Definitions of Economics by Jim Stanford for preparations of Master of Economics or other Business Studies. These definitions is also useful for anyone who do business.
Globalization: A generalized historical process through which more economic activity takes place across national borders. Forms of globalization include international trade (exports and imports), foreign direct investment, international financial flows, and international migration.
Goods: Tangible products which are produced in the economy – including agricultural products, natural resources, manufactured goods, and construction.
Government Production: Some production in the economy is undertaken directly by governments (or various kinds of government agencies) in order to meet public needs (as distinct from the production for profit which is undertaken by private companies). Examples of government production include education, health care, policing, and other public services.
Greenhouse Gases: Greenhouse gases trap more heat from the sun near the earth’s surface. Carbon dioxide is the major greenhouse gas, but other forms of pollution (including methane and nitrous oxide) also contribute to global warming. Because of the long-run accumulation of greenhouse gases after centuries of industrial pollution, the planet’s average temperature is rising notably, causing climate change, severe weather, rising sea levels, and other major effects.
Gross Domestic Product: The value of all the goods and services produced for money in an economy, evaluated at their market prices. Excludes the value of unpaid work (such as caring reproductive labour performed in the home). GDP is calculated by adding up the value-added at each stage of production.
Gross Domestic Product, Deflator : A price index which adjusts the overall value of GDP according to the average increase in the prices of all output. The GDP deflator equals the ratio of nominal GDP to real GDP.
Gross Domestic Product, Per Capita: The level of GDP divided by the population of a country or region. Changes in real GDP per capita over time are often interpreted as a measure of changes in the average standard of living of a country, although this is misleading (because it doesn’t account for differences in the distribution of income across factors of production and individuals, and it doesn’t consider the value of unpaid labour).
Heterodox Economics: Various schools of thought (including post-Keynesian, structuralist, Marxian, and institutionalist economics) which reject the precepts of dominant neoclassical theory.
Hoarding: A situation in which financial investors, companies, or individual consumers choose to hold hoards of cash or other liquid assets, rather than spending and re-spending that money. Hoarding often results from intense fears about future economic and financial turbulence – yet ironically hoarding can create the very recession which hoarders fear!
Households: The basic unit of individual economic behaviour. Households offer labour supply to the labour market, earn income (from employment and other sources), make consumer purchases, and care for each other through unpaid labour within the home.
Hyper-Inflation: A situation of extremely rapid inflation (reaching 100% per year or more), often resulting from a condition of economic or political breakdown.
Imports: Goods or services which are produced in a foreign country and purchased domestically. Imports include money spent on vacations or purchases in foreign countries.
Industrial Policy: Government policies aimed at fostering the domestic development of particular desirable or productive industries, in order to boost productivity, create higher-paid jobs, and enhance international trade performance. Tools of industrial policy can include measures to stimulate investment in targeted industries; trade policies (such as tariffs, export incentives, or limits on imports); and technology policies.
Inequality: The distribution of income across individual households typically demonstrates inequality between higher-income and lower-income households.
Inflation: A process whereby the average price level in an economy increases over time.
Informal Economy: The informal sector of the economy represents the production of goods and services for the own-use of the producers, or for informal or “underground” trade in particular communities (as opposed to the formal economy). It is particularly important in developing countries.
Innovation: Producers (including private companies) will endeavour to develop new products (new goods or services) and new processes (new ways of producing those goods or services), with the goal (in a capitalist context) of enhancing market share and hence profitability. More generally, innovation simply refers to finding better ways to produce better goods and services.
Institutionalist Economics: A school of heterodox economics which emphasizes the importance of institutional development and evolution (as opposed to “pure” market forces) in explaining economic and social development.
Interest: A lender charges interest as the price of lending money (or some other asset) to a borrower. Interest is typically charged as a specified percentage of the loan’s value, per specified time period (eg. percent per year).
Intermediate Products: Products (including both goods and services) which are not produced in order to be consumed, but rather are produced in order to be used in the production of some other good or service. Capital goods and raw materials are examples of intermediate products.
International Monetary Fund: An international financial institution established after World War II with the goal of regulating and stabilizing financial relationships among countries, and ensuring free flow of finance around the world economy. Based in Washington, D.C., it is governed by a system which grants disproportionate influence to the wealthier economies (based on their contribution to the Fund’s operating resources).
