Statistics Division of Information Services. February 28, 2008. Retrieved 2009-05-05.
  39. ^ Record, Neil, Currency Overlay (Wiley Finance Series)
  40. ^ Garrison, Noreen, Brewer. Ch 2 - Managerial Accounting and Costs Concepts, pp 48
  41. ^ a b "Money Velocity". Federal Reserve Bank of St. Louis. Retrieved October 28, 2013.
  42. ^ • Darby, Michael R. (1987). "wealth effect," The New Palgrave: A Dictionary of Economics, v. 4, pp. 883–4.
       • Jelveh, Zubin. "In Praise of the Wealth Effect – Economics Blog – Zubin Jelveh – Odd Numbers –". Retrieved 2009-04-20.