Animal spirits is a term used by economist John Maynard Keynes in his 1936 book The General Theory of Employment, Interest and Money to describe the instincts, proclivities, and emotions that influence and guide human behavior, and which can be measured in terms of consumer confidence[1][2]. Animal spirits represent the emotions of confidence, hope, fear, and pessimism that can affect financial decision-making, which in turn can fuel or hamper economic growth[2]. The term animal spirits has also been used by scientists to describe how the notion of the vitality of the body is used[1]. Animal spirits can be seen as our interpretations of economics and the economy, our mental/psychological forces and constructs[4]. The concept of animal spirits is relevant to market psychology and behavioral economics, and it sheds light on complex issues and leaves readers with a better grasp of undercurrents and a rediscovered belief in principles of common sense and caution[3]. The Animal Spirits podcast is a show about markets, life, and investing that discusses all things financial markets, personal finance, favorite books, movies, and TV shows, parenting, the asset management business, and more[5][6].

Citations:

[1] wikipedia

[2] investopedia

[3] princeton

[4] amazon

[5] apple

[6] awealthofcommonsense

 

G

GAME THEORY

Game theory is the study of mathematical models of strategic interactions among rational agents.

General Agreement on Tariffs and Trade (GATT)

The General Agreement on Tariffs and Trade (GATT) is a legal agreement between many countries, whose overall purpose was to promote international trade by reducing or eliminating trade barriers such as tariffs or quotas.

G7, G8, G20, G21, G22, G26

The G7, G8, G20, G21, G22, and G26 are groups of major advanced and developing economies that convene to discuss and coordinate economic policy.

GDP

Gross Domestic Product (GDP) is the total monetary value of all finished goods and services produced within a country's borders in a specific time period.

GEARING

Gearing, also known as leverage, refers to the degree to which a company's operations are financed by debt versus equity.

GENERAL AGREEMENT ON TARIFFS AND TRADE

The General Agreement on Tariffs and Trade (GATT) is a legal agreement between many countries aimed at promoting international trade by reducing or eliminating trade barriers such as tariffs or quotas.

GENERAL EQUILIBRIUM

General equilibrium refers to a state in which supply, demand, and prices are balanced across all markets in an economy.

GENERATIONAL ACCOUNTING

Generational accounting is a method of evaluating the fiscal impact of government policies on different generations over time.

GIFFEN GOODS

Giffen goods are rare cases of products that experience an increase in demand when their price rises, contrary to the basic law of demand.

GILTS

Gilts are UK government bonds issued by the HM Treasury to raise funds for public spending.

GINI COEFFICIENT

The Gini coefficient is a measure of income inequality within a country, ranging from 0 (perfect equality) to 1 (perfect inequality).

GLOBAL PUBLIC GOODS

Global public goods are goods and services that benefit everyone and are not adequately provided by the market.

GLOBALISATION

Globalisation refers to the increased interconnectedness and interdependence of countries through trade, communication, and technology.

GNI

Gross National Income (GNI) is the total income earned by a country's residents, including income from abroad.

GNP

Gross National Product (GNP) is the total value of all final goods and services produced by a country's residents, both domestically and abroad.

GOLD

Gold is a precious metal often used as a store of value and a form of investment.

GOLD STANDARD

The gold standard is a monetary system where a country's currency is directly convertible into a specific amount of gold.

GOLDEN RULE

The golden rule in economics states that a government should aim to borrow and spend in a way that ensures sustainable economic growth.

GOVERNMENT

Government refers to the central authority that makes and enforces laws and regulations within a country.

GOVERNMENT EXPENDITURE

Government expenditure is the amount of money spent by the government on various goods, services, and programs.

GREENSPAN, ALAN

Alan Greenspan is a former chairman of the Federal Reserve of the United States, known for his influence on monetary policy.

GRESHAM'S LAW

Gresham's Law is an economic principle stating that bad money tends to drive out good money from circulation.

GROWTH

Growth refers to the increase in the production of goods and services in an economy over time.

H

HARD CURRENCY

In macroeconomics, hard currency, safe-haven currency, or strong currency is any globally traded currency that serves as a reliable and stable store of value. Factors contributing to a currency's hard status might include the stability and reliability of the respective state's legal and bureaucratic institutions, level of corruption, long-term stability of its purchasing power, the associated country's political and fiscal condition and outlook, and the policy posture of the issuing central bank.

HAWALA

Hawala is a popular and informal value transfer system based on the performance and honour of a huge network of money brokers (known as hawaladars).

HAYEK, FRIEDRICH

Friedrich Hayek was an economist and philosopher known for his defense of classical liberalism and free-market capitalism.

HEDGE

A hedge is a risk management strategy used to offset potential losses in one investment by taking an opposite position in a related asset.

HEDGE FUNDS

Hedge funds are investment funds that pool capital from accredited individuals or institutional investors and use various strategies to generate high returns.

HERFINDAHL-HIRSCHMAN INDEX

The Herfindahl-Hirschman Index (HHI) is a measure of market concentration used to evaluate competition within an industry.

HORIZONTAL EQUITY

Horizontal equity is a principle of taxation that suggests individuals with similar incomes should be subject to similar tax burdens.

HORIZONTAL INTEGRATION

Horizontal integration is the process of a company acquiring or merging with its competitors to strengthen its market presence.

HOT MONEY

Hot money refers to short-term capital that moves quickly in and out of financial markets to exploit short-term interest rate differences.

HOUSE PRICES

House prices refer to the cost of purchasing residential properties and are influenced by various economic and market factors.

HUMAN CAPITAL

Human capital refers to the skills, knowledge, and experience possessed by individuals that contribute to their economic productivity.

HUMAN DEVELOPMENT INDEX

The Human Development Index (HDI) is a composite measure of a country's development based on factors such as health, education, and income.

HYPER-INFLATION

Hyper-inflation is an extremely high and typically accelerating rate of inflation, leading to a significant decrease in the purchasing power of money.

HYPOTHECATION

Hypothecation is the practice of using an asset as collateral to secure a loan while retaining ownership of the asset.

HYSTERESIS

Hysteresis refers to the persistence of economic effects even after the initial cause of those effects has been removed.

I

International Labour Organization (ILO)

The International Labour Organization (ILO) is a United Nations agency whose mandate is to advance social and economic justice by setting international labour standards.

International Monetary Fund (IMF)

The International Monetary Fund (IMF) is a major financial agency of the United Nations, and an international financial institution, headquartered in Washington, D.C., consisting of 190 countries. Its stated mission is "working to foster global monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth, and reduce poverty around the world."

IMPORTS

Imports refer to goods and services purchased by a country from foreign sources, contributing to the country's trade balance.

INCOME

Income is the money or cash flow received by an individual or entity as a result of work, investment, or other financial activities.

INCOME EFFECT

The income effect refers to the change in consumer demand due to a change in real income, affecting the quantity of goods and services purchased.

INCOME TAX

Income tax is a tax imposed by governments on individuals and businesses based on their earnings and other forms of income.

INCUMBENT ADVANTAGE

Incumbent advantage refers to the favorable position that existing companies or individuals have in a market due to factors such as brand recognition and resources.

INDEX NUMBERS

Index numbers are statistical measures used to represent changes in a group of related variables over time.

INDEXATION

Indexation refers to the adjustment of prices, wages, or financial instruments according to changes in a specific price index or inflation rate.

INDIFFERENCE CURVE

An indifference curve is a graphical representation of different combinations of two goods that yield equal satisfaction or utility to a consumer.

INDIRECT TAXATION

Indirect taxation involves levying taxes on goods and services rather than directly on income or profits.

INELASTIC

Inelastic refers to a situation where changes in price have a relatively small impact on the quantity demanded or supplied of a good or service.

INEQUALITY

Inequality refers to disparities in income, wealth, or opportunities among individuals or groups within a society.

INFERIOR GOODS

Inferior goods are products for which demand decreases as consumer income increases.

INFLATION

Inflation is the sustained increase in the general price level of goods and services in an economy, leading to a decrease in purchasing power.

INFLATION TARGET

Inflation targeting is a central bank's policy of aiming to keep inflation within a specific target range to achieve stable economic growth.

INFORMATION

Information refers to data or knowledge that is relevant and useful for decision-making and economic analysis.

INFRASTRUCTURE

Infrastructure includes the basic physical and organizational structures needed for the operation of a society or enterprise.

INNOVATION

Innovation refers to the creation and application of new ideas, processes, products, or services that result in improved outcomes.

INSIDER TRADING

Insider trading involves buying or selling securities based on non-public information, which is illegal and unethical.

INSTITUTIONAL INVESTORS

Institutional investors are large organizations that invest on behalf of others, such as pension funds and insurance companies.

INSURANCE

Insurance is a financial arrangement in which an individual or entity pays a premium to an insurer in exchange for coverage against potential losses or risks.

INTANGIBLE ASSETS

Intangible assets are non-physical assets, such as intellectual property and brand recognition, that have value and contribute to a company's success.

INTELLECTUAL CAPITAL

Intellectual capital refers to the collective knowledge, skills, and capabilities possessed by individuals and organizations that contribute to their competitive advantage.

INTEREST

Interest is the cost of borrowing money or the return on investment for lending money.

INTEREST RATE

The interest rate is the percentage charged or paid for the use of money, typically expressed as an annual rate.

INTERNATIONAL AID

International aid refers to financial, technical, or humanitarian assistance provided by one country or international organization to another.

INTERVENTION

Intervention refers to deliberate actions taken by governments or central banks to influence or control economic conditions.

INVESTMENT

Investment is the allocation of resources, such as money and assets, with the expectation of generating income or achieving capital appreciation.

INVISIBLE HAND

The invisible hand is a metaphor used by Adam Smith to describe how self-interested individuals unintentionally contribute to the collective good in a market economy.

INVISIBLE TRADE

Invisible trade refers to the exchange of services, such as tourism, shipping, and financial services, between countries.

INWARD INVESTMENT

Inward investment refers to foreign capital or funds invested in a country by individuals, companies, or governments.

Economic Terms (E - F)

Economic Terms (K - L)

E

ECONOMETRICS

ECONOMIC AND MONETARY UNION

ECONOMIC INDICATOR

ECONOMIC MAN

ECONOMIC SANCTIONS

ECONOMICS

ECONOMIES OF SCALE

EFFICIENCY

EFFICIENCY WAGES

EFFICIENT MARKET HYPOTHESIS

ELASTICITY

ENDOGENOUS

ENGEL'S LAW

ENRON

ENTERPRISE

ENTREPRENEUR

ENVIRONMENTAL ECONOMICS

EQUILIBRIUM

EQUITY

EQUITY RISK PREMIUM

EURO

EUROZONE

EURODOLLAR

EUROPEAN CENTRAL BANK

EUROPEAN UNION

EVOLUTIONARY ECONOMICS

EXCESS RETURNS

EXCHANGE CONTROLS

EXCHANGE RATE

EXOGENOUS

EXPECTATIONS

EXPECTED RETURNS

EXPENDITURE TAX

EXPORT CREDIT

EXPORTS

EXTERNALITY

F

FACTOR COST

FACTORS OF PRODUCTION

FACTORY PRICES

FAIR TRADE

FEDERAL RESERVE SYSTEM

FINANCIAL CENTRE

FINANCIAL INSTRUMENT

FINANCIAL INTERMEDIARY

FINANCIAL SYSTEM

FINE TUNING

FIRMS

FIRST-MOVER ADVANTAGE

FISCAL DRAG

FISCAL NEUTRALITY

FISCAL POLICY

FIXED COSTS

FLOTATION

FORECASTING

FOREIGN DIRECT INVESTMENT

FREE RIDING

FREE TRADE

FRICTIONAL UNEMPLOYMENT

FRIEDMAN, MILTON

FULL EMPLOYMENT

FUNGIBLE

< Economic Terms (C - D)

> Economic Terms (G - H)

 

(C)

CANNIBALISE

Market cannibalization, market cannibalism, or corporate cannibalism is the practice of slashing the price of a product or introducing a new product into a market of established product categories.

CAPACITY

It represents the maximum production capacity of a company or an economy utilizing its existing resources, including equipment, labor, capital, and other assets, to their fullest extent.

CANNIBALISE

Market cannibalization, market cannibalism, or corporate cannibalism is the practice of slashing the price of a product or introducing a new product into a market of established product categories.

CAPACITY

It represents the maximum production capacity of a company or an economy utilizing its existing resources, including equipment, labor, capital, and other assets, to their fullest extent.

CAPITAL

In economics, capital refers to financial assets or the machinery, tools, and buildings used in production.

CAPITAL ADEQUACY RATIO (CAR)

CAR is a measure of a bank's capital in relation to its risk-weighted assets, indicating its financial stability and ability to absorb potential losses.

CAPITAL ASSET PRICING MODEL (CAPM)

CAPM is a financial model used to determine an asset's expected return based on its risk in relation to the overall market.

CAPITAL CONTROL

Capital controls are measures imposed by a government to regulate the flow of money in and out of a country's economy.

CAPITAL FLIGHT

Capital flight refers to the rapid movement of assets out of a country, often due to economic or political instability.

CAPITAL GAINS

Capital gains are profits earned from the sale of a capital asset, such as stocks, real estate, or bonds.

CAPITAL INTENSIVE

Capital-intensive industries require significant investments in machinery, equipment, and infrastructure.

CAPITAL MARKETS

Capital markets are financial markets where long-term debt and equity securities are bought and sold.

CAPITAL STRUCTURE

Capital structure refers to the mix of debt and equity financing used by a company to fund its operations.

CAPITALISM

Capitalism is an economic system based on private ownership of the means of production and free market competition.

CARTEL

A cartel is a group of companies that collude to control prices, production, and distribution to limit competition.

CATCH-UP EFFECT

The catch-up effect refers to the tendency of less developed economies to grow at faster rates and converge with more developed economies over time.

CENTRAL BANK

A central bank is a financial institution responsible for managing a country's money supply, conducting monetary policy, and regulating banks.

CETERIS PARIBUS

Ceteris paribus is a Latin phrase meaning "all other things being equal," often used in economic analysis to isolate the effect of one variable while holding others constant.

CHARITY

Charity refers to voluntary donations of money, goods, or services to individuals or organizations in need.

CHICAGO SCHOOL

The Chicago School is a neoclassical economic school of thought emphasizing free markets and limited government intervention.

CHARITY

Charity refers to the voluntary giving of resources, such as money, time, or goods, to help those in need or support various causes.

CLOSED ECONOMY

A closed economy is an economy that does not engage in international trade or transactions.

COLLATERAL

Collateral is an asset pledged as security for a loan, which can be seized by the lender in case of default.

COMMAND ECONOMY

A command economy is an economic system where the government or central authority makes most economic decisions.

COMMODITISATION

Commoditization refers to the process by which goods or services become standardized and undifferentiated in the market.

COMMUNISM

Communism is a socio-economic ideology advocating for the common ownership of means of production and the absence of social classes.

COMPARATIVE ADVANTAGE

Comparative advantage is the ability of a country, region, or individual to produce a good or service at a lower opportunity cost than others.

COMPETITION

Competition is the rivalry among firms in a market to attract customers, improve products, and achieve market share.

COMPETITIVE ADVANTAGE

Competitive advantage is the unique edge a company has over its competitors, allowing it to outperform and achieve superior results.

COMPETITIVENESS

Competitiveness refers to a country's ability to produce and sell goods and services in international markets.

COMPLEMENTARY GOODS

Complementary goods are products that are used together, so the increase in demand for one leads to an increase in demand for the other.

COMPOUND INTEREST

Compound interest is the interest calculated on the initial principal and the accumulated interest of previous periods.

CONCENTRATION

Concentration refers to the distribution of market share among firms within an industry.

CONDITIONALITY

Conditionality refers to requirements imposed by international organizations on borrower countries in exchange for financial assistance.

CONSUMER CONFIDENCE

Consumer confidence is the degree of optimism or pessimism consumers have about the economy's future prospects.

CONSUMER PRICES

Consumer prices, or consumer price index (CPI), measures the average change over time in the prices paid by urban consumers for a market basket of consumer goods and services.

CONSUMER SURPLUS

Consumer surplus is the difference between what consumers are willing to pay for a good or service and what they actually pay.

CONSUMPTION

Consumption refers to the spending by households on goods and services.

CONTAGION

Contagion is the rapid spread of financial crises and economic disturbances from one country to another.

CONTESTABLE MARKET

A contestable market is a market with low barriers to entry, allowing new firms to enter and compete with existing ones.

CORRUPTION

Corruption refers to the abuse of power for personal gain, often involving bribery, embezzlement, or other unethical practices.

COST OF CAPITAL

Cost of capital is the required return necessary to make a capital investment financially viable.

COST-BENEFIT ANALYSIS

Cost-benefit analysis is a technique used to evaluate the potential benefits and costs of a project or decision.

CREDIT

Credit is the ability to borrow money or receive goods and services now with the promise to repay in the future.

CREDIT CREATION

Credit creation is the process by which banks create money through the issuance of loans.

CREDIT CRUNCH

Credit crunch refers to a sudden reduction in the availability of credit or loans in the financial market.

CREDITOR

A creditor is an individual or institution that lends money or extends credit to a borrower.

CRONY CAPITALISM

Crony capitalism refers to an economic system where close relationships between business and government lead to preferential treatment and unfair advantages.

CROWDING OUT

Crowding out occurs when increased government borrowing leads to higher interest rates, reducing private sector borrowing and investment.

CURRENCY BOARD

A currency board is a monetary authority that issues notes and coins convertible into a foreign currency at a fixed exchange rate.

CURRENCY PEG

Currency peg is a fixed exchange rate system where a country's currency is tied or pegged to another currency, often the US dollar or the euro.

(D)

DEFAULT

Default is the failure to fulfill the terms of a loan agreement.

DEFICIT

A deficit is the amount by which a sum falls short of some reference amount.

DEFLATION

Deflation is a decrease in the general price level of goods and services.

DEMAND

Demand refers to the quantity of a good or service that consumers are willing and able to purchase at a given price.

DEMAND CURVE

The demand curve is a graphical representation of the relationship between the price of a product and the quantity demanded by consumers.

DEMOGRAPHICS

Demographics refer to statistical data about the characteristics of a population, such as age, gender, income, and education.

DEPOSIT INSURANCE

Deposit insurance is a guarantee provided by the government to protect depositors' funds in banks and financial institutions.

DEPRECIATION

Depreciation is a decrease in the value of an asset over time due to wear and tear or obsolescence.

DEPRESSION

Depression is a severe and prolonged economic downturn characterized by high unemployment, low production, and reduced consumer spending.

DEREGULATION

Deregulation is the reduction or elimination of government regulations in a specific industry or sector.

DERIVATIVES

Derivatives are financial contracts whose value is derived from an underlying asset, such as stocks, bonds, commodities, or currencies.

DEVALUATION

Devaluation is a deliberate reduction in the value of a country's currency relative to other currencies.

DEVELOPING COUNTRIES

Developing countries are nations with lower income levels, less industrialization, and lower Human Development Index (HDI) rankings.

DEVELOPMENT ECONOMICS

Development economics focuses on the economic, social, and political factors that contribute to the development and growth of countries.

DIMINISHING RETURNS

Diminishing returns is a concept in economics where the marginal benefit of an additional unit of input decreases as more units are added.

DIRECT TAXATION

Direct taxation is a tax levied directly on individuals or entities, such as income tax or property tax.

DISCOUNT RATE

Discount rate is the interest rate used to calculate the present value of future cash flows or to determine the cost of capital.

DISCOUNTED CASHFLOW

Discounted cash flow (DCF) is a valuation method that calculates the present value of projected future cash flows.

DISEQUILIBRIUM

Disequilibrium refers to a situation where demand and supply are not in balance, leading to changes in prices and quantities.

DISINFLATION

Disinflation is a gradual reduction in the rate of inflation, resulting in lower but still positive price increases.

DISINTERMEDIATION

Disintermediation is the process of removing intermediaries or middlemen from a supply chain or distribution network.

DIVERSIFICATION

Diversification is a risk management strategy that involves investing in a variety of assets to reduce the impact of a single loss.

DIVIDEND

Dividend is a payment made by a corporation to its shareholders as a distribution of profits.

DIVISION OF LABOUR

Division of labor is the specialization of tasks within a production process or organization to improve efficiency.

DOLLARISATION

Dollarization is the use of a foreign currency, such as the US dollar, as the official currency or a parallel currency in a country.

DOMINANT FIRM

Dominant firm is a company that holds a significant market share and exerts considerable influence on market conditions.

DUMPING

Dumping is the practice of selling goods in a foreign market at a price lower than their cost of production.

< Economic Terms (A - B)
> Economic Terms (E - F)

 

(A)

ADAPTIVE EXPECTATIONS

A theory that suggests individuals base future expectations on past events.

ADVERSE SELECTION

A situation where one party in a transaction has more information than the other, leading to unfavorable outcomes.

ADVERTISING

The act of promoting products or services to attract customers.

AGENCY COSTS

The costs incurred due to conflicts of interest between principals (owners) and agents (managers) in an organization.

AGRICULTURAL POLICY

Government decisions and actions related to farming, agriculture, and rural development.

AGRICULTURE

The practice of cultivating land and raising crops and animals for human use.

ALTRUISM

Selfless concern for the well-being of others.

AMORTIZATION

The gradual reduction of a debt or an intangible asset through regular payments over time.

ANIMAL SPIRITS

Emotional factors that influence human behavior and decision-making in economics and finance.

ANTITRUST

Laws and regulations aimed at promoting fair competition and preventing monopolies.

APPRECIATION

An increase in the value of an asset or currency over time.

ARBITRAGE

Profiting from price differences of the same asset in different markets.

ARBITRAGE PRICING THEORY

A theory that attempts to explain the relationship between expected returns and risk factors.

ASIAN CRISIS

A series of financial crises that affected several Asian economies in the late 1990s.

ASSETS

Items of value owned by an individual, organization, or country, which have the potential to generate future economic benefits.

ASYMMETRIC INFORMATION

A situation where one party has more information than the other, leading to imbalances in decision-making.

ASYMMETRIC SHOCK

An unexpected event that has a disproportionate impact on different sectors or regions of an economy.

AUCTIONS

Processes in which goods or services are sold to the highest bidder.

AUSTRIAN ECONOMICS

A school of economic thought emphasizing individual action, entrepreneurship, and the role of markets.

AUTARKY

An economic policy aimed at self-sufficiency, where a country produces all its needed goods and services domestically.

AVERAGE

A measure of central tendency that represents the typical value in a dataset.

(B)

BACKWARDATION

Normal backwardation, also sometimes called backwardation, is the market condition where the price of a commodity's forward or futures contract is trading below the expected spot price at contract maturity.

BALANCE OF PAYMENTS

The balance of payments (also known as balance of international payments and abbreviated BOP or BoP) of a country is the difference between all money flowing into the country in a particular period of time (e.g., a quarter or a year) and the outflow of money to the rest of the world. These financial transactions are made by individuals, firms and government bodies to compare receipts and payments arising out of trade of goods and services.

BALANCED BUDGET

A balanced budget (particularly that of a government) is a budget in which revenues are equal to expenditures. Thus, neither a budget deficit nor a budget surplus exists (the accounts "balance"). More generally, it is a budget that has no budget deficit, but could possibly have a budget surplus.

BANK

A bank is a financial institution that accepts deposits from the public and creates credit. It is a crucial component of the financial system, providing various services such as loans, savings accounts, and payment processing.

BANKRUPTCY

Bankruptcy is a legal process in which an individual or business entity that is unable to repay outstanding debts seeks relief from its creditors. It allows for the orderly resolution of financial distress and a fresh start for the debtor.

BARRIERS TO ENTRY (OR EXIT)

Barriers to entry (or exit) are obstacles that make it difficult for new firms to enter a market or for existing firms to leave a market. These barriers can include factors such as high startup costs, government regulations, and established competitors.

BARTER

Barter is a system of exchange where goods or services are directly exchanged for other goods or services without using a medium of exchange, such as money. It was a common form of trade before the advent of currency.

BASEL 1 AND 2

Basel I and Basel II are international banking regulations that provide guidelines for banks to maintain adequate capital levels based on their risk profiles. These regulations aim to promote financial stability and ensure that banks have sufficient reserves to cover potential losses.

BASIS POINT

A basis point is a unit of measurement used in finance to describe the percentage change in interest rates or other financial metrics. One basis point is equal to one-hundredth of a percentage point (0.01%).

BEAR

A bear is an investor who expects the price of a financial instrument, such as a stock or market, to decline. Bears engage in "bearish" strategies to profit from falling prices.

BEHAVIOURAL ECONOMICS

Behavioral economics combines psychology and economics to understand how individuals make economic decisions. It explores the influence of cognitive biases, emotions, and social factors on decision-making.

BETA

Beta is a measure of a stock's volatility in relation to the overall market. It helps investors assess the risk associated with a particular stock by indicating how much it may move in relation to market movements.

BIG MAC INDEX

The Big Mac Index is an informal economic indicator that compares the purchasing power of different currencies by looking at the price of a Big Mac hamburger in various countries.

BLACK ECONOMY

The black economy refers to economic activities that occur outside the official channels of taxation and regulation. It includes unreported income, undeclared transactions, and illegal economic activities.

BLACK-SCHOLES

The Black-Scholes model is a mathematical formula used to calculate the theoretical value of European-style options. It has been widely used in the field of financial derivatives and has contributed to the understanding of options pricing.

BONDS

Bonds are debt securities issued by governments or corporations to raise capital. Investors who purchase bonds are essentially lending money to the issuer in exchange for periodic interest payments and the return of the bond's face value at maturity.

BOUNDED RATIONALITY

Bounded rationality is a concept in behavioral economics that suggests that human decision-making is limited by cognitive constraints, such as information overload and time constraints. Individuals make decisions that are "good enough" rather than fully rational.

BRAND

A brand is a unique identifier that distinguishes a product, service, or company from its competitors. It encompasses the company's reputation, values, and the emotional connection it establishes with consumers.

BRETTON WOODS

The Bretton Woods Agreement, established in 1944, created a system of fixed exchange rates that linked major world currencies to the U.S. dollar. It also led to the creation of international institutions like the International Monetary Fund (IMF) and the World Bank.

BUBBLE

A bubble refers to a situation in which the prices of assets, such as stocks or real estate, become significantly inflated due to excessive speculation and investor enthusiasm. Eventually, the bubble bursts, leading to a rapid decline in prices.

BUDGET

A budget is a financial plan that outlines an individual's or organization's projected income and expenses over a specific period. Budgeting helps in managing finances, setting financial goals, and making informed spending decisions.

BULL

A bull is an investor who anticipates rising prices in a market or asset. Bulls engage in "bullish" strategies to profit from upward price movements.

BUSINESS CONFIDENCE

Business confidence refers to the level of optimism or pessimism that businesses have about the economy's future performance. It can influence investment decisions and overall economic activity.

BUSINESS CYCLE

The business cycle is the recurring pattern of expansion (growth) and contraction (recession) in an economy over time. It consists of four phases: expansion, peak, contraction, and trough.

BUYER'S MARKET

A buyer's market occurs when there are more goods or services available than there are buyers. This can lead to lower prices and more favorable terms for buyers in negotiations.

Click for Economic Terms (C - D)