- Industry: Economy; Printing & publishing
- Number of terms: 15233
- Number of blossaries: 1
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Confusingly, rent has two different meanings for economists. The first is the commonplace definition: the income from hiring out land or other durable goods. The second, also known as economic rent, is a measure of market power: the difference between what a factor of production is paid and how much it would need to be paid to remain in its current use. A soccer star may be paid $50,000 a week to play for his team when he would be willing to turn out for only $10,000, so his economic rent is $40,000 a week. In perfect competition, there are no economic rents, as new firms enter a market and compete until prices fall and all rent is eliminated. Reducing rent does not change production decisions, so economic rent can be taxed without any adverse impact on the real economy, assuming that it really is rent.
Industry:Economy
Cutting yourself a bigger slice of the cake rather than making the cake bigger. Trying to make more money without producing more for customers. Classic examples of rent-seeking, a phrase coined by an economist, Gordon Tullock, include:
* a protection racket, in which the gang takes a cut from the shopkeeper’s profit;
* a cartel of firms agreeing to raise prices;
* a union demanding higher wages without offering any increase in productivity;
* lobbying the government for tax, spending or regulatory policies that benefit the lobbyists at the expense of taxpayers or consumers or some other rivals. Whether legal or illegal, as they do not create any value, rent-seeking activities can impose large costs on an economy.
Industry:Economy
The fertility rate required in a country to keep its population steady. In rich countries, this is usually reckoned to be 2. 1 children per woman, the extra 0. 1 reflecting the likelihood that some children will die before their parents. In poorer countries with higher infant mortality, the replacement rate may be much higher. In many countries, since the early 1990s the fertility rate has fallen below the replacement rate. There has been much debate about why, and much agreement that, if this trend continues, those countries may face long-term problems such as a relatively growing proportion of retired older people having to be supported by a relatively shrinking proportion of younger people.
Industry:Economy
An agreement in which one party sells a security to another party and agrees to buy it back on a specified date for a specified price. Central banks deal in short-term repos to provide liquidity to the financial system, buying securities from banks with cash on the condition that the banks will repurchase them a few weeks later.
Industry:Economy
The minimum expected return you require from an investment to be willing to go ahead with it.
Industry:Economy
Changing the payment schedule for a debt by agreement between borrower and lender. This is usually done when the borrower is struggling to make payments under the original schedule. Rescheduling can involve reducing interest ¬payments but extending the period over which they are collected; putting back the date of repayment of the loan; reducing interest payments but increasing the amount that has to be repaid eventually; and so on. The rescheduling may or may not require the lender to bear some financial loss. The rescheduling may or may not require the lender to bear some financial loss. The rescheduling of loans to countries usually takes place through the Paris Club and London Club.
Industry:Economy
A foreign currency held by a government or central bank as part of a country’s reserves. Outside the United States the dollar is the most widely used reserve currency. Everywhere the Euro is increasingly widely used.
Industry:Economy
