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.
Real Wages: The value of wages, adjusted for the level of consumer prices. If the nominal value of wages is growing faster than consumer prices, then real wages are growing, and hence the real consumption possibilities offered to workers are improving.
Recession: A condition in which the total real GDP of an economy shrinks (usually, for at least two consecutive quarters).
Recovery: A condition in which real GDP begins to grow again, following a recession.
Regressive Tax: A tax in which lower-income individuals or households bear a proportionately greater burden of the tax. Sales taxes are generally considered regressive (since lower-income households do not generally save, and hence must pay the sales tax on a larger proportion of their total income).
Relative Poverty: A measure of poverty based on an individual or family’s relative income compared to the overall average level of income in the economy as a whole. Relative poverty thresholds change over time with growth in overall income levels. Distinct from absolute measures of poverty, which are defined according to a specified level of real consumption.
Relative Price: The price of any product or commodity measured relative to the overall level of prices (for example, compared to the consumer price index).
Reproduction: The economic process of recreating the work force. Reproduction involves caring for one’s self and one’s family, and raising children.
Retained Earnings: Business profits which are not distributed to shareholders (through dividends or other payouts), but instead are retained within the company in order to finance future investment or other expenditures.
Return on Equity: A measure of business profitability equal to net after-tax income divided by the average level of shareholders’ equity in the business.
Sales Tax: A tax imposed as a proportion of consumer spending on specified goods or services.
Also known as a “value-added” tax.
Saving: The portion of income which is not spent on consumption. Saving can be undertaken by individuals and households, by businesses, or by governments.
Securitization: A process in which financial relationships (such as loans) are converted into financial securities or assets (such as bonds) which can be bought and re-sold in securities markets.
Services: A form of output which consists of a function performed for one person by another – such as cooking and serving a meal, teaching a lecture, completing a telephone call, or delivering a package. Distinct from goods.
Shares: Financial assets which represent the ownership of a small proportion of the total equity (or net wealth) of a corporation. Shares can be bought and sold on a stock market.
Slavery: An economic system in which most work is performed by individuals who are forcibly compelled to work with no formal compensation, under the control of a slave-owning elite.
Social-Democracy: A reformist political strategy which aims to win certain improvements in social and economic conditions under capitalism, without challenging the underlying precepts of wage labour and production for profit.
Socialism: An economic system in which most wealth is owned or controlled collectively (through the state, other public institutions, or non-profit organizations), and the operation of markets is influenced or managed through regulation and planning.
Speculation: The purchase of an asset (such as a financial asset or real estate) purely in the hope that its market price will increase, allowing a profit (known as a capital gain) to be made on its subsequent resale.
Stock Market: A place where shares of joint stock corporations are bought and sold. Most modern stock markets no longer have a physical presence, but rather consist of connected computer networks.
Structuralist Economics: A form of heterodox economics which emphasizes the relationships between effective demand, income distribution, and political and economic power.
