Economics
Microeconomics is a social science that examines the allocation of resources to produce goods and services, and the distribution of goods and services produced. In the modern era, this involves the s...
The 80-20 rule, also known as the Pareto Principle, states that 80% of outcomes arise from 20% of inputs. The idea is applied in business and economics to identify and prioritize the most productive ...
A. Michael Spence is an economist who won the 2001 Nobel Prize for his work in market-signaling theory. Born in New Jersey in 1943 and raised in Canada, Michael Spence attended Princeton University,...
Above full-employment equilibrium occurs when a country's gross domestic product (GDP) is higher than normal. For example, let's say Country X's normal rate of GDP growth is 2% per year. Over the la...
Adam Smith is one of the world's most famous economists. Modern capitalism owes its roots to Adam Smith and his Wealth of Nations, which many consider the single most important economic work in histo...
The Affordable Care Act (ACA), typically referred to as "Obamacare" but formally known as the Patient Protection and Affordable Care Act (PPACA), is a bill signed into law on March 23, 2010, by Pres...
Alan Greenspan was the chairman of the Federal Reserve Board of Governors from 1987 to 2006. Alan Greenspan was born in 1926 in New York. His father was a stockbroker and his mother was a salesperso...
A baby boomer is a member of the generation born between 1946 and 1964. The term baby boom refers to the increase in births after the end of World War II. Today, America’s 75 million baby boomers ...
The baby boomer age wave theory, developed by economist Harry S. Dent, Jr., theorizes that the age of the baby boom generation can predict major changes in economic trends. A "baby boomer" is a memb...
A bad bank is a new company created to buy poorly-performing assets from another bank. For example, let's assume that Bank XYZ has made an extraordinary number of loans to borrowers who can't pay th...
A bailout is financial help for ailing companies. Company XYZ is in the newspaper industry and has seen a dramatic downturn in its advertising sales. The company's board believes that if it can laun...
The balance of payments (BOP) reflects all payments and obligations to foreigners vs. all payments and obligations received from foreigners. It's a record of all financial flows in and out of a count...
A balanced budget exists when a household's (or country's) revenues are equal to its expenses. For example, let's assume that John Doe and his wife Jane Doe earn $100,000 a year. Jane analyzes the c...
The Baltic Dry Index (BDI)  is a leading economic indicator that measures demand for dry bulk shipping services worldwide relative to supply.   Every business day, researchers for the London-based...
Based in Basel, Switzerland, the Bank for International Settlements (BIS) acts as a bank for central banks around the world. The BIS's main role is setting capital adequacy requirements and ensuring...
A bank reserve is a portion of a bank's deposits that are set aside in a liquid account to ensure that the bank has enough cash on hand to fulfill withdrawal requests. Reserve requirements are Feder...
A barter (or bartering) is an exchange between two parties using goods and services for payment instead of currency. The barter system enables two parties to exchange goods or services based on mutu...
In economics, a basket of goods is a group of items used for price comparisons or other analytical purposes. The consumer price index (CPI) is the most common measure of price levels. The CPI measur...
The Beige Book is the informal name for the Federal open Market Committee's (FOMC) ongoing reports titled Summary of Commentary on Current Economic Decisions by Federal Reserve District. The purpose...
Ben S. Bernanke is the chairman of the United States Federal Reserve (the Fed). As Fed chairman, Bernanke also chairs the Board of Governors of the Federal Reserve and the Federal Open Market Committ...
A big box store is a large company that is more efficient but less specialized than other firms in a particular niche or industry. Wal-Mart is a classic example of a big box store. By being cheaper,...
A black market is the illegal purchase and sale of goods and services. Drug dealing is one of the most prominent black markets in the United States. In this black market, people buy and sell drugs k...
The Board of Governors is the decision-making body at the Federal Reserve. The Federal Reserve system is the United States' central bank. It manages the economy's money supply, regulates the banking...
In accounting, economics, and business, the break-even point is the point at which cost equals revenue (indicating that there is neither profit nor loss). At this point in time, all expenses have bee...
Under the Bretton Woods Agreement of 1944, the world's allied industrial countries established a fixed currency exchange rate based on the gold standard.    The Bretton Woods Agreement also led to...
The Bureau of Labor Statistics (BLS) of the U.S. Department of Labor is a Federal agency that measures and reports labor market activity, working conditions and price changes in the economy. The Bur...
/*-->*/ The Bureau of Public Debt is responsible for borrowing the money needed to run the U.S. government. They are also responsible for tracking the total amount of U.S. soverign debt. /*-...
The business cycle refers to an economy's periodic patterns of growth, recession, and recovery. An expanding economy is characterized by low unemployment, high productivity, and high consumer spendi...
A buyer's market exists when there are more sellers than buyers in the market for a certain good or service. Housing is a common place to find a buyer's market. Let's say that ABC Town has 100,000 h...
In the financial world, the phrase "buying power" has two meanings. One is the amount of money a person can use to invest in securities (and that can include money the investor borrows in order to b...
Capital is anything a business uses to generate income. In simple terms, capital is the potential for any item to create wealth. In the economic sense, capital comes in many forms: currency, equi...
A capital account is a national account that shows the changes in a nation's assets. These assets can be physical or financial. The capital account essentially is the left-hand side of a country's b...
Capital intensive refers to the degree that a company must invest money in physical or financial assets in order to produce a profit. Airlines, auto manufacturers, and drilling operations are often ...
Capitalism is an economic and social system in which participants privately own the means of production -- called capital. Free market competition, not a central government or regulating body, dictat...
A cartel is a group of companies, countries or other entities that agree to work together to influence market prices by controlling the production and sale of a particular product. Cartels tend to s...
A category killer is a large, dominant company that is more efficient but less specialized than other merchants in a particular niche or industry. Wal-Mart is a classic example of a category killer....
Caveat emptor is Latin for let the buyer beware, meaning the buyer assumes the risk in a transaction. Garage sales are great examples of caveat emptor. Buyers purchase goods as is and have little or...
A central bank is an institution responsible for determining the monetary policy of a nation or group of nations.  Exact duties vary by country, but generally a central bank's main goals are to mai...
Collusion, also known as price rigging or price fixing,  occurs when several individuals and/or businesses agree to set the price for something.  For example, let’s assume that there are four ma...
A command economy (also known as a “planned economy”) occurs when decisions about the production and allocation of all goods and services are made by one central government authority. Command ec...
Commerce is the exchange of goods, services or commodities on a large scale. Nearly every business transaction is a form of commerce: purchasing food at a restaurant, buying stocks on the stock mark...
A firm's comparative advantage is its ability to produce a good or service at a lower opportunity cost than another entity. Famed economist David Ricardo first coined the term "comparative advantage...
Also called real GDP, constant-price gross domestic product (GDP) is inflation-adjusted GDP. Gross domestic product (GDP) is the broadest quantitative measure of a nation's total economic activity. ...
The Consumer Confidence Index (CCI) is an index based on the monthly Consumer Conference Board survey that measures consumer sentiment regarding current and future economic conditions. note that the ...
Consumer cyclical refers to a stock or group of stocks that are affected by changes in the economic cycle. Consumer cyclicals perform well when the economy grows and suffer when the economy stagnate...
Consumer durables are a category of consumer products that do not have to be purchased frequently because they last for an extended period of time (typically more than three years). Consumer goods a...
The consumer price index (CPI) measures changes in consumer prices. The Bureau of Labor Statistics (BLS) calculates and publishes CPI data monthly. The CPI is the most recognized inflation measure in...
Consumer staples are household necessities -- products that most of us use on an everyday basis and would continue to use with little regard to their cost or the overall economy. Examples of consume...
/*-->*/ Country risk is the risk that a foreign government will default on its bonds or other financial commitments. Country risk also refers to the broader notion of the degree to which politic...
Critical mass refers to the size a company needs to reach in order to efficiently and competitively participate in the market. This is also the size a company must attain in order to sustain growth a...
The crowding out effect describes the idea that large volumes of government borrowing push up the real interest rate, making it difficult or close to impossible for individuals and small companies to...
Currency is a medium of exchange for goods or services within an economy. Currency can be either fiat or tied to an underlying asset. Fiat money has no intrinsic value and is backed by the full fait...
A cyclical industry is an industry whose performance (revenues, profits, etc.) is tied to the business cycle. Thus, when the economy is grows quickly, the industry does well and vice versa. Cyclical...
Cyclical unemployment is the fluctuating rate of unemployment resulting from swings in the business cycle. This type of unemployment increases during a recession and decreases during an expansion. B...
In the finance world, dead presidents are slang for U.S. currency. The term comes from the pictures of the former U.S. presidents, all of whom are deceased, that appear on the face of American curre...
When supply and demand are out of equilibrium, the market inefficiency created and the societal cost is known as deadweight loss. When used in economics, deadweight loss will be applied to the defici...
Decoupling refers to instances in which security prices behave contrary to normally-occurring correlations. Movements in the price of different securities may be directly or indirectly correlated. I...
A defensive company is a company that does well or at least remains stable during economic contractions and expansions. Defensive companies are most famous for their ability to weather economic dips...
A deficit occurs when expenses exceed revenues, imports exceed exports, or liabilities exceed assets. A deficit is the opposite of a surplus. Fiscal deficits occur when an entity's (usually a govern...
Deficit spending is spending that reduces or offsets a surplus. In the business world, the term often refers to situations where expenses exceed revenues, imports exceed exports, or liabilities excee...
Deflation describes the general decline in the prices of goods and services in an economy, which in turn increase the purchasing power of money. It is the opposite of inflation, but is not the same a...
Demand elasticity is a measure of how sensitive the demand for a product or service is to changes in the price of that product or service. The formula for demand elasticity is: Elasticity = % Chang...
Usually associated with currency, a denomination is the value specified on a monetary instrument. Denomination values are graduated and usually divisible by some common denominator (hence, 'denomina...
A depression is a sustained downturn in economic activity characterized by high unemployment, decreased output and reduced levels of trade.  Low levels of consumer confidence during times of depres...
Deregulation occurs when there is a significant decrease or elimination of government regulation over an industry, market, or economy. The transportation industry is one of the most famous industrie...
A direct cost is any cost related to the production method of a good or service. It is the opposite of an indirect cost. Direct costs are variable costs associated with the inputs and labor require...
The discount rate, also known as the Fed discount rate, is the interest rate charged to commercial banks and other institutions on loans from a Federal Reserve bank. This process is a key tool of Fed...
The discount window is the method that banks use to borrow money from a central bank on a short-term basis, named after an actual teller window at the Federal Reserve where such transactions used to ...
Diseconomies of scale lead the marginal cost of a product to increase as a company grows. This is the opposite of economies of scale which cause the marginal cost for a product to decrease as a resul...
A double-dip recession occurs when the economy experiences a recession followed by a brief recovery and then another period of recession. Recessions occur when the gross domestic product (GDP) decl...
The Dow Jones Transportation Average (DJTA) is the most widely recognized gauge of the transportation sector. It is also the oldest index used today, even older than its more famous brother, the Dow ...
The Dow Jones Utilities Average (DJUA) is the most widely cited utilities index in the United States and the most widely recognized gauge of the utilities sector. The Dow Jones Utilities Average is ...
A duopoly is a form of oligopoly occurring when two companies (or countries) control all or most of the market for a product or service. There are two kinds of duopolies. In the first, the Cournot d...
Durable goods are a category of tangible (physical) products that last three years or longer. Typically, these goods are a bit more expensive because they tend to last for long periods of time. Durab...
Easy money is a phrase that often refers to the presence of low interest rates. In the context of the Federal Reserve, easy money is a method of helping the economy expand by increasing the money sup...
Econometricians are economists who use math and statistics to measure economic data. Econometricians measure things such as gross domestic product, inflation, or to predict changes in the economy. T...
Econometrics is the use of math and statistics to measure economic data. Econometricians use econometrics to measure things such as gross domestic product, inflation, or to predict changes in the ec...
Economic blight occurs when an area of a town shows visible signs of age, disrepair, and crime. For many people, thinking about the "bad side of town" is to think about economic blight. Often, bligh...
Economic exposure is the risk that a company's cash flow, foreign investments, and earnings may suffer as a result of fluctuating foreign currency exchange rates. The extent to which a company may b...
An economic indicator is an index or other data that suggests whether the economy is expanding or contracting. For example, the U.S. Department of Commerce reports the amount of new factory orders e...
An economic recovery is a period of economic expansion, typically after a recession. Let's assume that there has been a significant decline in industrial production, employment, and wholesale or ret...
An economic refugee is a person who moves to another country in search of a higher standard of living. Let's say John Doe lives in Cyprus. The country is undergoing tremendous economic upheaval: Not...
Economic rent is the minimum amount of money that an owner of land, labor or capital must receive in order to let someone else use that land, labor or capital. For example, your economic rent is the...
Economic risk is the chance that macroeconomic conditions like exchange rates, government regulation, or political stability will affect an investment, usually one in a foreign country. For example,...
An economic stimulus occurs when a federal government attempts to use targeted monetary or fiscal policies to stimulate an economy (especially when it enters a recession or depression). Sometimes re...
An economic tsunami is a set of circumstances that produce an event that triggers considerable distress in the financial markets and/or the economy. In the meteorology world, a tsunami is a wave or ...
Economics is the academic study of the production, distribution, and consumption of goods and services. Economics can be broken down into two main disciplines: macroeconomics and microeconomics. Mac...
Economies of scale is a term that refers to the reduction of per-unit costs through an increase in production volume. This idea is also referred to as diminishing marginal cost. Let's assume that it...
Economies of scope is a term that refers to the reduction of per-unit costs through the production of a wider variety of goods or services. Let's assume Company XYZ strictly manufactures vacuum clea...
An economist is a social scientist devoted to the study of the relationship between human behavior and supply and demand. The study of economics is generally divided into two areas: microeconomics a...
In its broadest sense, the economy is the organized system of human activity involved in the production, consumption, exchange, and distribution of goods and services. Derived from the Greek word o...
Something is elastic when its price varies with the price of another item. It the business world, the term most often refers to how much the price of a good or service changes when the supply of that...
Elasticity is a measure of the change in one variable in response to a change in another. In economics, elasticity generally refers to variables such as supply, demand, income, and price. The degree ...
The elasticity of supply, also known as price elasticity of supply, measures the responsiveness of the quantity supplied to a change in the price of a good, with all other factors remaining the same...
The employment cost index, or ECI, is a quarterly report compiled by the Bureau of Labor Statistics within the U.S. Department of Labor that offers wage and benefit information and provides a leading...
Existing home sales is an economic indicator released by the National Association of Realtors. The data reflect the number of homes that have previously been constructed (and therefore accounted for ...
Expansionary policy, or expansionary monetary policy, is when the Federal Reserve uses tools at its disposal in order to increase the money supply for the purpose of stimulating or growing the econom...
External debt, otherwise known as "foreign debt," is the component of total debt held by creditors of foreign countries, i.e. non-residents of the debtor's country. To meet the definition of extern...
In economics, the term factors of production refers to land, labor, and capital: the three inputs that make all commerce possible. Some economists also include entrepreneurship a factor of production...
Factory orders are the dollar value of orders for goods from factories. The U.S. Department of Commerce reports the amount of new factory orders every month. The information is divided into four par...
The Fair Labor Standards Act (FLSA) contains well-known American labor law standards regarding minimum wage, overtime pay and child labor, among others. The FLSA is enforced by the U.S. Department o...
Fair market value is the price at which a willing seller sells a good or service to a willing buyer. Let's assume John Doe wants to sell his house. He lists it for $750,000. Jane Dale wants to buy a...
The federal discount rate is the interest rate at which a bank can borrow from the Federal Reserve. To understand the federal discount rate, it is important to understand that banks derive income fr...
The federal funds rate is the interest rate banks charge each other on loans used to meet reserve requirements. The federal funds rate is often confused with the discount rate, which is the interest...
Federal Reserve Bank refers to any of the 12 branches of the Federal Reserve System overseeing the implementation of U.S. monetary policy.  As the country's central banking authority, the Federal R...
The Federal Reserve Board (FRB), officially called the Federal Reserve Board of Governors, is the Federal Reserve System's primary decision-making body. There are seven members on the FRB, each appo...
A Federal Reserve note is the formal name of U.S. currency. Founded in 1862, the U.S. Bureau of Engraving and Printing creates and produces Federal Reserve notes. It does not produce coins (that's t...
The Federal Trade Commission (FTC) protects consumers and businesses from practices that can cause markets to become unfair and anti-competitive. The Federal Trade Commission is divided into three b...
Fiat money refers to any currency lacking intrinsic value that is declared legal tender by a government.  As valid currency solely by virtue of a government declaration, fiat money is not backed by...
Fiscal deficits occur when a government's expenditures exceed its revenue. A deficit is the opposite of a surplus. In the business world, the term often refers to situations where expenses exceed re...
Fiscal policy refers to a government's spending and taxation policies intended to maintain economic stability, which is indicated by levels of unemployment, interest rates, prices and economic growth...
The Fisher Effect is an economic hypothesis stating that the real interest rate is equal to the nominal rate minus the expected rate of inflation. In the late 1930s, U.S. economist Irving Fisher wro...
Fixed costs are independent expenses that companies must pay, regardless of what their business does. Because they cover expenses that help keep the business up and running, they are sometimes referr...
/*-->*/ A flight to quality is the act of moving capital away from "risky" investments and toward "safer" investments due to uncertainty about the overall economy. /*-->*/ Anything that incr...
A free market is a type of economy with little to no interference from a central government. Instead, a free market is based on supply (from producers) and demand (from consumers).   The term free ...
Free on board (FOB) is a contractual term that refers to the requirement that the seller deliver goods at the seller's cost via a specific route to a destination designated by the buyer. To understa...
Frictional unemployment refers to the portion of the unemployment rate that results from labor market turnovers. This unemployment is ongoing and includes job transitions and communication lags betwe...
Game theory is a tool used to analyze strategic behavior by taking into account how participants expect others to behave. Game theory is used to find the optimal outcome from a set of choices by anal...
GDP gap refers to the disparity between an economy's actual total output and its possible total output. A country's GDP gap is mathematically expressed in the following way and serves as an indicato...
GDP per capita is a country's gross domestic product (GDP) per person. Essentially, this measures the amount of goods and sales a country produced per person, on average. The formula for GDP per ca...
A generation gap is a difference in philosophies between generations. The most famous generation gap is the baby boomers, many of whom came of age in the 1960s, and their parents, who grew up around...
A global recession occurs when global gross domestic product growth is 3% or less. The International Monetary Fund (IMF) identifies global recessions, which have some things in common with national ...
Countries have built economic partnerships that include trade, investment, capital flow, labor migration, and technology. Globalization is a term used to describe the integration of national economie...
The gold standard is a monetary system in which the representative currency is based on a fixed amount of gold held by the central government. Paper currency is actually a "legal note," i.e. a debt ...
The golden rule is very simple: treat people the way you want to be treated. In the business world, it also refers to fundamental principles of government spending: cover current spending with existi...
A Goldilocks Economy is one which enjoys sustained economic growth and low inflation.  This balance is attractive to investors because it allows for a market-friendly monetary policy from the Federa...
The Government Accountability Office (GAO) investigates, with congressional approval, the federal government's spending. The GAO started in 1921, when the Budget and Accounting Act transferred the g...
In the US, government sponsored enterprises, or GSEs, are quasi-governmental, privately-held entities established to improve, and at times make possible, the flow of credit to specific sectors of the...
Greenback is a slang term for the U.S. dollar. This name is derived from the green color of U.S. paper currency. Since U.S. currency notes were first introduced in the early 1800s, their color has c...
Gross Domestic Product (GDP) is a quantitative measure of how much an economy produces. It includes the monetary value of both goods and services within a specific nation’s borders. From cars to ma...
Gross national product (GNP) is the sum of all domestic and foreign output created by citizens of a given country. It can be measured by spending or by income. GNP includes activities by citizens and...
A hard landing refers to an abrupt downward shift in economic growth resulting from monetary policy. Inflation historically accompanies periods of economic expansion. In the U.S., the Federal Reserv...
Hardening refers to stabilization or steady increases in a price level. Financial instruments and derivatives frequently experience volatile market-price fluctuations. Hardening is the process of ma...
Harry Markowitz is a famous economist who won the Nobel Prize in Economics in 1990. Born in Chicago in 1927, Markowitz earned his bachelor's degree in economics at the University of Chicago and then...
A hawk is a person, usually in a politically oriented profession, who favors government efforts to control inflation or who favors reducing the federal budget deficit. Let's assume John Doe works fo...
The Herfindahl Index, also known as the Herfindahl-Hirschman Index (HHI), measures the market concentration of an industry's 50 largest firms in order to determine if the industry is competitive o...
Housing starts is a measure of new private homes built during a given month.  This statistic is viewed as a key economic indicator reflecting the state of the economy. Homes are usually purchased f...
Hyperinflation is a period of extremely high inflation. Imagine if $30,000 -- money that could buy you a car today -- was only enough to buy you dinner tomorrow. You're imagining hyperinflation -- a...
An implementation lag is the time elapsed between an adverse macroeconomic shock and an effort to counter the shock. Let's say the United States experiences a huge increase in unemployment and huge ...
In specie is a Latin term describing the provision of an asset in its physical form rather than in the cash value of the asset. Let's say Company XYZ wants to purchase Company ABC for $10 million. C...
In economic terms, an inefficient market is a market in which securities prices are random and not influenced by past events. The idea is also referred to as weak form efficient-market hypothesis or ...
Something is inelastic when its price does not vary with the price of another item. It the business world, the term most often refers to how little the price of a good or service changes when the sup...
Infant Industry Theory promotes an economic policy that protects young industries in less developed economies until they become established, financially stronger, and capable of withstanding competit...
An inferior good is a product for which demand goes down as income goes up. As opposed to demand for "normal goods," which goes up as income increases, demand for inferior goods goes down as income ...
Inflation is the rate at which prices rise and purchasing power falls. It is why something that cost $1 in 1980 cost $2.37 in 2005. Two general theories explain inflation. The first, the demand-pull...
Initial Jobless Claims is a report issued by the U.S. Department of Labor every Thursday at 8:30am EST.  The data in the Initial Jobless Claims report reflect how many people filed for unemployment...
The Institute for Supply Management (ISM) is a professional association for individuals and companies with an interest in supply management. The ISM publishes two important monthly surveys, the Manu...
An interest rate is the cost of borrowing money, or conversely, the income earned from lending money. Interest rates are expressed as percentage of the principal per period. The formula to find an i...
The International Monetary Fund (IMF) is the central institution embodying the international monetary system and promotes balanced expansion of world trade, reduced trade restrictions, stable exchang...
In The Theory of Moral Sentiments, Adam Smith theorized that as every individual intends to seek out his own gains, he is “led by an invisible hand to promote an end which was no part of his intenti...
The phrase irrational exuberance was coined by Alan Greenspan, chairman of the Federal Reserve, in a December 5, 1996, speech to the American Enterprise Institute. In the speech, Greenspan asked, ...
The J curve represents a hypothetical short-term increase in a country's trade deficit that occurs immediately following a decline in the value of its currency. When a country experiences a sustaine...
The J-curve effect refers to a "J" shaped section of a time-series graph in which the curve falls into negative territory and then gradually rises to a higher level than before the decline. The J-cu...
The annual Jackson Hole Economic Summit focuses on prominent economic issues that face the U.S. along with the rest of the world. The Jackson Hole Economic Summit is also referred to as the Jackson ...
The Jackson Hole Economic Symposium, held in Jackson Hole, Wyoming, is a conference focusing on important economic issues that face the United States and the rest of the world. The Jackson Hole Econ...
The job market is the group of individuals seeking employment within an economy. As with any market, there is a supply and a demand for employment opportunities that directly affects wage and salary...
The Job Openings and Labor Turnover Survey (JOLTS) is the name of a detailed report on the U.S. job market published each month by the Bureau of Labor Statistics. Each month, the U.S. Bureau of Labo...
Jobless claims refer to the unemployment benefits claims filed by unemployed individuals each week. People who have lost their jobs or have been unemployed for some length of time are entitled to re...
A jobless recovery refers to a sustained economic upturn accompanied by persistent or increasing unemployment levels. The New York Times first used the term "jobless recovery" in the 1930s to expres...
Jobs growth is a U.S. economic indicator that represents the number of new jobs created in a given month. The U.S. Bureau of Labor Statistics publishes its jobs growth number each month as part of i...
The K-percent rule is a monetary theory that states that the Federal Reserve should grow the money supply by a set amount per year ("K percent"). Economist Milton Friedman developed the theory. Ofte...
An L-shaped recovery refers to substantial losses in economic growth followed by a period of stagnation. Represented graphically, GDP data looks like the letter "L." For example, suppose country ABC...
Labor intensive is used to describe any production process that requires higher labor input than capital input in terms of cost. The production of goods and services requires labor and capital in va...
Labor market flexibility is the degree to which a company is able to modify its labor force to maximize productivity. A company is constantly adjusting its labor force via variables like staff size,...
Labor productivity measures the hourly productive output for a country's economy during a period of time.  A country's labor productivity is a function of technological innovation, labor resources ...
The labor theory of value says that the value of a finished good correlates solely with the number of labor hours required to produce it. Economist Adam Smith, the founder of the idea of modern capi...
A labor union is an organization that advocates for workers' rights and benefits through collective bargaining. Labor unions represent workers in both the public and private sector. Individual labor...
The Laffer curve is a graphic representation of the relationship between an increasing tax rate and a government's total revenues. The relationship suggests that revenues decline beyond a peak tax ra...
A lagging indicator is a financial gauge that becomes measurable only after an economic shift has taken place. There are certain economic indicators that rely on changes in productivity or economic ...
Laissez faire is a capitalist precept that states that market economies function at optimal efficiency in the absence of government regulation. The term laissez faire is French for "leave to do," or...
The law of large numbers states that as additional units are added to a sample, the average of the sample converges to the average of the population. Applied to finance, the law of large numbers imp...
The law of supply is the microeconomic theory stating that all else being equal, as the price of a good or service increases, the number of goods or services offered will also increase. The law of su...
A leading indicator is an index, stock, report or other measurement that signals the economy or market's direction in advance.  Popular leading indicators include average weekly hours worked in man...
Leakage occurs when money leaves an economy. In the investor relations world, leakage also refers to the unauthorized or unanticipated dissemination of information. Let's say interest rates in Count...
The term "Lender of Last Resort" refers to financial institutions or individuals that provide credit and/or liquidity to other financial institutions and/or individuals who have exhausted their remai...
Liquidity trap describes the macroeconomic conditions under which interest rates cannot be pushed any lower, rendering monetary policy ineffective.  Named in reference to the associated overabundan...
Macro accounting, also called national accounting, is a method of calculating the economic activity of a country or region. In the United States, federal government agencies typically use macro acco...
A macro environment is a wide, broad set of economic conditions rather than the conditions in a specific sector or industry within an economy. The macro environment in the American economy, for exam...
A macroeconomic factor is a characteristic, trend or condition that comes from or applies to a broad aspect of an economy rather than a certain population. Common macroeconomic factors include gross...
Macroeconomics involves the study of aggregate factors such as employment, inflation, and gross domestic product, and evaluating how they influence the economy as a whole. The Great Depression and i...
Macroprudential analysis is analysis of the stability of an economy's financial institutions. In the United States, stress tests are the most common example of macroprudential analysis. In that anal...
A magnet employer is an employer to which people are attracted or especially interested in working for. For example, let's say Company XYZ is located in Anywhere, USA. It routinely appears on lists ...
A mancession is a situation in which the employment rate of men is lower than the employment rate for women. Let's say the employment rate for women is 95%. Meanwhile, the employment rate for men is...
A market is a location where buyers and sellers meet to exchange goods and services at prices determined by the forces of supply and demand. A market may be a physical location or a virtual one over...
A market basket is a group of items that simulate the overall price movements in a market. At an economic level, a market basket is a permanent set of goods and services that are bought and sold as ...
Market cycles are the periods of growth and decline in a market, sector or industry. In a quantitative sense, market cycles are visible in price movements that rise, fall, and return to their point ...
A market disruption is a sharp, rapid weakening of market performance in response to external forces. A market disruption often occurs as a result of an event or group of events that are widely perc...
A market distortion occurs as a result of a government's involvement in a market through monetary or fiscal policies. Governments frequently intervene in a country's economy and implement policy mea...
Market dynamics are the interaction of supply and demand as the basis for setting prices. A fundamental concept of macroeconomics is the relationship between supply and demand as the principle force...
A market economy is structured to allow market forces to determine prices with little or no government involvement. In theory, a market economy's functions are based on fluctuations in supply and de...
A market failure occurs when the supply of a good or service is insufficient to meet demand. This results in an inefficient distribution of resources among market participants. Under free market con...
Market indicators are quantitative factors that predict the future behavior of market indices. Market indicators are used in technical analysis to forecast market trends. Market indicators are ratio...
Market jitters refers to apprehension among buyers and sellers resulting in choppy and unpredictable market performance. Unfavorable news regarding economic indicators, earnings reports, interest ra...
Market penetration is the percentage of a target market that consumes a product or service. Market penetration can also be a measure of one company's sales as a percentage of all sales for a product....
Market power refers to a single company's ability to control the market price of a good or service. The macroeconomic concept of perfect competition assumes that no one producer can set a price for ...
Market price is the price of an asset or product as determined by supply and demand. In the broadest sense, an item's market price lies at the point of intersection between the available supply of t...
Market saturation is the maximum sales volume for a product or service under current market conditions assuming a constant level of demand. When the number of units of a given product or service has...
A market segment is a discrete group of individuals who bear a number of similar characteristics. A market segment is characterized as a homogeneous population within a given market whose members di...
Market segmentation theory posits that the behavior of short-term and long-term interest rates are mutually exclusive. Market segmentation theory suggests that the behavior of short-term interest ra...
A mature industry has passed the rapid growth stage and has an established pattern of market share, earnings, and profits. All industries pass through various stages of growth, stability and decline...
The mean is the average of a series of numbers.  The formula for calculating a mean is: Mean = (X1 + X2 + X3 + ... +XN) / N where X1, X2, X3, XN are the values of the observations being averaged an...
Mean reversion is the theory that interest rates, security prices, or various economic indicators will, over time, return to their long-term averages after a significant short-term move. Mean revers...
Mergers & acquisitions (M&A) refer to the management, financing, and strategy involved with buying, selling, and combining companies. A merger or an acquisition usually starts out with a ser...
Minimum wage is the lowest hourly amount an employer may legally pay an employee. In the United States, the amount varies from state to state. If an employer compensates employees on an hourly basis...
A Minsky moment refers to a sharp decline in prevailing market sentiment and economic productivity after a long period of widespread optimism. Times of robust economic growth, like that experienced ...
Monetarism is a well-known macroeconomic school of thought developed by Milton Friedman. The Great Depression and its resulting high unemployment greatly influenced the development of macroeconomics...
Monetary policy is the means by which the Federal Reserve manipulates the U.S. money supply in order to influence the U.S. economy's overall direction, particularly in the areas of employment, produc...
Money is a medium of exchange for goods or services within an economy. Philosophically, anything can be money, but coins and paper notes are the most generally accepted forms. In most cases, each co...
A monopoly is a market environment where there is only one provider of a certain economic good or service. For a true monopoly to be in effect, each of the following characteristics would typically ...
The Nakahara Prize is an award from the Japanese government to Japanese economists under age 45 who have made significant contributions to the world of economics. The board of directors of the Japan...
Narrow moat refers to the size of a company's competitive advantage. The term is an adaptation of the term "economic moat." Long ago, castles were traditionally part city and part defensive fortress...
Narrow money is a colloquial term for the total of a country's physical currency plus demand deposits and other liquid assets held by the central bank. The economic term for narrow money is M1. Narr...
In economics, a Nash equilibrium occurs when two companies in a duopoly react to each other's production changes until their prices reach an equilibrium. The term is named after John Nash, who is an ...
National accounting, also called macro accounting, is a method of calculating the economic activity of a country or region. In the United States, federal government agencies typically use national a...
The National Bureau of Economic Research (NBER) is a private, nonprofit, nonpartisan research organization that studies the economy. Founded in 1920, the NBER undertakes and distributes unbiased eco...
A national currency is simply the currency issued by a country's central bank. Currency is a medium of exchange for goods or services within an economy. For example, in the United States, the nation...
National income accounting is a government accounting system to measure economic activity. For example, national income accounting measures the revenues earned in the nation's companies, wages paid,...
The national savings rate is the percentage of gross domestic product that households, governments and businesses save rather than spend. There are only two things to do with money: spend it or save...
Natural unemployment is the level of unemployment always present in an economy as industries expand and contract, as technological advances occur, as new generations enter the labor force and as work...
Negative carry means that the price of borrowing money is higher than the returns earned on borrowed money. It is the opposite of positive carry. For example, let's assume John borrows $10,000 from ...
In economics, negative growth usually refers to shrinking gross domestic product (GDP). For example, if the United States' GDP falls from $14.4 trillion to $14.1 trillion, we would say that the U.S....
Net borrowed reserves are a measure of the difference between what a bank has borrowed from the Federal Reserve and the cash reserves it holds above the required minimum. The opposite of net borrowed...
Net debt per capita is a government's total debt (less cash on hand) per person.  The formula for net debt per capita is: Net Debt per Capita = (Short-Term Debt + Long-Term Debt - Cash and Cash Eq...
Net domestic product (NDP) represents the net book value of all goods and services produced within a nation's geographic borders over a specified period of time. Gross domestic product (GDP) is the ...
A net exporter is a country that sells more to other countries than it buys from other countries. Countries are often net exporters in some industries (natural gas, for example) but net importers in ...
Net exports are the difference between a country's total value of exports and total value of imports. Depending on whether a country imports more goods or exports more goods, net exports can be a po...
Net free reserves is a measure of how much cash a bank holds above the Federal Reserve's required minimum. The opposite of net free reserves is net borrowed reserves. The formula for net free reserv...
A net importer is a country that buys more from other countries than it sells to other countries. Often, countries are net importers in some industries (natural gas, for example) but net exporters in...
In banking, the net interest rate spread is the difference between interest earned on loans, securities, and other interest-earning assets and the interest paid on deposits and other interest-bearing...
Net lending is an economic measure of whether governments are either providing financial resources to other sectors of the economy or using resources from other sectors of the economy (the latter is ...
Net national product (NNP) is the market value of a nation's goods and services minus depreciation (often referred to as capital consumption). The formula for NNP is: NNP = Market Value of Finished ...
The neutrality of money is a theory stating that changes in the money supply only affect prices and wages rather than overall economic productivity. For example, when the Federal Open Market Committ...
The new economy refers to the convergence of manufacturing, services and technologies to produce high value-added, technology-enabled, and adaptable industries. Industry trends have always adapted t...
A new paradigm is a new logical framework for understanding a situation. In the financial markets, a new paradigm refers to the shift in the underlying economic rules and factors that affect the mark...
The New York Clearing House Association, founded in 1853, is the country's first and largest bank clearing house. The Clearing House was created to streamline the bank settlement process, which had g...
Also referred to as face value or par value, nominal value is the value shown on the face of a security certificate or instrument, including currency. The concept most commonly applies to stocks and ...
Non-negotiable refers to something that cannot be bought, sold, exchanged or transferred. Non-negotiable also can refer to a term or condition that is not open to negotiation. Certain securities, co...
Nonfarm payrolls is an economic indicator released by the Department of Labor on the first Monday of each month at 8:30am EST. The data reflect the change in nonfarm payrolls from the previous month....
The North American Free Trade Agreement (NAFTA) is an agreement among the United States, Canada and Mexico designed to remove tariff barriers between the three countries. NAFTA was implemented on Ja...
Obamanomics refers to the economic policies of former United States President Barack Obama. In general terms, the primary focus of Obamanomics was economic stimulation in the wake of recession. Cent...
Occupational labor mobility is the ease with which a workforce can switch industries, retrain for new jobs and transfer to other sectors. For example, consider ice delivery or typewriter repair. A h...
An offer is a communication of interest in buying or selling an asset. In other contexts, it might refer to the act of making something available for sale. For example, a retailer might offer a men'...
An official settlement account is an account that records transactions of foreign exchange reserves, bank deposits and gold at a central bank. For example, the Federal Reserve uses official settlem...
An official staff commentary is a set of written answers from the Federal Reserve or the Treasury department regarding various interpretations and regulatory guidance on a myriad of topics. The Fede...
Okun's gap occurs when a country's actual gross domestic product differs from its predicted gross domestic product when applying Okun's law. Named after economist Arthur Okun, Okun's law states that...
Named after economist Arthur Okun, Okun's law states that for every 1% increase in the employment rate, gross domestic product increases 3%. Let's say the unemployment rate decreases by 2% (that is,...
Old Economy describes an economy or even a group of industries that does not rely on technology or technological advancement.   For example, horse farms, bread baking, landscaping and prostitution...
An oligopoly is an economic market whereby a small number of companies or countries generate and control the entire supply of a good or service. Let's assume that Company XYZ, Company ABC, and Compa...
An oligopsony is a market in which only a few buyers purchase all of an industry's output. Let's assume that Company XYZ, Company ABC and Company 123 buy 95% of the country's carrots. If Company XYZ...
A one-stop shop is a single location where all of the needed services for a particular activity are provided. One-stop shopping is a popular concept for packaging products and service oriented busin...
The Organization for Economic Cooperation and Development (OECD) is an international economic forum that pursues cooperative approaches to common issues affecting individual members as well as the gl...
The overnight rate is the interest rate banks charge each other on loans for meeting reserve requirements. The overnight rate is frequently confused with the discount rate, which is the interest rate...
A pale recession is a term describing a recession that does not have much impact on an economy. Former Federal Reserve Chairman Alan Greenspan coined this term in a 2008 television interview. At the...
Paper money is a medium of exchange for goods or services within an economy. It is printed on paper, rather than in coin form. Paper notes are the most generally accepted forms of paper money. In mo...
The paradox of thrift is an economic theory that states that the more people save, the less they spend and thus the less they stimulate the economy. Developed by economist John Maynard Keynes, the p...
A parallel shift in the yield curve occurs when the interest rates among bonds (or T-Bills) with different maturity dates change at the same rate. /*-->*/ For example, if the yield on a five-y...
The Paris Club is slang for 19 developed countries who meet in Paris to discuss issues with nations to which they have lent money. The Paris Club has several members, including the United States, Un...
Participation rate usually refers to the portion of the economy's working age population that is in the civilian labor market. The participation rate measures the number of people who are in the lab...
Per capita measures help analysts and investors get a better feel for whether a company, country, or other entity is productive, efficient, or profitable. For instance, the per capita measure of GDP ...
Permanent open market operations (POMO) are used by the Federal Reserve to either add to or drain the capital reserves available in the banking system. If the Federal Reserve wants to increase the a...
Personal Consumption Expenditures (PCE), or the PCE price index, is a statistic compiled and released quarterly by the U.S. Bureau of Economic Analysis (BEA) that synthesizes a host of data, chief am...
The Personal Income and Outlay report is compiled by the U.S. Department of Commerce. The report reflects personal income earned by individuals above the age of 18 working in the United States labor ...
The Phillips curve refers to the theory that unemployment rates relate inversely to inflation rates. Proposed by British economist A. W. Phillips, the Phillips curve graphically expresses an inverse...
A plutocracy is a system of government where the wealthiest people in a country rule or possess the power, and thus govern directly or indirectly. Plutocracy is often linked to the term “dynastic w...
A predictive indicator is a ratio, index, report or other measurement that signals a company or market's direction in advance.  The business cycle has highs and lows. That's why predicting what's a...
A price ceiling is the maximum price a seller can legally charge a buyer for a good or service. Regulators usually set price ceilings. Price ceilings typically have four tenets: 1. The regulator (su...
Price creep refers to a gradual increase in the price of a good or service. Price creep usually occurs because production costs have increased. Usually, producers will attempt to fight price creep b...
Price discovery refers to the act of determining the proper price of a security, commodity, or good or service by studying market supply and demand and other factors associated with transactions. In...
Price discrimination is the act of charging different customers different prices for the same good or service. A common example of price discrimination is ladies' night: men must pay full price for ...
Price elasticity of demand (PED) is a way to measure the change in the demand for a product or service in response to a change in its price. With most goods, an increase in price will lead to a decre...
Price improvement is the often unexpected event of obtaining a better bid or ask price than the price quoted at the time the buy or sell order is made. For example, assume you own 1,000 shares of Co...
Price inflation is simply an increase in the price of a good or service over time. The consumer price index (CPI) is the most common measure of price inflation. The Bureau of Labor Statistics (BLS) ...
Price leadership is the act of setting the price for a good or service in an industry. Let's assume that Company XYZ manufactures windshield wipers. It is one of five windshield manufacturers in the...
In economics, a price maker is a monopolistic company that can dictate the prices of its goods because there are no substitutes for it. In trading, a price maker is a stockholder who controls a large...
Also known as collusion or price fixing, price rigging occurs when a group of people or businesses agree to set the price for something.  In the stock market, traders with inside information might ...
In consumer behavior, price sensitivity (also called the elasticity of demand) is the degree to which price affects the sales of a product or service. Thus, the formula for price sensitivity is:Pric...
Price stickiness refers to the price persistence of a good, service, security or economic measure (like wages) despite changing economic conditions. Prices can be sticky on the way up or sticky on t...
A price war is an event whereby two or more companies continually lower prices to undercut each other. Airline companies are famous for their price wars. If Airline XYZ cuts the price of a flight fr...
Price-level targeting is an economic strategy whereby a central bank tries to reestablish an overall price level rather than reestablish a particular inflation rate. For example, let's assume that i...
"Priced out" refers to something being too expensive. Alternatively, priced out refers to the adjustment in a security's market price in response to new information. For example, a person earning $3...
Pricing power is the effect the price of a good or service has on the demand for that good or service. For example, a company that manufactures a pill that cures cancer has a lot of pricing power: t...
When financial assets and markets -- as with the broader economy -- fall steadily for an extended period of time, it is known as a primary downtrend, or "bear market." A primary downtrend is when ea...
When financial assets and markets -- as with the broader economy -- move in an upward direction for extended periods of time, it is known as a primary uptrend, or “bull market.” A primary uptren...
Pro bono refers to any work or service that someone provides free of charge for the common good. From the Latin phrase "pro bono publico" meaning "for the public good," the motivation behind pro bon...
Procurement is a purchasing process that controls quantity, quality, sourcing and timing to ensure the best possible total cost of ownership. Procurement may be a simple purchasing arrangement with ...
The Producer Price Index (PPI) is used to measure the change over time of the average price of goods produced domestically. The producer price index consists of a weighted index of goods prices at w...
Productivity refers to the measure of output (e.g. products) from a production process per unit of input (e.g. labor and capital). Productivity is usually expressed as a ratio of output to inputs. I...
Purchasing power is a phrase to describe the quantity of goods or services that a dollar can buy. A decrease in purchasing power is called inflation. Let's assume $1 bought 1.50 gallons of gas in 19...
Quantitative easing (sometimes abbreviated "QE") is a strategy used by a central bank -- like the Federal Reserve -- to add more money to that which is in circulation. The premise (which is largely ...
The quantity theory of money argues that the size of the money supply influences the price of goods. The quantity theory of money (sometimes called QTM) says that prices rise when there is more mone...
The Quarterly Services Survey is an estimate of the operating revenue by customer class for communications firms, IT firms, hospitals and nursing services providers.   The Census Bureau administer...
Reaganomics is a reference to U.S. president Ronald Reagan's economic policies between 1981 and 1989. Also called voodoo economics, Reaganomics is an idiomatic expression used in reference to the tr...
Real gross domestic product, or real GDP, is a measure of the value of all goods and services produced by an economy in a period. Because the value is adjusted for inflation it can separate out the e...
Real income is inflation-adjusted income or wages. For example, let's say John Doe works for Company XYZ. His salary is $100,000 per year. He started the job five years ago at $100,000 and has not h...
A recession is two consecutive quarters of declining gross domestic product (GDP) Let's assume that there has been a significant decline in industrial production, employment, and wholesale or retail...
A stock or other investment is recession resistant when it tends to rise in value when the economy falters (and the markets falter with it). Recession-resistant investments are usually countercyclica...
The reserve ratio is the percentage of deposits that the Federal Reserve requires a bank to keep on hand at a Federal Reserve Bank. For example, let's assume that Bank XYZ has $400 million in deposi...
Reserve requirements are Federal Reserve rules that require banks and other financial institutions to keep a strict percentage of their deposits on reserve at a Federal Reserve bank. The Federal Rese...
A run occurs when a flood of depositors withdraw their funds from a bank within a short time frame. It’s important to remember one thing about banks: They don’t keep your money in cash in a vaul...
A sacrifice ratio measures the costs of lower economic production as a percentage of the change in inflation. The formula for the sacrifice ratio is: Sacrifice Ratio = Dollar Cost of Production Los...
A seller's market exists when there are more sellers than buyers in the market for a certain good or service. Housing is a common place to find a seller's market. Let's say that ABC Town has 100,000...
A semi-variable cost has characteristics of both fixed costs and variable costs once a specific level of output is surpassed. Semi-variable costs remain fixed up to a particular production volume. B...
The stock market crash of 1929 is the most famous stock market crash of all time. On just one day (October 24, 1929), panicked sellers traded nearly 13 million shares on the New York Stock Exchange (...
The stock market crash of 1987, also called Black Monday, refers to the 509-point fall in the Dow Jones Industrial Average on October 19, 1987, one of the worst days in the average's history.   Bla...
Strong-form efficiency is a component of the random walk theory and states that market and securities prices are not random and are influenced by past events. Strong-form efficiency is the opposite o...
Structural unemployment is a category of unemployment arising from the mismatch between the jobs available in the market and the skills of the available workers in the market. Structurally unemploye...
A tax treaty is an agreement between two countries regarding how they tax each other's citizens. In the U.S., residents of foreign countries that have tax treaties with the U.S. are taxed at a reduc...
A time deposit is an interest-bearing deposit held by a bank or financial institution for a fixed term whereby the depositor can only withdraw the funds after giving notice. Time deposits generally ...
The trade balance, also known as the "balance of trade (BOT)", is the calculation of a country's exports minus its imports. When a country imports more than it exports, the resulting negative number...
When the value of a country's imports exceeds the value of its exports, the resulting negative number is called a trade deficit. Balance of trade (BOT; also called the "trade balance") is a measure ...
When the value of a country's exports exceeds the value of its imports, the resulting positive number is called a trade surplus. First, let's back up and define another important term. Balance of tr...
Treasuries refer to all the tradable and negotiable debt obligations issued by a country's government. Broadly speaking, when an investor is referring to "Treasuries," he or she is referring to U.S....
Trickle down theory suggests that a policy of tax cuts and other financial benefits to businesses and rich individuals will indirectly benefit the broader and poor population. The basic principle of...
The United States Department of the Treasury protects and manages many American economic and financial systems. The Secretary of the Treasury is the Chief Financial Officer of the U.S. government and...
Uncle Sam is a fictional character who represents the United States government. His predecessor was a character named Brother Jonathan. Uncle Sam first appeared in the 1820s. Though many artists dre...
Underemployment occurs when one does not have a job that is full-time or that reflects his or her training and financial needs. It is not the same as unemployment, which is the percentage of employab...
Unemployment occurs when one does not have a job. In the financial world, the term is often short for unemployment rate, which is the percentage of employable people in a country’s workforce who ar...
The unemployment rate measures the percentage of employable people in a country's workforce who are over the age of 16 and who have either lost their jobs or have unsuccessfully sought jobs in the la...
Universal banking refers to the practice of offering clients retail banking as well as investment services. Investment services and retail banking services (savings and checking accounts, loans, mor...
A value proposition is a marketing statement that positions a company’s products in the mind of the consumer as the best one for their needs. It clearly, easily, and concisely articulates what the c...
Variable costs are the direct costs a company incurs when producing goods or services. Variable costs are incurred in direct proportion to the quantity of goods or services produced.  Simply put: As...
A Veblen good is a good or service whose demand increases when its price increases. The term is named after economist Thorstein Veblen. Many luxury goods are Veblen goods. That is, the more expensiv...
The velocity of money is the average frequency with which a unit of money is spent in an economy. For example, assume a very small economy that has a money supply of $100 and only two people. Bob se...
Vladimir Illyic Ulyanov, also known as Vladimir Lenin, was the first leader of the Soviet Union and a key player in its October Revolution. Born in 1870 as Vladimir Ulyanov, Lenin's revolutionary ro...
Also called “Reaganomics,” voodoo economics is the nickname for the hallmark economic policy of Ronald Reagan, the 40th President of the United States (1981-1989), who was trying to stimulate an ...
A W-shaped recovery refers to two consecutive cycles of economic decline and growth that graphically resemble the letter "W." A W-shaped recovery graphically expresses what is frequently termed a "d...
Also called cost-push inflation, a wage-price spiral is an economic term that describes how prices increase when wages increase. The general idea behind a wage-price spiral is a simple one of supply...
Also called cost-push inflation or a wage-price spiral, wage-push inflation is an economic term that describes how prices increase when wages increase. The general idea behind a wage-push inflation ...
Wall Street is the name used to describe the place in New York City where much of the United States' financial industry is concentrated. The name "Wall Street" is also used frequently used to describ...
The Walmart effect refers to the economic impact of a large discount retailer on a local market. Named after the large discount retailer, it is used to describe the crowding out and shuttering of sma...
Walras's law is the concept that a surplus in one market indicates the presence of a shortage in another. In 1844, neoclassical French economist Leon Walras posited that the existing markets of the ...
A war economy centers on producing goods and services that support war efforts. For example, if Country X spends most of its tax dollars on defense and/or uses most of the proceeds from borrowing mo...
The random walk theory states that market and securities prices are random and not influenced by past events. The idea is also referred to as weak form efficiency or the weak form efficient-market hy...
A wide economic moat is a significant competitive advantage that is extremely difficult to copy or emulate, thereby creating a barrier to entry for competing firms. Castles were traditionally part c...
The World Trade Organization (WTO) establishes rules of trade among its member nations. To this end, the WTO also handles trade disputes, monitors trade policies, provides technical assistance for de...
X-efficiency describes a company's inability to get the maximum output for its inputs due to a lack of competitive pressure. Economist Harvey Leibenstein, a Harvard professor who studied the psychol...
The Young and Wealthy but Normal (YAWN) demographic is a group of people who typically have generated their own wealth but live modest lifestyles. Let's say John and Jane Doe each has a job that pay...
Zero-bound is a scenario in which the Federal Reserve lowers interest rates to zero or near zero. Traders sometimes also use the term to describe stocks that seem to be quickly losing value. The Fed...