ECONOMIC VOCABULARY

Ability-to-pay principle- The concept that justifies taxing people with larger
incomes or wealth more than those with lesser incomes in both absolute and
percentage terms.
Absolute advantae-The ability of a country to produce a good or service more
cheaply than another.
Acceptability- A characteristic of money that permits it to be accepted in the
market as a medium of exchange.
Ac!uisition- When one firm takes over another ( usually by purchasing a
controlling portion of common stock.
Accountin pro"it- What is left after subtracting the sum of all explicit costs from
total revenue.
Acreae-allot#ent prora#- A government program in which a total number of
acres for planting agricultural products is determined and followed by allocating
that number among individual farmers. !nly farmers who restrict their plantings to
the allotted acreage may participate in the support price system.
Ad#inistered price- "rices that are set by management and not determined
exclusively by demand and supply.

Ad valore# ta$- A levy applied to the value of what is being taxed# particularly
imports.

A""ir#ative action- A policy to actively locate and hire women and members of
minority groups.

Aency s%op- A contract in the workplace in which employees must pay union
dues whether they become members of the union or not.

Areate supply- The total spending in the economy for a given
period. $pending by consumers# investment by businesses and expenditure by
government ( The %eynesian formula & ' ( ' ) * + is aggregate demand.

Areate supply- The value of the products the economy is willing to produce.

Aricultural Ad&ust#ent Act- "assed in ,-..# this act established the basis for
American agricultural policy by restricting output and providing price supports
through the parity concept.

Aid to 'a#ilies (it% )ependent C%ildren *A')C+- A joint state- and federally
funded transfer program that provides payments to poor families with dependent
children.

Allocative e""iciency- The distribution of resources to producers and consumers in
such a way to maximi/e satisfaction according to the preferences of that society.

Annually balanced budet- The idea that the federal government should balance
its expenditures with its revenues every year.

Antitrust policy- 0aws# designed by agency decisions and court verdicts# to
enforce competition and curb restraint of trade and monopolistic practices.

Appreciation- The increase in the value of one currency in relation to other
currencies.

Arbitration- 1ethod of settling a labor dispute when both parties agree to abide
by the decision of a third party.

Assess#ent- The official valuation of property or income for tax purposes.

Asset- Any item that an individual or a business owns that has economic value.

A,- account- An automatic transfer service that shifts money from a savings
account to a demand deposit account to cover checks as they are drawn.

Auto#atic stabili.er *built-in+- A built-in tool that compensates for changes in
business activity without re2uiring changes in government policy.

Averae cost *AC+ or averae total cost *A,C+- The total cost of production
divided by the number of units produced. (t is also the sum of average fixed costs
and average variable costs. (t is also known as cost per unit or just unit cost.

Averae "i$ed cost- 3ixed costs divided by units produced.

Averae p%ysical product- Total output divided by the number of units of a factor
of production used to produce it.
Average propensity to consume (A"&- The percentage of disposable income that
is saved.

Averae revenue- Total revenue divided by the number of units sold.

Averae variable cost- Total variable costs divided by the number of units
produced.

Balanced ro(t% policy- A program designed to produce growth in all sectors of
the economy at the same time.

Balance o" pay#ents- An accounting statement showing a nation4s total financial
transactions with all other countries. 5xports are listed as credits and imports as
debits.

Balance o" trade- The difference between the value of a nation4s exports and
imports.

Balance s%eet- A financial report on a firm4s assets# liabilities and net worth at a
particular time.
Ban/ %oldin co#pany- A corporation created to hold the stock of other financial
institutions.

Ban/ note- "aper money that is issued by a commercial bank.

Barriers to entry- !bstacles that make it difficult for new firms to enter a market.

Barter- The direct exchange of goods for goods rather than using money as a
medium of exchange.

Base year- A reference point when constructing an index to measure changes# such
as the consumer price index.

Bear-t%y-nei%bor policy- A policy designed to increase domestic demand by
imposing tariffs and 2uotas on foreign goods. 6esigned to reduce domestic
unemployment at the expense of higher unemployment in foreign countries.

Bene"it principle- The idea that people who receive the most benefits from
government should pay the highest taxes.
Bilateral #onopoly- A market in which there is only one buyer and one seller of a
resource or product.

Blac/ list- A list of workers# usually union organi/ers# circulated by employers to
prevent those on the list from getting jobs.

Blac/ #ar/et- An illegal market where goods are sold above the maximum or
ceiling prices.

Bond- An interest-bearing certificate issued by a government or a corporation in
exchange for borrowed money.

Boo#- A period of great business activity where demand exceeds supply and
prices increase.

Boureoisie- Those who own property or capital as contrasted with the proletariat
or working class. They are considered below the aristocracy and above the
peasants and factory workers.

Boycott- A refusal to buy or sell a good or a service in order to exert pressure to
achieve a goal. 1ost commonly it is a labor union against an employer in order to
win a concession.

Brea/-even point- A level of output where the total revenue is e2ual to the total
cost or where the cost per unit is e2ual to the price.

Budet- A plan of expected income and expenditures for a given period.

Budet de"icit- When expenditures exceed revenues in a given time. $ometimes
planned by governments to stimulate the economy.

Business cycle- 3airly regular changes in business activity involving expansions
and contractions.

& ' ( ' ) * +- The %eynesian formula showing aggregate demand# personal
consumption plus business investment plus government expenditures# determining
aggregate income.

&apital- Any human-made instrument used in the production of other goods and
services# such as tools and machines.

&apital consumption- The value loss to capital that occurs in the production
process. The difference between gross national product and net national
product. Also know as depreciation.

&apital deepening- When capital is added to the production process in a ratio faster
than other factors of production.
&apital good- A good used in the production of other goods rather than for
consumption.

&apitalism- An economic system in which the means of production are privately
owned and resources are distributed by the market with minimal government
interference.

&artel- A group of sellers who get together to control output and to raise prices in
order to invrease profits.

&aveat emptor- A 0atin term meaning7 let the buyer beware.7 &oncept that places
the responsibility of what is purchased on the consumer.

&entral bank- A bank for banks and the official bank of a nation. The 3ederal
8eserve $ystem is the central bank in the 9nited $tates.

&ertificate of deposit (&6 : A certificate showing that a depositor has put a sum
of money for a specified period of time at a designated rate of interest in a bank or
thrift institution.

&eteris paribus- A$ 0atin term meaning ;other things being e2ual.7 As used in
economics# it means that all variables are to be held constant except one.

&hange in demand- An increase or a decrease in the 2uantity that buyers will
purchase at each possible price. This change is shown graphically by a shift in the
demand curve to the right or to the left.

&hange in supply- An increase or a decrease in the 2uantity that sellers are willing
to supply at each possible price. $hown graphically# the supply curve shifts to the
right or to the left.

&heckable deposit- A deposit in a bank or other depositor may transfer funds by
writing a check or its e2uivalent.

&hicago $chool of 5conomics- A group of famous economists who believe that the
free market is the most efficient allocator of resources.

&ircular flow- A simplified model of the economy showing the flow of goods and
services from business to households and the flow of factors of production from
households to business.

&lassical economics- The major economic thinking before Alfred 1arshall. (t is
identified with Adam $mith# 6avid 8icardo# and Thomas 1althus# who believed
that if each person pursued his or her own economic ends in a free market# society
as a whole would benefit most. (n macroeconomics# it is associated with <ohn $ay
who believed that supply created its own demand and that full employment was the
normal condition.

&layton Act- &losed some of the loopholes of the $herman Antitrust Act by
outlawing interlocking directorates in competing companies# discriminatory price
cutting# tying contracts and ac2uiring stock in competing companies that would
substantially lessen competition. 0abor unions were exempt from antitrust
provisions.

&losed shop- An agreement that a business will hire only union
members. !utlawed by the Taft-=artley Act.

&ollective bargaining- A method for labor and management to arrive at working
conditions resulting in a contract.

&ollusion- !vert or covert agreements by sellers to exert influence over the
market.

&ommand economy- An economic system in which the means of production are
owned collectively and the allocation of resources are planned and distributed by a
central agency.

&ommercial banks- 3inancial institutions whose major purpose is to receive
demand deposits and to make short-term loans to business. 1ore recently# they
have become multipurpose.

&ommodity money- (tems having intrinsic value used as a medium of exchange.

&ommon market- A union of nations who agree to eliminate trade barriers among
them but set up common trade restrictions to those outside their market.

&ommon stock- !wnership shares in a corporation carrying voting privileges.

&ommunism $ee ;command economy.7

&ompany union- An organi/ation of workers not having any national affiliation
and sometimes under the control of management>

&omparable worth- An idea that all nations benefit when each produces that in
engaged in different kinds of work should be paid similar wage rates.

&omparative advantage- The principle that all nations benefit when each produces
that in which it has the greatest relative efficiency and imports those in which it has
the least relative efficiency.

&ompetition- A market situation in which there are a number of sellers and buyers#
not permitting any to control prices. (T also allows easy entry and exit to the
market# and similar products. &ompetition protects the consumer.

&omplementary goods- &ommodities that are used together so that the sale of one
affects the sale of the other.

&oncentration ratio- A measure of market concentration usually held by the four or
eight largest firms in an industry. $ales or output are the common criteria.

&onglomerate- A combination of firms in unrelated businesses.

&onstant cost industry- An industry in which the unit costs of production of the
efficient firms remain the same as the firms expand.

&onstant dollars- 6ollars adjusted to eliminate the effects of changes in price
levels.

&onsumer price index (&"(- A measure of the change in prices of a market basket
of goods and services most commonly purchased by urban consumers. 1ost
popular measurement used to determine changes in consumer prices.

&onsumer sovereignty- What consumers buy will determine what is produced and
in what amounts.

&onsumption- 9sing goods and services to satisfy human wants.

&onsumption function- A relationship schedule of consumer expenditures and
disposable income. The assumption is that disposable income influences
consumption.

&ontraction- The decline of business activity in a business cycle.

&ontrived scarcity- The restricting of output by monopoly to increase prices.

&orporation- A form of business organi/ation owned by shareholders and
have separate legal status from its owners. The owners have limited liability but the
business has perpetual life.

&ost-benefit analysis- A method for determining the difference between the costs
of a project and the value of the benefits it will provide.

&ost-push inflation- (ncreases in the general price level that can be attributed to
rising costs of production. 3re2uently occurs when economic groups try to increase
their share of the national income.

&ountercyclical policy- )overnment policy designed to reverse the direction of the
business cycle.

&ountervailing power- Theory that one economic group with monopolistic power
would be balanced by another economic group. The groups would tend to balance
each other in the bargaining process.

&raft union- A labor union made up of workers with similar skills. $ometimes
called a trade union.

&rowding-out effect- A situation in which additional government spending and
borrowing reduces funds available for private investment. This condition raises
interest rates for businesses and households# making investments and purchases
less attractive.

&urrency- (t consists of coins and paper money.

&urrent dollars- ?alues expressed in prices prevailing at the time of the
measurement. Therefore# price changes over a period of time are not considered.
&ustoms duties- Taxes levied on imported goods.

&yclical unemployment- 9nemployment directly attributable to the decline in
business activity as part of the business cycle.

6ebenture bonds- 0ong-term promissory notes issued by a corporation and backed
only by good faith as against a mortgage or business assets.

6ebit- An accounting term indication an increase in assets or a decrease in
liabilities.

6ebt limit- A legislative action placing a ceiling on the amount of debt that
government may incur at any one time.

6ebtor nation- A nation in which its citi/ens# businesses and government owe more
to other nations that others owe to it.
6ecreasing costs- An industry in which unit costs decrease as output
increases. 9sually found in industries with high fixed costs.

6ecreasing returns to scale- As output increases so do unit costs (increasing
average costs. This results in declining per unit profits. $ame as ;6iseconomies of
scale.7

6eficit financing- $ee ;@udget deficit.7

6eflation- A decline in the general price level that results in an increase in the
purchasing power of money.

6eflationary gap- The amount that aggregate demand must be increased in order to
bring aggregate income up to full employment without inflation.

6emand- The 2uantity of goods and services that buyers are willing to purchase at
various prices. The law of demand show the inverse relationship between prices
and 2uantity purchased.

6emand curve- A graphic representation of demand. A downward sloping curve.

6emand deposit- A checking account at a commercial bank. The deposit can be
withdrawn on demand by writing a check.

6emand for money- The amount of money that individuals and businesses wish to
hold for all purposes.

6emand-pull inflation- An increase in the general price level caused by too much
money chasing too few goods.
6emand schedule- A table showing that 2uantity that people are willing to buy a
good or service at various prices at a certain time and place.

6emand side economics- @elief that policy should focus attention of aggregate
demand# and changing it# when necessary# to achieve full employment without
inflation.
6ependent variable- A variable that changes when the independent variable
changes.

6epreciation- $ee ;&apital consumption.7

6epression- A serious and prolonged recession.

6eregulation- When a government ceases to regulate an industry previously
regulated# largely to improve the performance of the industry.

6erivative deposit- 6eposits that result from people borrowing money.

6erived demand- The demand for factors of production that results from demand
for a product.

6evaluation- A decrease in the price of one nation4s currency in relation to other
currencies (exchange rate or gold.

6iminishing marginal utility- The law that states with each additional unit
consumed the satisfaction obtained from each declines.

6iminishing returns# the law of- When additional units of one factor of production
are added to a fixed 2uantity of other factors# a point is reached where the
additional inputs will yield less than the preceding units.

6irect taxes- Taxes that are levied directly on people# such as the personal income
tax.

6irty float- When a nation4s currency value is allowed to change with the demand
and supply for it# but the government reserves the right to influence the rates by
interceding in the market.

6iscount rate- The rate of interest the 3ederal 8eserve @ank charges commercial
banks when they borrow money.

6iscretionary policy- &ountercyclical monetary and fiscal policy designed to
stabili/e the economy but re2uiring some action by policy makers.
6iseconomies of scale- $ee ;6ecreasing returns to scale.7

6isinflation- A decline in the inflationary rate.

6ise2uilibrium- When market forces are unstable and prices have not adjusted to
sudden changes.

6isposable income-What households have left to spend after personal taxes have
been paid and transfer payments received. (t is also personal consumption
expenditures plus personal savings.
6issaving-$pending more than present income.

6istribution (functional- =ow output is divided among the factors of production
or between individuals. Answer to the 2uestion7 for whom.7

6ivestiture- The act of breaking a single firm into more than one unit.
6ividends- The part of profits of a corporation that are paid to shareholders.

6ivisibility- A characteristic of money that permits it to be divided to make it more
useful.

6ivision of labor- The speciali/ation of the production process that permits greater
productivity.
6ouble- counting- (n national income accounting# adding intermediate goods more
than once# resulting in an inflated figure for )A".

6umping- $elling commodities for a lower cost in the foreign# rather than the
domestic market# not related to the relative costs. 6esigned to get rid of a country4s
surpluses and improve its balance of trade.

6urable goods- )oods that can last for several years such as appliances and cars.

5asy money- A policy by the 3ederal 8eserve $ystem to increase the amount of
money in order to reduce interest rates and to stimulate the economy.

5conometrics- The application of statistics in the analysis and solution of
economic problems.

5conomic efficiency- The lowest-cost method of producing.

5conomic growth- An increase in real per capital income.

5conomic indicator- A measurement of one or more parts of the economy used in
evaluating its performance.

5conomic profit- What is left from total revenues after explicit and implicit costs
have been met. (f total costs exceed total revenues# there is an economic loss. (t is
sometimes called pure profit.

5conomic system- The way society organi/es itself to answer the basic 2uestions
of ;WhatB7# ;=owB7# and ;3or WhomB7

5conomics- A social science that concerns itself with the production# distribution
and consumption of goods and services. (t is the study of choosing among
alternatives to maximi/e satisfaction of wants given a scarcity of resources.

5conomies of scale- (ndustries where average long-range costs decline as output
increases.

5lasticity- A measure of the sensitivity of response to a percentage change in price
by a percentage change in 2uantity. &an be applied to demand (price elasticity of
demand or to supply (price elasticity of supply.

5merging nation- A poor country that is just beginning to show signs of economic
development.

5mployee buyout- When workers of a company purchase it from their employers.


5mployment Act of ,-CD- 3irst recognition by the federal government that it ahs a
responsibility to establish economic policy to help promote full employment.

5ntrepreneur- The person or firm responsible for initiating production# organi/ing
the factors of production# taking risks# and receiving profits or assuming losses.

52uation of exchange (1? * "E or 1? * "T- An e2uation showing the
relationship among the money supply# prices# and business activity where 1 is the
money supply# ? the velocity or number of times money turns over# " is the price
level# and E the number of goods (T is the number of transactions.

52uilibrium- A condition when all economic forces balance each other so that there
will be no change. 1ost commonly# e2uilibrium is where demand and supply
intersect or & ' ( ' ) crosses the + or CF line.

5scalator clause- A provision in a contract hat ties changes in payment to changes
in the price level# particularly wage rates.

5urodollars- 9.$. dollars that are on deposit in foreign companies or nations
needing dollars to transact business in the 9nited $tates.

5vasion- An illegal method of avoiding or reducing tax payments.

5xcess capacity- 9nder utili/ing a plant so that production is below the lowest
average total cost level of output.

5xcess profits tax- An additional tax on business above the normal tax on what the
law defines as the usual rate of profit.

5xcess reserves- 8eserves that are above those re2uired legally and that may be
used to make additional loans.

5xchange rate- The price of a unit of one nation4s currency in relation to the price
of a unit of other nation4s currency.

5xcise tax- A tax placed on a particular item at the time it is sold.

5xpansion- That phase of a business cycle where economic activity# such as
employment profits and production# are increasing.

5xplicit costs- All costs that originate outside the firm such as wages# rent# interest.
&ontrast with implicit costs.

5xports- )oods and services sold outside the country.

5xternal costs- When the burden of payment is placed on others rather than those
creating the problem# such as taxpayers paying for pollution clean-up rather than
the firm that polluted.

3actor market- The market where business buys its inputs for production and
households supply those resources.

3actors of production- The resources necessary to produceG land (natural
resources# labor# capital and entrepreneurship.

3avorable balance of trade- When the value of a nation4s exports exceed the value
of its imports.

3eatherbedding- 5mploying more workers than are needed for efficient production.
9sually forced by union in a declining industry.

3ederal funds- 0oans made by a commercial bank with excess reserves to another
bank# usually for a HC-hour period. (nterest is called the federal fund rate.

3ederal !pen 1arket &ommittee- A committee# comprised of @oard of )overnor
members and 3ederal 8eserve district bank presidents# which directs the buying
and selling of securities for the system. This is a major factor influencing the
money supply.

3ederal 8eserve $ystem- The central bank of the 9nited $tates that regulates
financial institutions and sets monetary policy.

3iat money- "aper money that has value because it is legally recogni/ed by the
government as a medium of exchange.

3inal goods- A good whose purpose is consumption rather than input for further
production.

3ine tuning- A belief that monetary and fiscal policies may be changed fre2uently
to achieve a national income at full employment without inflation.

3iscal policy- The use of taxes and government expenditures to regulate the
nation4s economic activity.

3ixed cost- A cost that does not change with output.

3ixed exchange rate- An international monetary system in which nations4 currency
values are set in relation to some designated currency units or gold with provision
for only a small range for changes.
3lat rate tax- A fixed rate of tax regardless of the si/e of the tax base. A
proportional tax.

3loating exchange rate- An international monetary system in
which nationsi currency values change with market forces and little or no
government interference.

3loor price- The lowest price permitted.

3oreign exchange- The means of nations satisfying claims against other nations
through exchange of foreign currencies.

3oreign exchange rate- The price of one nation4s currency in terms of other
nation4s currency.

3ractional reserve banking- A system where a bank must hold a portion of its
deposits on reserve and may loan the remainder out.

3ranchise- A government grant to a company giving it the right to carry out some
activity# sometimes as a monopoly. (n the private sector# a manufacturer giving a
distributor an exclusive right.

3ree trade- When there are no government obstacles to interfere with the flow of
trade between nations.

3rictional unemployment- 9nemployment caused when workers are changing jobs
or by new entrants into the labor force. ?iewed as temporary unemployment.

3ringe benefits- &ompensation to employees other than wages.
3ull employment- A sufficiently high level of aggregate demand so that those
looking for a job# given the wage level# should be able to find it.

3unctional distribution- "ayment to the factors of production.

)ains from trade- The increased benefits that nations have from the increased
efficiency resulting from trade.

)eneral Agreement on Tariffs and Trade ()ATT- An international organi/ation
started in ,-CI designed to increase world trade by reducing trade restrictions.

)ive-backs- When unions agree to give back to management some previously
granted benefits.

)old standard- A system in which monetary units are expressed and are
redeemable in terms of gold.
)osbank- The state-operated bank of the $oviet 9nion.

)osplan- The $tate "lanning &ommission of the $oviet 9nion.

)ross domestic product- A measurement of the market value of all final goods and
services produced within a country during a specified period# usually a year.
(nternational flows are excluded.

)ross national debt- The total indebtedness of the national government including
intergovernmental debts owed by one agency to another.

Aet debt eliminates interagency debts.

)ross national product ()A"- The total market value of all goods and services
produced by the economy during a specified period of time# usually a year. (t
includes net foreign investment.

)ross national product price deflator- A price index that adjusts the nominal )A"
to the real )A" by adjusting for inflation or deflation.

)ramm-8udman Act- 0egislation passed in ,-JF designed to reduce the federal
government4s annual deficits gradually so as to have a balanced budget by ,--,. (T
mandates automatic decreases in expenditures if &ongress and the "resident do not
agree.

)uaranteed annual wage- A minimum yearly payment made by employers to
workers if there is insufficient demand to keep them employed. (t usually involves
supplementing their unemployment benefits.

=olding company- A corporation created to control other corporations by holding
shares of their stock.

=ori/ontal combination- When several firms producing or selling the same item
merge.

=uman capital- The knowledge and skills of people viewed as adding to their
earning power.
=umphrey-=awkins Act- "assed as the 3ull 5mployment and @alanced )rowth
Act of ,-IJ# it re2uires the federal government to establish five-year economic
goals and plans to implement them. (t includes employment# prices and growth.
(mperfect competition- All market situations other than perfect or pure
competition.
(mplicit costs- The opportunity costs of resources owned and used by the firm.
(mports- )oods and services produced by foreign countries and brought into the
home country.
(ncidence of a tax- The final resting place for a tax.
(ncomes policy- A method for fighting inflation by placing restrictions on raising
wages and prices.
(ncome tax- A tax on the net income an individual# a household or a business. (t
usually carries progressive rates.
(ncreasing cost industry- A condition where the expansion of output by existing
firms# new entries or both will cause unit costs to increase.
(ncreasing returns to scale- Where increasing output results in lower average total
costs.
(ndependent variable- A variable that may fluctuate freely.
(ndexing- A provision in a contract or law that causes payments to fluctuate with
price levels.
(ndex number- A measurement used to express changes in output or prices form a
base period that is expressed as ,KK.
(ndirect business tax- Those business taxes that are treated as costs and that can be
passed on to buyers. 5xamples include excise# property and sales taxes.
(ndustrial union- A union in which all members of an industry or firm# regardless
what they do# belong to the same union. $ometimes called a vertical union.
(ndustry-wide bargaining- When a union negotiates with one or more firms in an
industry# setting a pattern for the entire industry.
(nelastic demand and supply- $ee ; elasticity7
(nferior good- A goodLsuch as breadLthat is characteri/ed by consumers
purchasing less of it as their incomes.
(nflation- A rise in the general price level. A decrease in the purchasing power of
money.
(nflationary gap- The amount that aggregate demand must be reduced in order to
bring aggregate income down to the full-employment without inflation level.
(nfrastructure- &apital goods that are usually provided by governments for use of
consumers and businesses. They are paid for and used collectively# such as bridges#
roads and pollution control.
(nheritance tax- A tax on those receiving an estate.
(njunction- A court order restraining an individual or group from doing something.
(nput- 8esources that are used in production.
(nstallment credit- A type of credit in which periodic payments are scheduled and
the seller may repossess the article purchased if the borrower defaults.
(nterest- The price a borrower pays for loanable funds or a lender receives for
savings. 3igured as a percentage of the amount borrowed per year.
(nterlocking directorate- The presence of one or more persons as members of the
board of directors of competing companies. !utlawed by the &layton Act.
(nternational 1onetary 3und- An association of nations whose purpose is to
facilitate trade by making loans in foreign currency.
(ntrinsic value- The market value of the material of which an item is made.
(nventory- The supply of goods a firm has on hand that is available for production
or sale.
(nvestment- $pending to further production.
(nvestment bank- A financial intermediary that sells or underwrites new corporate
securities.
(nvestment spending- @usiness expenditures that further production# such as
outlays for new factories# inventory and machinery.
(nvisible exports and imports- (nternational transactions involving services# such as
shipping charges# insurance and the transfer of loanable funds.
(nvisible hand- The classical economists4 idea that individuals and firms pursuing
their own self-interest in a competitive environment improve the economic position
of the society as a whole.
<awboning- "ressure exerted# usually by political leaders# to urge individuals and
firms to take some kind of action. (t has been used to urge the settlement of a strike
or to slow down the rate of inflation.
<oint 5conomic &ommittee- &ongressional committee to help &ongress deal with
economic problems.
<urisdictional dispute- When a conflict exists between rival unions over control of
a job.
%eynesian economics- @ased on the general ideas of <ohn 1aynard %eynes# it is
the belief that a mature capitalistic economy may have difficulty employing its
resources fully without the intervention of monetary and fiscal policy to alter
aggregate demand. & ' ( ' ) * + is generally considered the %eynesian formula.
%inked demand curve- A demand curve usually associated with oligopolies.
0owering prices by one firm will be followed by others# showing an inelastic
tendency. 8aising prices will not cause others to follow and result in an elastic
demand curve.
0abor- The human efforts put forth in production.
0abor force- Those persons# ,D years of age and older# who are not
institutionali/ed and who are working or looking for work.
0abor union- An organi/ation of employees who have banded together to further
their own goals by agreeing to negotiate collectively with management.
0abor productivity- A measure of output per unit of labor.
0abor theory of value- The belief that all value is created by the labor used to
produce it. !riginally developed by 6avid 8icardo and later developed by %arl
1arx.
0affer curve- A theoretical representation# suggested by Arthur 0affer# of the
relationship between tax rates and tax revenues.
0abor intensive- "roduction in which the relative input of labor is considerably
greater than the input of capital.
0agging indicator- A measurement of business activity that tends to follow the
pattern of the business cycle.
0aisse/-faire- A policy# first suggested by the classical economists# that suggest
minimal involvement by government in market activities.
0and- A factor of production form which goods originate. Aatural resources.
0eading indicator- A measurement of business activity that tends to fortell the
future.
0eakages- What falls aside form the circular flow of spending and reduces savings.
0egal tender- Anything the government has declared accepted in payment for
debts.
0iability- The debt of an individual or firm.
0imited liability- "rotection that limits the amount that stockholders of
corporations may lose to no more than what they have invested# regardless the si/e
of the debt.
0ibertarianism- @elief that individual freedom is most important. $imilar to ;
laisse/-faire7.
0imited life- The characteristic that the business ceases upon the death of the
owner(s in a single proprietorship or partnership.
0i2uidity- Assets that can be 2uickly converted into cash with little or no loss in
nominal value. 1oney is the most li2uid asset.
0ockout- When an employer closes a business in order to put pressure on
employees during labor negotiations. An employer4s counterpart to a strike.
0ong run- A sufficient period to permit a firm to have all costs become variable#
including the plant.
0oren/ curve- A graph that shows the degree of ine2uality of income or wealth.
1,- The narrowest definition of money. (t includes coins and paper money that
circulate as well as checkable deposit balances.
1H- 1, plus small time deposits# most savings accounts# shares in money markets#
mutual funds and several other sources.
1.- 1H plus large time deposits# institutional money markets and several other
categories.
1acroeconomics- The study of the economy as a whole rather than individual units
( microeconomics.
1aintenance of membership shop- A provision in a union contract that re2uires
those workers who are members of the union to continue their membership until
the expiration of the contract.
1anaged floating exchange rate- A system to allow currencies to fluctuate with
demand and supply# but modified to allow nations to intervene to control the
magnitude and fre2uency of those fluctuations.
1arginal- +ielding only enough value to cover the cost of production.
1arginal analysis- Analysis that is oriented to studying how an additional unit of
one variable affects another variable.
1arginal costs (1&- The additional cost for producing one more unit.
1arginal physical product (1""- The increase in total output that result from
adding one more unit of one type of input while other inputs are held constant.
1arginal productivity wage theory- The theory that under competitive conditions
the value contributed by the last worker will set the wage level for all workers.
Applies to other factors of production as well.
1arginal propensity to consume (1"&- The fraction of additional income people
receive that they spend.
1arginal propensity to save (1"$- The fraction of additional income people
receive that they save. (ts reciprocal is use as the multiplier in the theory of
national income determination.
1arginal revenue- The additional revenue a firm receives by selling one more unit.
1arginal revenue product- The additional value created by adding one more unit of
a factor of production.
1arginal utility- The additional utility a consumer receives by the consumption of
one more unit of a good or service.
1arket- A place or situation in which buyers and sellers meet to exchange goods
and services.
1arket economy- An economic system in which the allocation of resources are
determined primarily by demand and supply.
1arket period- A significantly short period of time so that business cannot respond
to increases in price by changing the 2uantity they can offer for sale.
1arket power- When a firm has a sufficiently large share or important position in
the market so as to be able to raise its price above what the competitive price
would be.
1arket share- The percentage of sales or units produced by a firm in an industry.
1arket socialism- An economic system in which there is collective ownership of
the means of production but where production and allocation decisions are
determined largely by the market or price system. Associated with the +ugoslav
economy.
1ediation- A method of settling a labor dispute involving a third party in a formal
way. $uch a person offers solutions and tries to expedite agreements but nothing
done is binding.
1easure of economic welfare (15W- An alternate measurement to )A" that adds
contributions by volunteers and subtract those things that detract form the welfare
of society such as certain costs resulting from pollution.
1edium of exchange- The most important characteristic of money# which allows it
to be used to facilitate the exchange of goods and services.
1ercantilism- A popular economic system# form the sixteenth to the eighteenth
centuries# designed to increase the flow of precious metals to a country through
rigid control of production and trade within an ; empire.7
1erger- When one firm combines with one or more other firms.
1icroeconomics- The study of individual units in the economy such as an industry.
1inimum wage- The lowest legal wage that an employer may pay a worker.
1ixed capitalism- An economic system in which most of the instruments of
production are owned and operated privately and most decisions on the allocation
of resources are made in the market. =owever# government does own# operate and
allocate a portion of the economy# usually for the purpose of caring for the well-
being of the nation.
1odel- A theory to help analy/e problems in the real world.
1onetarists- A group of economists who emphasi/e the importance of the changes
in the si/e of the money supply determining macroeconomic conditions. They
generally believe in a minimum of governmental interference.
1onetary policy- &hanging the money supply and interest rates to influence prices
and employment.
1oney- Anything accepted as a medium of exchange. (t is also used as a unit of
value and a store of value.
1oney supply- The total stock of money in the economy at a point in time. 9sually
includes just 1, but may be expanded to include 1H and 1..
1onopolistic competition- A market situation in which there are many suppliersM
while their products are similar they are made to appear different. The sellers have
some control over price.
1onopoly- A market situation in which there is only one supplier or seller of a
product without any acceptable substitutes.
1onopoly power- The ability of a firm to exercise some control over supply and#
therefore# price.
1onopsony- A market situation in which there is only a single buyer of a
commodity.
1oonlighting- When a full-time worker holds more than one job.
1oral suasion- When the 3ederal 8eserve $ystem tries to exert pressure on the
banking system without an attempt to compel compliance.
1ost-favored nation clause- A trade between nations that permits signators to
receive any of the benefits# such as a tariff reduction# made with any other nation.
1ultinational corporation- A business that has its head2uarters in one country by
subsidiaries in other countries.
1ultiplier effect- When the change in aggregate expenditures bring about a larger
or multiple change in aggregate income.
Aational @anking Acts of ,JD.-DC- The federal government chartered commercial
banks# permitting them to issue bank notes based on the bank holdings of
government securities. (n ,-.F# these banks lost their note-granting privileges.
Aational debt- The total debt owed by the federal government# including
interagency debts. Aet debt excludes the latter.
Aational income- The total payments to the factors of production in a given year.
Aational income and products accounts- A statement of a nation4s output including
)A"# national income# personal income# personal consumption# expenditures# and
other measurements.
Aationali/ation- When government takes over the ownership and operation of a
privately owned enterprise.
Aational 0abor 8elations Act (Wagner Act- "assed in ,-.F# it recogni/ed the
rights of workers to organi/e into unions for collective bargaining. (t created the
Aational 0abor 8elations @oard which is empowered to investigate unfair business
and labor practices and certify legitimate unions in the event of conflict between
competing unions.
Aatural monopoly- An industry in which a single firm would have a lower average
cost than several firms. Therefore# competition would be costly.
Aatural rate of unemployment- The unemployment rate when the economy reaches
full employment# when labor markets are in e2uilibrium and wages tend to be
stable.
Aatural resources- $ee ;land7
Aear money- Assets that are highly li2uid and can easily be converted to money.
Time deposits and short-term securities make up the major source of near money.
Aegative incentives- Taxes or changes that discourage production or use such as
the highest utility rates during peak hours.
Aegative income tax- A proposal to provide financial assistance in the form of a
cash transfer payment to individuals or families whose income is below a certain
minimum. "ayments would decrease as income increases.
Aegotiable order of withdrawal (A!W- (A effect# these are interest-bearing
checking accounts.
Aet exports- The difference between the total value of exports minus the total value
of imports for a given period.
Aet national product- )ross national product minus depreciation (capital
consumption.
Aet worth- The total assets minus the total liabilities of a firm or an individual
e2ual net worth.
Aominal- Whether used with income# interest# wages# or other economic
measurements# it refers to dollars unadjusted for changes in the price level.
Aormal profits- A sufficient return to the business so it continues to operate but not
so large that other firms would be attracted into the industry.
Aormative economics- The use of value judgments in describing how the economy
or some portion of it should be.
!ld Age and $urvivors (nsurance (!A$(- The social security system designed to
replace a portion of the lost income from retirement or death.
!ligopoly- A market situation in which there are only a few firms. 6ecisions made
by any one firm usually bring a response by all.
!ligopsony- A market situation in which there are only a few buyers.
!pen market operations- The buying and selling of government securities by the
3ederal 8eserve !pen 1arket &ommittee in order to implement monetary policy.
!pen shop- A workplace where employees may work without regard to union
membership.
!pportunity cost- The highest value that is given up whne a resource is used in
some other way.
!ther things being e2ual- $ee ;ceteris paribus.7
!utput- The goods and services that result from production.
"aradox of thrift- A situation in which the attempts by Kpeople to save more may
actually result in their saving less because of a decline in aggregate income.
"arity- That part of the 9.$. farm policy designed to keep the prices of farm
products e2ual in purchasing power to the price of products the farmer buys. What
he sells should be e2ual to what it cost him to buy. (t results in the establishment of
price supports.
"artnership- A form of business organi/ation in which two or more individuals
share in the ownership and operation of a business according to a contractual
relationship.
"atent- An exclusive right# granted by the federal government# to inventors or
innovators to produce or sell a product for a period of time# currently ,I years.
"ayroll tax- A tax levied on the payroll of a firm.
"eak pricing- ?arying price as demand shifts upward.
"er capital !utput- )A" divided by the population.
"erfect competition- see ; pure competition7
"erpetual life- A characteristic of a corporation that permits it to continue operating
after the death of one or more owners.
"ersonal consumption expenditures (&- What consumers spend. 6isposable
income minus savings.
"ersonal income- The income received by households# both earned and transfer
payments# before personal taxes are paid.
"ersonal income tax- A tax# usually progressive# levied on the income of
individuals and households.
"ersonal savings- "ersonal disposable income minus personal consumption
expenditures.
"hillips curve- A curve that shows the inverse relationship between the
unemployment and inflation rates.
"iece rate- A wage rate based on the number of units a worker produces rather
than the time worked.
"ositive economics- 5conomics that deals with the real world# using facts rather
than value judgments.
"overty index- A measurement for determining who is at or below the poverty
level. (t considers the si/e of the family and location. The $ocial $ecurity
Administration determines this level each year.
"redatory pricing- "rice cutting by a firm to try to drive competitors out of
business.
"referential hiring- A contract agreement that a firm will hire union members
before workers not belonging to a union.
"referred stock- &orporate shares that have preferences in payment of dividends
and li2uidation of assets over common stock. (t is less speculative than common
stock but more so than bonds.
"rice- The market value of a good or service stated in a monetary unit.
"rice ceiling- The maximum legal price that may be charged for a good or service.
"rice discrimination- &harging customers different prices when there is no
difference in the cost for producing and delivering goods. (llegal under the &layton
Act.
"rice elasticity- $ee ;elasticity.7
"rice index- A measure of prices in a given time compared to a base year.
"rice leadership- An informal arrangement where one firm in an industry# usually
in an oligopolistic market# takes the initiative in setting price and is followed by
others n the industry.
"rice level- The weighted average of prices paid for goods and services in a given
period.
"rice supports- )overnment guarantees that assure the producer# usually the
farmer# a minimum price. This is achieved by government buying up the surplus.
"rivate enterprise- The organi/ation of production by individuals or groups of
individuals who take risks and are motivated by the desire to make profits.
"rivate sector- The part of the economy that is not part of government.
"roducer price index- A measurement of the general price level of wholesale goods
such as aluminum# corn or lumber.
"roduct differentiation- The firm tries to make its product differentLat least in the
minds of consumers from its competitors4 products. "attern of monopolistic
competition and some oligopolies.
"roduct market- Where buyers and sellers exchange goods.
"roduction- Any activity that creates or adds value to goods and services including
making them more accessible to the consumer.
"roduction possibilities curve- A model that shows the capacity of production of
the economy at a particular time using a variety of combinations of two goods or
services. 1ovement along the curve shows the trade-off between the two.
"roductivity- The average output per worker during a given period of time.
"rofit- What is left from revenue after all costs have been paid. $ee ;economic and
normal profit.7
"rogressive tax- A tax in which the rate of payment increases with the tax base.
"roletariat- The working class.
"ropensity to consume- The tendency to spend a certain proportion of income at
different income levels.
"ropensity to save- The tendency to save a certain proportion of income at different
income levels.
"roportional tax- A tax in which the rate remains the same regardless of the change
in the tax base.
"roprietorship- The simplest form of business organi/ation# where the firm is
owned by a single individual. (t has unlimited liability and limited life.
"rosperity- The highest phase in a business cycle.
"rotectionists- Those who favor protecting domestic industries by excluding
foreign competition through high tariffs and 2uotas.
"rotective tariff- A tax on imported goods that raises the price on foreign imports
enough to protect some domestic industries.
"ublic choice economics- The study of how government makes choices on the use
of economic resources.
"ublic debt- The total debt owed by all levels of government# excluding securities
held by the 3ederal 8eserve $ystem.
"ublic good- A good whose benefits may be shared by many people at a cost no
greater than if used by one.
"ublic utility- A business that furnishes an essential service to the public# that tends
to be a natural monopoly# and that government grants a franchise to carry out the
service.
"ure competition- A market situation in which there are no barriers to enter or
leave the market# there are so many competing businesses that no one can influence
price# and in which the products are 2uite homogeneous.
Euality circles- When workers get together periodically to discuss production
problems and discuss their solution.
Euantity theory of money- The belief that price levels will change in response to
change in the money supply. $ee the ;e2uation of exchange.7
8adical economics- @eliefs held by some economists that the major economic
problems in society can be traced to monopolistic corporations and that some form
of socialism would be preferable.
8ate of return on capital- "rofits measured as a percentage of invested capital.
8ational expectations- The theory that believes monetary and fiscal policies can no
longer be effective because individuals and firms can anticipate policy and take
offsetting action.
8eaganomics- $ee ;supply side economics.7
8eal- 1ay be used with income# interest or wages. (n each# adjustments are made
in the price level to show changes in constant dollars.
8ecession- The downward or contraction phase of a business cycle when output is
declining and unemployment increasing.
8ecessionary gap- $ee ; deflationary gap.7
8ecognition lag- The time it takes fro policy makers to recogni/e an economic
problem that re2uires action.
8eciprocal trade agreements- The Act of ,-.C that reversed 9.$. tariff policies by
allowing the president to negotiate trade reductions ( or increase with foreign
nations by up to FK percent.
8ecovery- The expansion phase of a business cycle when output and employment
increase.
8egressive tax- A tax in which the rate declines as the tax base increases.
8ent- "ayment to land or national resource.
8eserve ratio- The ratio of what a depository institution must keep in reserves#
either with a 3ederal 8eserve @ank or in vault cash# to its total checkable deposits.
8evaluation- An increase in the official value of nation4s currency in relation to
other currencies.
8evenue sharing- When governments with greater taxing powers share some of
their revenues with smaller units of government.
8ight-to-work law- $tate laws that make it illegal to prevent employment on the
grounds of union membership.
8oundabout production- The making of capital goods as a way of increasing
production.
$ales tax- A tax placed on a broad variety of good and services at their time of
purchase.
$avings- The portion of disposable income that is not spent.
$avings and 0oan Association- A financial intermediary that receives its funds
primarily form individuals and lends its money primarily to finance real estate.
$ay4s law- The idea# developed by <.@. $ay and supported by most classical
economists# that supply creates it own demand and that e2uilibrium would be at
full employment without inflation without government interference.
$carcity- The generally accepted belief in economics that there are insufficient
resources available to satisfy our wants.
$68s- $pecial 6rawing 8ights are a new international monetary unit created to
assist nations with balance of payments difficulties through the (nternational
1onetary 3und.
$easonal 3luctuations- The regular variations that take place in business activity
during a year because of a change in seasons# such as the construction business in
the north.
$easonal unemployment- 0ayoffs that are directly linked to fluctuations in business
activity because of seasonal variation.
$econdary boycott- "ressure on third parties# placed by a union involved in a labor
dispute# not to buy their employer4s product.
$econdary reserves- @ank assets# other than re2uired reserves (fre2uently
government or corporate securities that can be easily converted to cash.
$ecular trend- The changes in economic activity that take place over a long time.
$elf-correcting mechanism- (A a market system# the tendency of interest rates and
wages prices to adjust for inflation or recession.
$eniority- The employment rights secured by workers because of their length of
service.
$eparation of ownership and control- The phenomena that there is a difference
between those who own a corporation# or shareholders# and those who manage it#
the officers# and that the two may have different goals.
$herman Antitrust Act- The cornerstone of the 9.$. policy to keep a competitive
environment. 1ade it illegal to restrain trade# monopoli/e or attempt to
monopoli/e.
$hort run- A period of time in production that is too short to change plant capacity
(capital goods but long enough to change such variable costs as labor.
$hut down point- When a firm chooses to minimi/e its losses by halting
production. 3ixed costs continue but variable cost cease.
$ingle tax- A tax movement started by =enry )eorge that advocated eliminating all
taxes except the one that would fall all income received form land rent.
$lowdown- When workers purposely slow down their output to put pressure on
employers when they are negotiating.
$ocial overhead- $ee ;infrastructure.7
$ocial cost- When society must pay for damages caused by individual economic
activities such as firm polluting but not paying for the clean up.
$ocialism- An economic system in which most or much of the means of production
are owned an controlled collectively# usually by the government.
$oil bank- A government farm program that pays farmers for keeping some of their
land idle.
$peciali/ation- 6ividing production into small processes as a means of increasing
productivity.
$peculation- (nvesting in something risky with the hope of making a 2uick profit.
$tabili/ation policy- Any government policy designed to reduce# in si/e and
number# the fluctuations of the business cycle.
$tagflation- A condition of the economy when it is suffering from inflation and a
recession or slow economic growth at the same time.
$tandard of deferred payment- A function of money that allows it to be accepted in
a contractual agreement involving a payment in the future.
$tandard of living- A measure of how well a household lives with reference to the
value of real goods and services consumed.
$tock- A certificate of ownership in a corporation.
$tore of value- A function of money ( or some other asset that allows it to be used
for future purchases.
$trike- An action# taken by a labor union# of withholding their labor in order to put
pressure on the employer.
$trikebreaker- A worker who is hired by management to replace a striking worker.
$tructural unemployment- That portion of unemployment caused by a change in
consumer demand# a change in the skills needed for employment or a change in
market structure.
$ubsidy- A payment by government to an economic group to support some
economic policy such as farm price supports.
$ubstitute goods- )oods which# because they may be used as a replacement for
other goods# have a direct relationship to the price of each.
$ubsistence- The level of income necessary to maintain a minimum standard of
living.
$upply- The 2uantity of goods or services that a seller is willing to offer at various
prices.
$upply curve- A graphic representation of supply# usually upward sloping# showing
a direct relationship between price and 2uantity.
$upply-side economics- A theory that emphasi/es a series of polices designed to
increase the productive capacity of the economy rather than aggregate demand.
Associated with "resident 8eagan.
$urplus- The amount by which the 2uantity supplied is greater than the 2uantity
demanded at a given prJice in a given market.
$urplus value- (n 1arxian theory# the amount when the value of what workers
produce exceeds what workers are paid.
Tacit collusion- An informal# unwritten agreement among sellers that interferes
with competition. "rice leadership is a common example.
Taft-=artley Act- A labor management act that tried to correct a perceived
imbalance in favor of labor established under the Aational 0abor 8elations Act
(Wagner Act of ,-.D.
Target price- The minimum price established for an agricultural product that the
farmer receives. The government pays the farmer the difference between the target
and market prices.
Tariff- A tax imposed on imported and exported goods. (n the 9nited $tates# it is
only charged on imports.
Tax- A compulsory charge levied on individuals# groups and businesses to transfer
resources form the private to the public sector.
Tax avoidance- A legal way of not paying taxes by earning nontaxable income.
Tax base- The value of what is taxed.
Tax evasion- An illegal method of avoiding taxes.
Tax incidence- The final place of a tax. Who finally pays the tax.
Tax rate- The percentage of the tax base that is taxed.
Taxable income- The tax base after subtracting exemptions and deductions.
Technology- The science of production of goods and services.
Terms of trade- The relative price of two goods in international trade.
Third world- The underdeveloped or developing nations of the world.
Thrift institutions- $avings institutions that channel funds primarily form
individuals to mortgages.
Tight money- &ontracting the money supply to reduce inflationary pressure.
Time deposits- Accounts in a depository institution that pay the depositor interest
and may be withheld until a given date.
Token money- &oins whose face value are greater than their intrinsic value.
Trade association- An organi/ation designed to represent the interests of businesses
who have similar goals.
Trade deficit- When the value of a nation4s imports exceed the value of its exports.
Trade surplus- Where the value of a nation4s exports exceed the value of its
imports.
Trade-off- Ac2uisition of one benefit at the expense of losing another benefit.
Trade union- $ee ;craft union.7
Traditional economy- An economic system that answers the basic economic
2uestions on the basis of the past# it s customs and beliefs.
Transfer payment- "ayments made form one party or group# institution# or
government to another without any payment expected or given. $ocial security and
unemployment compensation are examples.
Trend line- A graphic measurement showing long-term changes of an economic
activity.
Trust- A closed form of business combination# designed to restrict output and
increase profits. A trust company exchanges trust certificates for common stock in
producing companies to gain control over an industry.
Truth in 0ending Act- A federal law designed to protect the consumerM it re2uires
the lender to show the real charges for the loan.
Two-tier wage agreement- A scheduled different# lower wage agreement for new
workers who do the same job as workers with seniority.
9nderdeveloped nation- &ountries with very low per capital income# little savings
and capital# few skilled workers# and not much reali/ation of its economic
potential.
9nderemployment- When those working are employed in positions below their
skill and training levels an others# who desire to work full time# are not.
9nderground economy- The economic activity# worth billions of dollars# that is
unreported and illegal because it avoids taxes.
9nderwrite- To assume a risk in exchange for a fee or commission. (A investment
banking# where a certain sum for the sale of new securities is guaranteed for a
price.
9nemployment rate- A measurement of the percentage of the labor force who are
not working.
9nfavorable balance of trade- $ee ;trade deficit.7
9nion shop- A contract agreement in which the employer may hire nonunion
workers but those workers are obligated to join the union within a specified period
of time.
9nitary elasticity- Where the percentage change in price will bring about an e2ual
percentage change in 2uantity sold.
9nit of account- The function of money that establishes a measurement of standard
of value.
9nlimited liability- The owner or owners of a firm are legally responsible for the
debt of their business up to the value of their assets.
9sury laws- $tate laws that put a ceiling on interest rates.

9tility- The degree of want-satisfying pleasure that one get from owning or
consuming something.
9topian socialism- An early form of cooperative by workers without the
centrali/ation associated with late socialism.
?alue added tax (?AT- A tax that is popular outside the 9nited $tates and is
similar to a sales tax. (t is paid by each producer who adds to the value of the final
product. They pay tax only on the value they create.
?ariable cost- Those costs that increase as output increases.
?elocity of money- The number of times money circulates in a given period#
usually a year.
?ertical combination- A merger of firms that combine various stages of production
of a final product.
?icious cycle of poverty- A condition where poor countries cannot afford to save
and invest. This keeps their level of income low# their savings low# and their
investment low.
Wage and price control- A policy that sets maximum levels that wages and price
may be raised.
Wages- "ayment for human effort to labor.
Wage-price guideposts- A policy for setting wages and prices that depends on
voluntary cooperation.
Wagner Act- $ee ;Aational 0abor 8elations Act.7
Wealth- The total value of accumulated assets.
Welfare capitalism- A modification of capitalism# involving many government
programs# to provide a minimum standard of living for all.
Wildcat strike- A strike by workers that is not sanctioned by the union.
Withholding tax- (ncome that is withheld by the employer to pay taxes periodically
rather than at one time. $ocial security and income taxes are usually withheld for
employees.
Workable competition- Although the market structure of the industry is imperfectly
competitive with monopolistic power# there is sufficient competition among units
to protect the consumer.
Working poor- Workers whose skills and training do not permit them to earn
enough to lift them above the poverty index.
World bank- A bank# belonging to over ,KK countries# whose purpose is making
and supervising loans to underdeveloped countries to help them grow.
+ellow-dog contract- At the time of hiring# a worker agrees not to join a union
while working with that company. (t is presently outlawed.
+ield- The rate of return on an investment.