a comprehensive dictionary of economics (nelson brian)

_axL_ (OMPREHENJIVE [)ICTI()~Al2'" ~~~~(Jf~~~~ ECONOMICS Chief Editor & Compiler: Nelson Brian ~ ABHISHEK All rights reserved No part of this book may be reproduced in any form, electronically or otherwise, in print, photoprint, micro film or by any other means without written permission from the publisher ISBN : 978-81-8247-031-6 ISBN 8/ -8247-03 /-5 Copyright Publisher 2009 2004 First Edition Published by ABHISHEK PUBLICATIONS, S.C.O 57-59, Sector 17-C, CHANDIGARH-1600 17 (India) Ph.-2707562,Fax-OI72-2704668 Email: abhpub@yahoo.com Concept & Design by Xact Ad 'N' Art Studio, Delhi Pri1lted at : Balaji Offset, Naveen Shadra, Delhi-32 Preface Economics is the science that deals with the production, distribution and consumption of wealth It studies the various problems oflabour, finance, taxation, etc and tries to find a solution or the best possible way to tackle these problems The subject not only deals with the present and future growth of a country's economy at the micro level, like the consumption of a household or an individual [trm, but also studies the same at a bigger and more complex level or the macro level, like the national income or the production of an industry The job of the economists is to identify the economic problems of a country's economy and find solutions for the same, thereby promoting a healthy and smooth economic growth There are two schools of thoughts in economics, viz the Classical and the Modern The economists belonging to these two schools have contributed a lot in the field of economics through a number of theories But, as the human wants are endless, so are the economic problems unending and therefore, economists are continuously working towards finding solutions for these new problems The dictionary is made with the intent of providing the readers with a handy referral for the terminology used in the subject The dictionary covers almost all the terms that form a part and parcel of economics in simple and easily comprehensible language In order to enhance the readers knowledge and bring about more relevance, many examples and pictures have been used along with the definitions of the terms II a foir trader / foir traders I accelera~ t:lepreciation - a fair trader / fair traders contrasted with free trader, a fair trader is a holder of the point of view that one's country's government must prevent ~oreign companies from havmg artificial advantages over domestic ones ~ and government) of a country, ; in contrast to the total demand ~ for that country's output : _ absorption approach ~ a way of understanding the fac; tors of the balance of trade, : noting that it is equal to the l b ' : earnings less a sorptIon - abilene principle ~ _ abstinence a description of a group's inabil- ~ the giving up of the current conity to solve their disagreement ; sumption in order to increase Nobody wants to reach a par- : the future consumption It is ticular destination (Abilene), ~ often characterised by directing for fear of offending or contra- ; the available resources towards dicting each other : the production of capital goods - absolute advantage ~ Due to this, the future producgoods will a term used in the interna- ; tion of the consumer , tional trade theory, as per which ~ increase a country specialises in produc- : _ abundant factor ing such goods and services that ~ the factor which is available in it is able to produce more ~ffi- ~ abundant supply in a country ciently (more output per urut of ; relative to other countries Can input) than any other country : be defmed both with respect to the ability of a country to pr?- ~ quantity and price duce a good at lower cost, m i l d d tion terms of real resources, than : - acce ~ra~e eprecla I of a ' ther cuntry In a Ricardian depreCIatlOn d h new asset ano o h model, cost is in term of only ; over a peno t at ISalmTuch shorter than th d Ia bour ' the norm I e I firms operatIng m e eve op- absorption : ing areas usually follow this I the sum-total of demands for : method of depreCIatIOn goods and services by all resi- I dents (consumers, producers Economics======= II ",,6===========~tinginJlatUm I accepting house II • accelerating inflation a sudden inflation rate increase It is the result of the government's efforts to hold the employment level below its natural rate I I I I I • acceleration principle; accelerator indicative of a relationship be.tween income and output and the investment effects associated with the changing output The size of the accelerator depends on the marginal capital/ output (C/O) ratio (i.e how much new investment is needed in response to the changing demand for output) and on a variety of other factors influencing investment decisions • accelerator the process in which demand change for the consumer goods leads to an even larger demand change for the capital equip~ ment used to produce them accelerator co-efficient states that any increase in the output is always accompanied by a corresponding increase in the capital, like machinery etc., that is used to produce it The incremented capital output ratio depicts the amount of capital that should be increased in order to raise an additional unit of output I • I I accelerator principle states that the aggregate net investment level is dependent on the expected change in output • acceptance credit a way of payment in international trade In case the accepting house finds the credit of a foreign import merchant satisfactory, it may open an acceptance credit for him in say New York I • I I I I accepting house the establishments whose business is to accept or guarantee bills of exchange Such establishments may also be involved ·in several other services and functions I • I I II ========E&onomics IIIICUSS / accessibility I accounts receiV:============7 ~ cepted or endorsed to make • access / accessibility term expressing the ease with ; some cash available for a short which a location can be reached : term, without receiving any and interacted with from other ~ goods in return The sole pur~ pose of this is of discounting locations ; • accommodation endorse• acc~sion rate also known as the hiring rate, I ment i.e the total number of employ- : the endorsing of a note or any ees added to the payroll in a ~ other bill of credit by one indigiven period of time It acts as ; vidual to another in order to an important indicator of the : grant him the right to obtain a I loan future business conditions ~ -_ _ ~ ~ _1Aow c.- _ • accounts payable I the amount that a business : owes to its suppliers and other ~ parties, generally a period of 10 I to 90 days is taken as standard to pay for the goods already transported Il" ""' , - " : : ~ • accessions tax the tax on the receiver of gifts and inherited property, it is levied by the government I • accommodating movements the transferring of gold and con- I • accounts receivable vertible currency aboard by a ; the amount that a business is country in order to meet its bal- : entitled to receive from its cusance of payment deficits ~ tomers, generally a period of ; 10 to 90 days is taken as stan• accommodation bill that bill, which is drawn, ac- I: dard to receive payments for E&onomics======= \I accounts ;eiVIJble (finance) I active circulation " the goods already transported • accounts receivable (finance) the entitlement of a firm to receive application of money from its debtors for obtaining funds to fincnce the current operating expenses or some other expense • accrual basis a method of accounting in which the income and expenses are not charged until the time they are actually earned or incurred I I I • accrued expenses an accounting entry ,,,herein a liability is recorded when the cost of a service used but not paid for is observed • accumulation the acquisition of an increasing quantity of something • ACP countries a group of Mrican, Caribbean across-the-board tariff changes a change of all tariffs in a country They are raised or lowered by an equal percentage I • I I action lag the delay between the formulation of a policy decision and its execution I • I actionable subsidy a subsidy which is not prohibited by the World Trade Organisation (WTO), but that member countries are permitted to levy compensating duties agamst I • I • accrued the earnings, sales, expenses or other items of income or expenditure, which are already made or incurred and are outstandmg and Pacific less developed countries that were included in the Lome Convention and now the Cotonou Agreement I I I • active balance a term to indicate a balance of payments that is favourable for a country, when the revenue earned from exports is higher than the expenditure incurred on tl1e import of goods and serVICes I I I • active circulation at any given time, the part of the RBI's issue which is in circulation II ========Eetmomies 1\ actiPe tnllritet I addition rule *================ ~ of its effects on trade, price or - active market market for a specific set of stock ; some other measure, to a non or shares traded quite fre- : tariff barrier I quently and regularly : - ad valorem tariff _ activity rate : tariff defined as the percentage I of the value of an imported the percentage of people in a given population age group that ~ good are employed, but not in the ~ - ad valorem tax defence forces of the country a t