CHAPTER 13
Glossary a b s o l u t e a d v a n t a g e An economic pattern wherein a nation or a company uses fewer resources-per-unit of production than its competition. a g g r e g a t e s The study of markets taken as a whole in relation to their individual components. a n a r c h i s m An economic theory promoted most notably by Mikhail Bakunin in the 19th century that calls for very small autonomous groups who work collectively in an economy with no central authority. a r b i t r a g e A form of risk-free trading wherein the trader (arbitrageur) buys in one market and sells in another to take advantage of price differentials between the two markets. a u s t e r i t y m e a s u r e s Extreme fiscal policies imposed upon a country by its government in hopes of protecting the nation from economic decay. b a l a n c e o f p a y m e n t s An overall statement of one nation’s economic transactions compared with that of other nations, including current and capital accounts. b a r r i e r t o e n t r y The various formal (e.g., taxes) and informal (e.g., cultural bias) obstacles that prevent potential participants from entering an economy or marketplace. b i l a t e r a l t r a d e The commerce between two countries. b l a c k m a r k e t Buying or selling of products and commodities, or engaging in exchange of foreign currencies in violation of government restrictions. b o n d m a r k e t That sector of an economy that buys and sells securities in the form of private and governmental debt with set redemption dates. See also e q u i t y market.
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b o o m p h a s e A period of great economic growth accompanied by large gains in per capita income. b u l l i o n Gold or silver in bulk form regarded as a raw material for use in industry, coinage, or as a nation’s reserve. b u s i n e s s c y c l e s The regularly occurring periods of growth (peaks) and contraction (troughs) in an economy that dictate overall stability. The relative severity of the cycles can be affected by domestic business, politics, natural phenomena, and external trade. b u y e r o f l a s t r e s o r t An economy whose stability, strength, and regular levels of consumption permit it to assist smaller, troubled economies through the purchase of goods and services during periods of economic crisis. c a p i t a l Financial, physical, and intellectual assets that are used to produce goods and services. c a p i t a l a c c o u n t The total of one nation’s exchanges of assets and liabilities with other nations. c a p i t a l f l i g h t The transfer of money or other financial resources from one country to another as a hedge against inflation or poor economic or political conditions. c a p i t a l g o o d s Manufactured goods that are for productive industrial use. For example: machine tools. c a p i t a l g a i n s The profits derived from the sale of an asset, or the increased value of an asset from time of purchase until the present. c a p i t a l i s m An economic theory wherein the owners and managers of assets (capital) derive the greatest portion of profit from the use of those assets.
