- Industry: Economy; Printing & publishing
- Number of terms: 15233
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A form of short-term government debt. Treasury bills usually mature after three months. They are used for managing fluctuations in the government’s short-run cash needs. Most government borrowing takes the form of longer-term bonds.
Industry:Economy
One of the most valuable economic assets, hard to create but easy to destroy - a crucial ingredient of a country's social capital. People are more likely to do business together when they trust each other. Trust can reduce market failure that otherwise results from asymmetric information. When there is a lack of trust, people may have to spend heavily on monitoring others' behavior to ensure they do what they say they will do. This cost may be so high that it is not worth going ahead with a business deal. When trust is absent, people may be less flexible in their dealings with each other. Countries can overcome some of the problems of a lack of trust by passing laws requiring good behavior, but only to the extent that people trust that the laws will be enforced. One way in which companies seek to demonstrate that they can trust is by investing heavily in a brand.
Industry:Economy
The number of people of working age without a job is usually expressed as an unemployment rate, a percentage of the workforce. This rate generally rises and falls in step with the business cycle--cyclical unemployment. But some joblessness is not caused by the cycle, being structural unemployment. There are also voluntary unemployment and involuntary unemployment. Some people who are not in work have no interest in getting a job and probably should not be regarded as part of the workforce. Others choose to be out of work briefly while they look for, or are waiting to start, a new job. This is known as frictional unemployment. In the 1950s, the Phillips curve seemed to show that policymakers could reduce unemployment by having higher inflation. Economists now say there is a NAIRU (non-accelerating inflation rate of unemployment). In most markets, prices change to keep supply and demand in equilibrium; in the labor market, wages are often sticky, being slow to fall when demand declines or supply increases. In these situations, unemployment often increases. One way to tackle this may be to boost demand. Another is to increase labor market flexibility.
Industry:Economy
When unemployed people who receive benefits, either from the government or from private charity, are deterred from taking a new job because the reduction or removal of benefit if they do will make them worse off. Also known as the poverty trap, it can be addressed, to an extent, by continuing to pay benefit for a while to unemployed people returning to work. (See welfare to work. )
Industry:Economy
In developed countries, at least, trade union membership and influence has declined over the past three decades. Fewer wages are now set by collective bargaining, and far fewer working days are lost to strikes. Unions, which are in effect a cartel of workers, probably make unemployment higher than it would be without them, as collective bargaining often pushes wages above the level that would bring labor supply and demand into equilibrium. These higher wages increase supply and reduce demand, with the result that there are more jobless people. Unions thus deepen a conflict between those in the labor market who are insiders, that is, union members, and those who are outsiders, typically non-unionized, poorly paid or jobless people. However, unions can combat the excessive market power of some firms, particularly when the firms (or a government) dominate a particular job market. They can support workers who are badly treated by management. They may sometimes provide an efficient, and thus valuable, channel for communication between workers and managers, particularly in countries such as Germany, where conflict between management and unions is viewed as unhealthy.
Industry:Economy
This usually refers to firms, where it is defined as the value of the firm’s output minus the value of all its inputs purchased from other firms. It is therefore a measure of the profit earned by a particular firm plus the wages it has paid. As a rule, the more value a firm can add to a product, the more successful it will be. In many countries, the main form of indirect taxation is value-added tax, which is levied on the value created at each stage of production. However, it is paid, ultimately, by whoever consumes the finished product. Another definition of value added refers to the change in the overall economic value of a company. This takes into account changes in the combined value of its shares, assets, debt and other liabilities. Part of the pay of company bosses is often linked to how much economic value is added to the company under their management.
Industry:Economy
Merging with a company at a different stage in the production process, for instance, a car maker merging with a car retailer or a parts supplier. Unlike horizontal integration, it is likely to raise antitrust concerns only if one of the companies already enjoys some monopoly power, which the deal might allow it to extend into a new market.
Industry:Economy
Americans use welfare as shorthand for government handouts to the poor. Economists use it to describe the well being of an individual or society, as in “Are tax cuts welfare-enhancing?”. This is economist-speak for “Will tax cuts improve the overall well being of the country?” (See utility. )
Industry:Economy
A tax that is collected at source, before the taxpayer has seen the income or capital to which the tax applies. In other words, that part of the income or capital due in tax is withheld from the taxpayer, who therefore cannot easily avoid paying the tax. Withholding taxes are frequently imposed on interest and dividends.
Industry:Economy
An institution created with the IMF at Bretton Woods in 1944 and opened in 1946. The World Bank has three main branches: the International Bank for Reconstruction and Development (IBRD), the International Development Agency (IDA) and the International Finance Corporation (IFC). Collectively, it aims to promote economic development in the world’s poorer countries through advice and long-term lending, averaging $30 ¬billion a year, spread around 100 countries. Critics of the World Bank say that it often worsens the problems facing developing countries. Its advice has often been guided by economic fashion, which led it to support a centrally planned brand of development economics in the 1960s and 1970s, before switching to privatization and structural adjustment in the 1980s and then to promoting democracy and economic transparency, and attacking crony capitalism, in the late 1990s. Until recently, it has generally supported big, ¬high-profile projects rather than more economically useful smaller schemes. It has often failed to ensure that its loans have been spent on the intended project. Its willingness to pump money into struggling countries creates a potential moral hazard, in which politicians may have little incentive to govern well because they believe that, if they do a bad job, the World Bank will come to the rescue. The increase in private-sector lending to and investment in emerging markets has led to growing discussion of whether the World Bank is any longer needed.
Industry:Economy
