Define 'opportunity cost'.

Value of the best alternative forgone when a choice is made

Define 'price elasticity of supply'.

Measure of the responsiveness of the quantity supplied of a good to a change in its price

Describe 'inflation'.

Rate at which the general level of prices for goods and services is rising, and, subsequently, purchasing power is falling

Define 'liquidity' in finance.

Ease with which an asset can be converted into cash

Define 'real GDP'.

Measure of the value of economic output adjusted for price changes (inflation or deflation)

Define 'variable cost' in production.

Cost that varies with the level of output

Define 'fiscal policy' objectives.

Stabilize the economy by adjusting spending levels and tax rates to influence aggregate demand

Define 'inferior good'.

Type of good for which demand declines as the level of income or real GDP in the economy grows

Define 'portfolio diversification'.

Strategy of investing in a variety of assets to reduce risk

Define 'marginal utility'.

Additional satisfaction or utility that a person receives from consuming an additional unit of a good or service

Define 'cross elasticity of demand'.

Measure of the responsiveness of demand for one product in response to a change in the price of another product

Define 'capital account' in the balance of payments.

Record of all transactions between residents of one country and the rest of the world that involve changes in ownership of capital assets

Define 'standard deviation' in statistics.

Measure of the amount of variation or dispersion of a set of values

Define 'perfect competition'.

Market structure characterized by a complete absence of rivalry among the individual firms

Describe 'balance of trade'.

Difference between a country's imports and its exports for a given time period

Define 'structural unemployment'.

Long-term unemployment arising from mismatches between workers' skills and the requirements of jobs

Define 'correlation coefficient'.

Measure of the strength and direction of association between two variables

Define 'monetary policy'.

Process by which the monetary authority of a country controls the supply of money

Define 'absolute advantage'.

Ability of an entity to produce a greater quantity of a good, product, or service than competitors using the same amount of resources

Define 'credit rating'.

Evaluation of the credit risk of a prospective debtor, predicting their ability to pay back the debt and an implicit forecast of the likelihood of the debtor defaulting

Define 'product market'.

Marketplace in which final goods or services are offered for purchase by consumers, businesses, and the public sector

Define 'stagflation'.

Combination of stagnant economic growth, high unemployment, and high inflation

Define 'venture capital'.

Financing that investors provide to startup companies and small businesses that are believed to have long-term growth potential

Define 'producer surplus'.

Difference between the amount a producer of a good receives and the minimum amount they would accept for the good

Describe 'market liquidity'.

Extent to which a market allows assets to be bought and sold at stable prices