Economics Online Tutor
Glossary and Dictionary of
Economics Terms

Page 9
STORE OF VALUE: The function of money that allows people to make purchases at times that do not coincide with the time that
income is received.

STRATEGIC BEHAVIOR: Actions taken by one that depend on actions taken by another.

STRUCTURAL UNEMPLOYMENT: The type of unemployment caused by a difference between the job skills required to fill the
openings available, and the job skills that applicants possess.

SUBSIDY: A payment made by the government to a domestic producer, effectively decreasing the production costs for domestic
production.

SUBSTITUTES: Goods that consumers consider to be similar enough so that if the price of one increases, consumers will
purchase more of another good instead of the one with the price increase.
SUPPLY: The quantities that producers are willing and able to offer for sale at every potential price.  When shown on a graph, it
becomes a supply curve.

SUPPLY & DEMAND: An economic model that explains market price and quantity outcomes.

SUPPLY & DEMAND EQUILIBRIUM: The price where the quantity supplied is equal to the quantity demanded.  In equilibrium, no
market forces for changes exist.

SUPPLY CURVE: A graph of the supply schedule.  The supply curve is an upward sloping curve, indicating a positive relationship
between price and quantity supplied.

SUPPLY OF MONEY: The quantity of money in the economy.  Since the money supply is controlled by the government or the central
bank, it is not determined by market forces, and therefore does not change as the price level changes.  The money supply curve is
a vertical line.

SUPPLY SCHEDULE: A table of supply.

SUPPLY SHOCK: Inflation caused by a sudden increase in the price of a key product or resource in the economy.

SUPPLY SIDE ECONOMICS: Discretionary government policies designed to influence the level of aggregate supply in the economy.

SURPLUS: In supply & demand analysis, the amount by which supply exceeds demand.  In market structure analysis, the benefit
received when the market price is different from the price that consumers are willing to pay (consumer surplus), or the price that
producers are willing to sell for (producer surplus).

TARIFF: A tax on goods imported from another country.

TAX INCIDENCE: The degree to which a consumer pays a tax on the sale of a good, and the degree to which the seller pays the tax,
based on the price elasticities of demand and supply.

TECHNOLOGY: The processes and knowledge that go into production.

TC: Total cost.  The sum of total variable cost and total fixed cost.

TFC: Total fixed cost.  The total cost associated with fixed inputs.

TOTAL COST: The sum of total variable cost and total fixed cost.

TOTAL FIXED COST: The total cost associated with fixed inputs.

TOTAL LABOR FORCE: The number of employed persons plus the number of persons counted as unemployed.  Also known simply
as the labor force.

TOTAL PHYSICAL PRODUCT: The total number of units of output for a given quantity of a variable input.  Same as total product.

TOTAL POPULATION: The total number of persons living within a nation's borders.

TOTAL PRODUCT: The total number of units of output for a given quantity of a variable input.  Same as total physical product.

TOTAL REVENUE: Proceeds from sales.  Equal to price times quantity.

TOTAL REVENUE MAXIMIZATION: Total revenue is maximized at the quantity where the demand curve is unit elastic.

TOTAL SURPLUS: The sum of consumer surplus and producer surplus.

TOTAL VARIABLE COST: The variable costs associated with a given level of output.  Equal to quantity times average variable cost.

TPP: Total physical product.  The total number of units of output for a given quantity of a variable input.  Same as total product.

TR: Total revenue.  Proceeds from sales.  Equal to price times quantity.

TRADE DEFICIT: The amount by which imports exceeds exports.

TRADE EMBARGO: A trade restriction in which the imports of a specific good, or imports from a specific country, are forbidden.

TRADE RESTRICTIONS: Anything that limits free trade between nations.

TRADE SUBSIDY: A payment made by the government to a domestic producer, effectively decreasing the production costs for
domestic production.

TRADE SURPLUS: The amount by which exports exceeds imports.

TRANSACTION DEMAND FOR MONEY: The amount of money that the public prefers to hold in order to pay for transactions.

TRANSFER PAYMENTS: Money that the government collects from one group of people in the form of taxes, and pays to another
group of people in the form of benefits.  This portion of government spending does not represent new production in the economy,
and therefore is not included in GDP.

TROUGH: The point in the business cycle when the contraction stage ends.

TVC: Total variable cost.  The variable costs associated with a given level of output.  Equal to quantity times average variable cost.

TYPES OF UNEMPLOYMENT: Unemployment is classified into four categories: cyclical, frictional, structural, and seasonal.

UNDEREMPLOYMENT: People who are employed but not fully utilizing their abilities.  Often refers to part time workers who would
prefer to be working full time.

UNDERGROUND ECONOMY: Economic activity that is not reported for tax purposes and is not included in official government
statistics.  Also known as the black market, hidden economy, shadow economy, informal economy, and parallel economy.

UNEMPLOYED PERSONS: People without jobs who are actively searching for work.

UNEMPLOYMENT: Wanting a job, and actively looking for a job, but not having a job.

UNEMPLOYMENT RATE: The percentage of the labor force that is classified as unemployed.

UNEMPLOYMENT STATISTICS: Various statistics relating to the labor market, especially the unemployment rate.

UNILATERAL TRANSFERS ACCOUNT: The portion of the current account in the balance of payments that represents transactions
between countries in which only one country actually receives something.

UNIT ELASTIC: An elasticity in which a change in one variable will result in an equal change in another variable.  The elasticity value
is equal to one.

UNIT OF ACCOUNT: The function of money in which the values of different items can be compared based on their prices as
measured by the currency.

UNLIMITED WANTS: The concept that somebody will always want more of something.

UPWARD BIAS: The idea that the official inflation rate is probably higher than the actual inflation rate, due to problems with
measurements.  One source of upward bias is holding the bundle of goods used in the measurements constant even after the
relative prices of the goods involved change.  Another source of upward bias is that the price changes are not adjusted for
improvements in the quality of the goods over time.

US TREASURY BILLS: Short term securities issued by the United States government to finance deficit spending.  Treasury Bills
have a maturity of less than one year from the issue date.  They are sold at a discount from par value, and instead of paying a
stated interest they simply pay the full par value at maturity.  The effective interest rate is determined by the amount of discount in
the purchase price.

US TREASURY BONDS: Bonds issued by the United States government to finance deficit spending.  The maturity date is generally
20 to 30 years from the issue date.  Treasury Bonds pay semi-annual interest based on a stated percentage of par value.

US TREASURY NOTES: Bonds issued by the United States government to finance deficit spending.  The maturity date is generally 1
to 10 years from the issue date.  Treasury Notes pay semi-annual interest based on a stated percentage of par value.
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