Translation of terms related economics and finance
Ability-to-pay principle
The idea that taxes should be levied on a person according to how well that person
can shoulder that
burden.
Absolute advantage
The ability to produce more of a good or service than another producer using the
same amount of
resources as that producer.
Absolute good
A value that cannot be traded off against other things that are highly valued by individuals.
Many moral
or ethical laws are considered to be absolute goods by the supporters (or advocates) of such laws.
Actual output (real GDP)
The amount that an
economy actually produces, as measured by real GDP.
Adjustable-rate mortgage (ARM)
A mortgage that permits the lender to periodically adjust the interest rate on
the basis of changes in a
specified index.
Adjusted gross income
Gross income minus specific adjustments.
Administered rate
An interest rate that is set directly rather than being influenced by the
market forces of supply and
demand.
Adverse selection
The tendency of insurance to be purchased by those most likely to make claims.
Advertising
Communication used by businesses to persuade consumers to buy a good or service.
Agency debt
Direct debt obligations issued
by Fannie Mae,
Freddie Mac, and the Federal Home Loan Banks, which are
government-sponsored enterprises (GSEs).
Aggregate demand curve
A graphical depiction of the amounts of real output (gross domestic product [GDP]) that buyers
collectively desire to purchase at each possible price level.
Aggregate supply curve
A graphical depiction of the amounts of real output (gross domestic product [GDP]) that businesses will
choose to produce at each possible price level.
