Economics Glossary: O

Ockham’s razor – The ideal that irrelevant detail should be cut away, or the simplest approach is probably the best.

Okun’s law – The theory that in the short run, the unemployment rate will decrease by about 1 percent for every 3 percent increase in real GDP.  This relationship doesn’t necessarily hold true in all cases.

Oligopoly – A market where a small number of independent firms compete.

Open market operations – The purchase and sale of government securities in the open market by the Federal Reserve Bank. 

Opportunity cost – The best alternative  that must be given up when making a decision/choice.

Origin – On a Cartesian coordinate system, the origin is the point where the horizontal and vertical axes intersect.

Output – Goods and services that will be consumed by households.

Output gap – Real GDP minus potential GDP, shown as a percentage of potential GDP.

Output growth – The growth rate of the output of an economy.

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