Economics

Inflation targeting is a monetary policy framework built around a publicly announced inflation objective, forward-looking decisions, and central bank accountability.

Information asymmetry occurs when parties to an economic interaction possess unequal access to relevant information, affecting decisions, incentives, and market outcomes.

Innovation is the implementation of significantly new or improved products or processes, shaping economic activity, organizational performance, and social change.

Instrumental variables identify and estimate causal effects using external variation in an explanatory variable, subject to assumptions about relevance and validity.

An interest rate expresses the cost of borrowing or return on lending as a percentage of principal over a specified period.

British economist whose theories of employment, demand, and money helped establish modern macroeconomics and shaped the postwar international monetary order.

Joseph Schumpeter was an Austrian-born economist known for explaining capitalist development through entrepreneurship, innovation, and creative destruction.

Kenneth Arrow was an American economist whose work on social choice, general equilibrium, uncertainty, and learning helped shape modern economic theory.

Keynesian economics explains how aggregate demand influences output and employment and provides a basis for countercyclical economic policy.

Knowledge spillover occurs when ideas or expertise benefit people or organizations beyond their originators without full compensation for those benefits.

The labor market connects workers and employers, shaping employment, wages, working conditions, and the allocation of labor across the economy.

A lender of last resort provides emergency liquidity when ordinary funding sources fail, helping contain financial panics without necessarily rescuing insolvent institutions.

Liquidity is the ease of converting assets into money or obtaining funds to meet obligations without substantial losses.

Macroeconomics studies economy-wide output, employment, inflation, growth, and the policies and institutions that influence them.

Macroprudential policy uses financial regulatory tools to contain system-wide risks and strengthen the financial system’s resilience to shocks.

Marginal cost measures the additional cost of increasing output and helps explain production decisions, prices, and economic efficiency.

Marginal revenue is the change in a firm’s total revenue resulting from an additional unit of sales, linking demand, pricing, and profit-maximizing output.

A market is an arrangement through which buyers and sellers exchange goods, services, or assets under particular rules and conditions.

Market equilibrium is a state in which buyers’ and sellers’ decisions are mutually compatible, conventionally represented by equality between quantity demanded and quantity supplied.

Market failure occurs when market incentives and exchanges produce an inefficient allocation of resources, often because important costs, benefits, or information are excluded.

Market power is the ability of a firm or group of firms to profitably sustain prices or other trading terms less favorable than competitive conditions would permit.

Mechanism design studies how rules and institutions can achieve specified objectives when participants possess private information and act strategically.

Microeconomics studies individual economic decisions and how their interaction shapes prices, production, resource allocation, and welfare.

The monetary base consists principally of currency in circulation and banks’ reserve balances at the central bank, underpinning payments and monetary policy implementation.

Monetary policy comprises central-bank actions that influence financial conditions to stabilize prices and economic activity.

Money is a generally accepted means of payment that serves as a medium of exchange, unit of account, and store of value.

The money multiplier is the ratio of a monetary aggregate to the monetary base, also used in models of deposit expansion under specified banking assumptions.

Money supply is the stock of currency, deposits, and other qualifying monetary assets held within an economy.

A market structure in which many firms sell differentiated products, exercise limited pricing power, and face relatively free entry and exit.

A monopoly is a market structure in which a single seller supplies a product without close substitutes, protected from competition by barriers to entry.

Moral hazard arises when protection from consequences or unobservable actions creates incentives to shift costs or risks onto others.

National accounts are an integrated statistical framework recording an economy’s production, income, expenditure, financial transactions, and wealth.

A market cost structure in which one supplier can serve total demand more cheaply than two or more separate suppliers.

A network effect occurs when the value of a product or service to a user depends on participation by other users.

An annual international award established by Sweden’s central bank in 1968 to recognize outstanding contributions to economic sciences.

Oligopoly is a market structure in which a few major sellers account for most supply and make decisions strategically in response to one another.

Open market operations are central-bank transactions that manage banking-system liquidity, influence interest rates, and implement monetary policy.

Opportunity cost is the value of the best alternative forgone when scarce resources are committed to a particular use.

A feasible allocation is Pareto efficient when no alternative can improve anyone’s welfare without worsening someone else’s.

Perfect competition is an idealized market structure in which buyers and sellers take prices as given, products are identical, and firms can freely enter or exit.

Price controls are government-imposed limits or rules governing prices, used to influence affordability, incomes, inflation, or the exercise of market power.

Price elasticity measures how strongly quantity demanded or supplied responds to a change in price, holding other relevant factors constant.

Producer surplus measures the benefit sellers receive when their revenue exceeds the minimum compensation required to supply the units sold.

Productivity measures output relative to inputs, indicating how effectively resources are used to produce goods and services.

Property rights are socially recognized rules governing the use, control, benefits, and transfer of assets and resources.

A public good is nonrival and nonexcludable, allowing shared benefits while creating difficulties in financing its provision.

Purchasing power parity compares currencies through the prices of comparable goods and services, enabling price-adjusted international economic comparisons.

Quantitative easing is a monetary policy tool in which central banks purchase financial assets using newly created reserves to ease financial conditions and support economic activity.

Research and development is systematic, creative activity that generates new knowledge and develops new applications, products, or processes.

Signaling is the strategic use of observable actions to convey private information and influence another party’s economic decisions.

Simon Kuznets was an American economist who pioneered national income measurement and empirical research on economic growth and inequality.

Substitute and complementary goods describe how demand for one product responds to changes in another product’s price.

A sunk cost is an irrecoverable past expenditure that does not change across current alternatives and therefore does not determine their relative economic value.

Supply and demand describe how buyers’ and sellers’ decisions interact to determine market prices and quantities.

Sveriges Riksbank is Sweden’s central bank, founded in 1668, responsible for monetary policy, currency issuance, payment settlement, and contributing to financial stability.

The System of National Accounts is the international statistical framework for consistently measuring an economy’s production, income, expenditure, assets, and liabilities.

A tariff is a tax on internationally traded goods, usually imports, used to raise revenue, influence trade, and protect domestic production.

Tax incidence describes how the economic burden of a tax is distributed after prices, wages, returns, and behavior adjust.

Taxation is the compulsory collection of revenue by public authorities to finance expenditure and influence economic activity and income distribution.

Technological change is the development and adoption of new knowledge, tools, and methods that alter production, economic opportunities, and the organization of work.