Economical, Business, and Financial Terms +

(economics involves business and financial activities that show how people choose to use their limited resources (land, labor, and capital goods) to produce, exchange, and to consume goods and services)

absolute advantage
1. The ability to produce a unit of a product using fewer resources than any another producer.
2. A country has an absolute advantage if its output per unit of input of all goods and services produced is greater than that of another country.

If one person, firm, or country can produce more of something with the same amount of effort and resources, they have an absolute advantage over other producers.

The question of what to specialize in and how to maximize the benefits from international trade is determined according to comparative advantage that identifies which activities a country, firm, or individual is most efficient at doing. Both absolute and comparative advantages may change significantly over time.

absolute poverty standard
Establishing a specific income level for a given-sized household below which the household is judged to be living in a state of poverty.
accelerator principle
An investment that depends on the growth of output which implies that an investment will be unstable.

Investment will fall simply because output grows at a slower rate. For investment to remain stable, output growth must be constant.

accounting profits
Revenues minus explicit (accounting) costs.
Addition to capital investment or capital stock from profits.
activist policy
A selection of money policy and fiscal policy actions on the basis of perceived economic conditions and which modifies as economic conditions change.
adverse-selection problem
That which takes place when a buyer or seller entering a disadvantageous contract on the basis of incomplete or inaccurate information because the cost of obtaining the relevant information is higher for a buyer or seller than the other party involved in the transaction.
Substantial wealth and economic influence or power.
The total of some measured element, or elements, of the economy.
aggregate demand
The total spending on goods and services by all sectors, including consumers, business, government, and foreign.
aggregate equilibrium
A macroeconomic situation in which national demand for goods and services equals a national supply of goods and services.
Growing, processing, and marketing of crops by large corporations instead of by individual farmers.
Growing crops and raising livestock; especially, as a basis of economic structure.
Pertaining to policies or laws designed to curb monopolies.
assumed debt
The taking of the liabilities of others as in a merger.

Also see this Index or Menu for a variety of other topics.