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Information on Economics

This information hub has a list of terms containing the words ‘economics’, ‘economic’ and ‘economy’.

The word ‘economy’, with the meaning ‘management of material resources’, entered the English language in the late 15th century. It comes from the French ‘économie’, or via Latin from the Greek word ‘oikonomia’, which means ‘household management’. ‘Oikos’ in Greek means ‘house’, while ‘neme’ means to ‘manage’.

The term ‘Economy’ has similar origins in most European languages. Spanish – economía, French – économie, Italian – economia, Dutch – economie, Portuguese – economia, Danish – økonomi, Russian – экономика (pron: ekanomica).

Abenomics – economic policies created by Shinzō Abe, Japan’s Prime Minister, after he won the elections in 2012. It concentrates on monetary and economic growth strategies to boost private investment.

American Economic Association – a professional organization based in Nashville, Tennessee. Just over half of the 18,000 members are academics, while the rest come from business, industry and federal and local government. It says it is non-partisan.

Applied Economics – the practical, hands-on side of economics, that involves trying out economic theories in real world situations, and using this information to make economic forecasts.

Austrian Economics – a school of economic thought that emerged after the publication of the writings by Carl Menger (1840-1921), who founded the Austrian School of Economics. Followers support liberalism and laissez-faire economics. They insist that the market can find the best path to equilibrium without government intervention.

Behavioral Economics – humans tend to be irrational when making spending decisions. Behavioral economic applies elements of psychology to explain why.

Classical Economics – an economic school of thought created by Adam Smith after he wrote ‘The Wealth of Nations’. Followers believe the market should be left alone and that the government should not intervene.

Council of Economic Advisers (CEA) – a body that advises the American President on economic policy, both domestic and international. It consists of economy experts. The President nominates the Chairman, and the Senate then approves or rejects the nomination.

Development Economics – examines how emerging and low-income economies become more developed, i.e. nations that are transitioning from an agricultural economy to an industrial one. Also called Economics for Development.

Economic Bubble – occurs when securities are bought and sold at much higher prices than their intrinsic worth. Also called a market bubble or price bubble.

Economic Capital – the amount of risk capital a bank or other financial institution should have in order to withstand market or credit shocks. The amount is decided by the company itself or its stockholders.

Economic Cost – how much going ahead with doing something costs in money terms, plus how it compares against another option. In other words, the accounting cost plus the opportunity cost.

Economic Downturn – when the economy stops growing, shrinks, or growth slows down. Economic downturns are typically accompanied by a rise in unemployment, and a decline in borrowing, investment, production, and property prices.

Economic Geography – studies the distribution, location and spatial organization of economic activities internationally. It is a sub-field of Economics and Geography.

Economic Globalization – refers to the growing mobility internationally of people, technology, services, goods and capital, as well as how integrated a nation is into the global economy.

Economic Growth – when GDP (gross domestic product) expands in a nation or region over a given period. When the value of all the goods and services increases.

Economic Life – how long an asset can continue generating more income than it costs to maintain and operate. This is shorter than its physical life. Also known as useful life, service life or depreciable life.

Economic Risk – the risk that something may go wrong in the macroeconomy that will disadvantage a company or undermine an investment. Risks include currency changes, economic sanctions, political instability, nationalization, higher taxes, or even war. The term refers to both the domestic economy and those of other countries.

Economics – the study of the factors that make up an economy, i.e. the production, distribution and consumption of goods and services. Economists examine how consumers use scarce resources that have alternative uses.

Economic Sanctions – punitive actions taken against a nation in order to persuade it to change policy. Measures may include trade restrictions, travel bans, arms embargoes, and capital restraints.

Economic Tigers – the four countries that from the 1960s to 1990s left the third world and became advanced economies (rich countries). The countries are Hong Kong, Taiwan, South Korea and Singapore. Also called the Asian Tigers or Asian Dragons.

Economic Value – an asset’s value calculated according to its income-generating ability. It also means the maximum amount of money a consumer is willing to part with in order to get a particular good or service.

Economic Value Added – measures whether a company has generated more or less profit from invested capital than how much it had to pay in order to obtain that capital. Also called economic profit.

Keynesian Economics – an economic school of thought, created by John Maynard Keynes, that believes economic performance is driven by aggregate demand.