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.
Investment: Investment represents production which is not consumed, but rather is utilized in the production of other additional output. Investment also represents an addition to the capital stock of an economy.
Joint Stock: A form of business in which the company’s assets are jointly divided among a large number of different individual owners, each of whom owns a specified share of the company’s total wealth. Joint stock companies are governed by a weighted voting system in which investors’ influence depends on the number of shares they own.
Labour Discipline: Employers are interested in maximizing the extent to which employees expend effort and “follow the rules” in the workplace. The degree of labour discipline reflects the cost of job loss and other measures of employers’ power over their workers.
Labour Extraction: Most employees under capitalism are paid according to the time they spend at work. But employers then face a challenge to extract genuine labour effort from their workers while they are on the job. Employer labour extraction strategies utilize a combination of labour discipline, supervision, technology (to control and monitor work), and threat of dismissal.
Labour Force: The total population of working-age people who are willing and able to work, and who hence have “entered” the labour market. The labour force includes individuals who are employed, and those who are “actively” seeking employment.
Labour Intensity: The ratio of labour effort expended, compared to total on-the-job compensated labour time. A higher ratio of labour intensity reflects a more successful employer labour extraction strategy.
Labour Market Segmentation: Deep and systematic differences among various groups of workers, in which different types of workers are effectively “assigned” to different types of jobs (reflecting differing productivity and income opportunities). Typically, access to different segments of the labour market is organized on grounds of gender, race, ethnicity, or age.
Labour Supply: The total number of workers available and willing to work in a paid position; usually measured by the labour force (although the labour force usually excludes many workers who do not officially qualify as “actively” seeking work, but who can nevertheless be mobilized into employment if necessary).
Long Waves: Longer-term periods of growth or stagnation in the economy, that can last for a decade or more and reflect broader changes in technology, politics, and international relations. For example, most developed capitalist countries experienced a long wave of economic expansion after World War II (the “Golden Age”), followed by a long period of stagnation during the 1980s and 1990s.
Machinery and Equipment: One form of fixed capital asset, consisting of machines, computers, transportation equipment, assembly lines, and other equipment. Economists believe that investment in machinery and equipment is very important to productivity growth.
Macroeconomics: The study of aggregate economic indicators such as GDP growth, employment, unemployment, and inflation. Conventional economics makes a distinction between macroeconomics and microeconomics (the study of individual businesses or industries).
Managers: Top managers and directors of larger companies who are assigned the task of initiating and organizing production, disciplining workers, and accounting to shareholders for the performance of the business.
Market Income: A household’s total pre-tax income obtained from its activities in the formal economy, including wages and salaries, investment income, and small business profits. Excludes government transfer payments.
Market Socialism: A form of socialism in which productive companies are owned through public or non -profit forms, but relate to each other through markets and competition (with little or no central planning).
Mercantilism: An economic theory from pre-capitalist times which held that a country’s prosperity depended on its ability to generate large and persistent surpluses in its foreign trade with other countries.
Microeconomics: The study of the economic behaviour of individual “agents” such as particular companies, workers, or households.
Migration: The movement of human beings from one country or region to another. Sometimes migration is motivated by economic factors (such as the search for employment), sometimes by other forces (such as war, natural disaster, or famine).
Monetarism: Strictly speaking, monetarism was a right-wing economic theory (associated with the work of Milton Friedman, in particular) which believed that inflation could be controlled or eliminated by strictly controlling, over long periods of time, the growth of the total supply of money in the economy. This theory was proven wrong in the 1980s (when it became clear that it is impossible, in a modern financial system, to control the supply of money). More broadly, monetarism believes that inflation is a major danger to economic performance, and should be controlled through disciplined policies; modern “quasi-monetarists” agree with this view, but now use high interest rates (rather than monetary targeting) to indirectly regulate the money supply.
Monetary Policy: Monetary policy reflects the use by government and government agencies (especially the central bank) of interest rate adjustments and other levers (such as various banking regulations) to influence the flow of new credit into the economy, and hence the rate of economic growth and job-creation. A “tight” monetary policy tries to reduce the growth of new credit (through higher interest rates); a “loose” monetary policy tries to stimulate more credit-creation and hence growth.
Monetary Targeting: A policy which attempts to directly limit the growth in the total supply of money in the economy. It was the main policy tool used by strict monetarists. This policy approach failed in the 1980s, when it became clear that the supply of money could not be directly controlled by a central authority.
Money: Broadly speaking, money is anything that can be used as a means of payment (for example, to settle a debt). It includes actual currency, bank deposits, credit cards and lines of credit, and various modern electronic means of payment.
