Introduction to Economics GEN1704.2/ECN1101.2 L, Mussurov Altay

The value of total gross domestic product (that is, all the goods and services produced for money in the economy) adjusted for the effects of inflation. In theory, real GDP represents the physical quantity of output.

The interest rate on a loan, adjusted for the rate of inflation. The real interest rate represents the real burden of an interest payment. Real interest rates must be positive for the lender to attain any real income from the loan.

The value of wages, adjusted for the level of consumer prices. If the nominal value of wages is growing faster than consumer prices, then real wages are growing, and hence the real consumption possibilities offered to workers are improving.

A condition in which the total real GDP of an economy shrinks (usually, for at least two consecutive quarters).

A condition in which real GDP begins to grow again, following a recession.

A tax in which lower-income individuals or households bear a proportionately greater burden of the tax. Sales taxes are generally considered regressive (since lower-income households do not generally save, and hence must pay the sales tax on a larger proportion of their total income).

The price of any product or commodity measured relative to the overall level of prices (for example, compared to the consumer price index).

Business profits which are not distributed to shareholders (through dividends or other payouts), but instead are retained within the company in order to finance future investment or other expenditures.

A measure of business profitability equal to net after-tax income divided by the average level of shareholders’ equity in the business.