Economics For Dummies, 4th Edition

Glossary

This glossary contains common economics terms. Words set in italic type are terms that are defined separately in this glossary.

absolute advantage:

When a person or nation can produce more output from a given amount of resource inputs than another person or nation can.

administered interest rates:

One of the two interest rates that the Federal Reserve pays to, respectively, either banks or large nonbank financial firms to help control the economy’s money supply. The two administered interest rates are the interest rate on reserve balances, or IORB rate, and the over-night reverse repo rate (ON RRP rate).

aggregate demand:

The total demand for goods and services in an economy.

aggregate supply:

The total supply of goods and services in an economy.

allocatively efficient:

When an economy’s limited supply of resources is allocated to the production of the goods and services that consumers most greatly desire to consume.

anchoring:

The tendency people have to anchor (base) the value that they assign an item on recently viewed, but logically irrelevant, information.

antitrust laws:

Laws that regulate monopolies and cartels.

asset-price bubble:

A situation in which the price of an asset rises above its true value; it’s usually driven by speculative purchases financed with borrowed money.

asymmetric information:

A situation in which either the buyer or the seller knows more about the quality of the good that they’re negotiating over than the other party does.

behavioral economics: ...