Economics Glossary: N -, Learning Economics... Solved!


Economics Glossary: N

Nash equilibrium – An equilibrium where each player takes the best possible actions based on the action taken by the other player.

National debt – A stock measure.  The total amount the federal government borrowed to make expenditures that exceeds the total revenue received from taxes.  This total is added up every year and is the sum total of all past government budget surpluses and deficits. 

National income – The total income earned by the factors of production owned by a certain country’s citizens.

Natural monopoly – A monopoly that arises because a single firm can meet the entire market demand for a good or service at a lower average total cost than two or more firms could.

Natural rate of unemployment – The unemployment rate that occurs as a normal part of the economy.  Sometimes taken as the sum of frictional and structural unemployment and is very difficult to lower with government policy.

Near monies – Close substitutes for transactions money, including savings and money market accounts.

Needs-tested spending – The act of spending on programs that entitle qualified people and businesses to receive benefits.

Negative demand shock – An event that causes a negative shift in consumption or investment that leads to a decrease in exports. 

Negative externality – A production or consumption activity that imposes a cost on a third party not directly involved in the transaction.

Negative relationship – A relationship between two variables where a decrease in one variable is associated with an increase in the other variable.  Or, they move in opposite directions (downward sloping on the X Y graph).

Net business transfer payments – Net transfer payments by businesses to others.

Net domestic product at factor cost – The sum of all wages, interest, rents, and profits.

Net exports (exports – imports, or X – M) – The difference between exports (sales to foreign countries) and imports (purchases from foreign countries).  The result may be positive (trade surplus) or negative (trade deficit).

Net interest – The interest payments made by businesses.

Net investment – Gross investment minus depreciation. 

Net national product (NNP) – A nation’s total product minus what is required to maintain the value 
of its capital stock (some capital will depreciate each year and must be replaced). 

Net taxes (T-TR) – Taxes paid by firms and households to the government minus the transfer payments made to households and firms by the government.

Nominal GDP – The gross domestic product of a nation measured in current dollars (or domestic currency).

Nominal wage rate – The wage rate in current dollars (or domestic currency).

Nondurable goods – The goods that are used quickly, such as food, toiletries, clothing, and other common household supplied.

Nonlabor income, nonwage income – All income received other than from working.  This includes rents, dividends, interest, inheritances, transfer payments, welfare, etc.

Nonresidential investment – Expenditures by firms for physical capital, such as machines, tools, factories, etc.

Nonsynchronization of income and spending – The difference in timing between when a household earns money and when it spends it on goods and services.

Normal goods – Goods that you will consume more of when income rises (an increase in demand), and will consume less of when income declines (a decrease in demand).  Also see: Inferior goods.

Normal profit – The anticipated return to entrepreneurship.  Normal profit is part of a firm’s opportunity cost because it is the cost of not working at another firm.

Normative economics – An approach to economics that analyzes the outcomes of economic behavior and analyzes them as being either good or bad.  The approach may also suggest different courses of action and can also be called policy economics.

North American Free Trade Agreement (NAFTA) – An agreement signed by the United States, Canada, and Mexico where each country agrees to establish North America as a free-trade zone.

Not in the labor force – A person who is not actively looking for work because they do not want a job or have given up in searching for a job.