Below are common terms in economics beginning with A:
Above full-employment equilibrium – When real GDP
equilibrium is higher than potential GDP.
Absolute advantage – When an individual or country can
produce more than another individual or country with identical resources. Or, when one person or country is more
productive than another person or country in one or more activities.
Accelerator effect – The case when changes in investment are
positively correlated with changes in aggregate output. For example, an increase in aggregate output
causes investment to increase while a decrease in aggregate output causes
investment to decrease. This causes
accelerated growth or decline in output depending on the movement direction.
Actual investment – The actual amount of investment that
occurs. Actual investment includes
investment in unplanned changes in inventory.
Adjustment costs – The costs that a firm faces when it
changes its output level. Training costs
for new employees or to use new machines, and severance packages for laid off
employees are three examples.
Aggregate behavior – The behavior of all households and
firms taken together. Usually calculated
by assuming a representative household or firm, and then multiplying by the
population or number of firms.
Aggregate demand – The aggregated (total) demand for all
goods and services in a certain economy (usually one country).
Aggregate demand curve (or AD) – The negative relationship
between real GDP quantity demanded and the price level ceteris paribus
(everything else equal). Each point
along the AD curve represents a point where the money and goods markets are in
equilibrium.
Aggregate income – The total income received by every factor
of production during a given time period (most likely one year).
Aggregate output – The total amount of goods and services
produced within an economy in a given time period (most likely one year).
Aggregate output or Aggregate income (represented by Y) –
The variable used in certain applications in economics to represent total
output or income. Its significance shows
that aggregate outcome and aggregate income are EQUAL in these applications.
Aggregate production function – The mathematical function
that shows the relationship between inputs and outputs for a nation. Outputs for a nation are commonly called
gross domestic product (GDP).
Aggregate saving (represented by S) – The total amount of
saving occurring in the economy, calculated by subtracting aggregate
consumption from aggregate income.
Aggregate supply – The aggregated (total) supply for all
goods and services in a certain economy (usually one country).
Aggregate supply curve (or AS) -- The positive relationship between real GDP
quantity supplied and the price level ceteris paribus (everything else
equal).
Allocative efficiency
-- When the goods and services that are produced are the ones that
people value the most. For example, if
we attain allocative efficiency, then we cannot change the goods and services
we produce without lowering society’s welfare or well being.
Animal spirits – A term introduced by Keynes to describe
investor sentiment, and to summarize herd like behavior.
Appreciation (of a currency) – The increase in value of a
certain currency relative to another currency.
For example, the dollar has appreciated against the pound if it now
takes less dollars to buy the same amount of pounds.
Automatic destabilizers – Possible fiscal policies that work
automatically to destabilize GDP. For
example, lowering taxes during an expansion, or raising taxes during a
recession.
Automatic fiscal policy – a fiscal policy action that occurs
during certain times of the economic cycle.
Also called automatic stabilizers.
Automatic stabilizers – a type of fiscal policy that acts to
stabilize real GDP without active involvement from the government. For example, during a recession government
expenditures go up (unemployment and welfare payments) but they go down during
an expansion. Likewise, taxes rise
during an expansion (more money and higher tax brackets) and fall during a
recession).
Average cost pricing rule – A rule set by the government
that requires firms (most likely monopolies) to set their price equal to their
average total cost (most likely where ATC crosses the demand curve). This ensures that the regulated firm does not
incur an economic loss and withdraw from the market.
Average fixed cost – The total fixed cost divided by the
quantity produced: TFC/Q
Average product – The total product divided by the quantity
used of the input. For example, if labor
produces tacos, the average product is the total amount of tacos produced
(output or total product) divided by the amount of labor hired (quantity of
input).
Average total cost—The total cost divided the quantity
produced: TC/Q.
Average variable cost – The total variable cost divided by
the quantity produced: TVC/Q.
