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

The distribution of income across individual households typically demonstrates inequality between higher-income and lower-income households.

A process whereby the average price level in an economy increases over time.

The informal sector of the economy represents the production of goods and services for the own-use of the producers, or for informal or “underground” trade in particular communities (as opposed to the formal economy). It is particularly important in developing countries.

Producers (including private companies) will endeavor to develop new products (new goods or services) and new processes (new ways of producing those goods or services), with the goal (in a capitalist context) of enhancing market share and hence profitability. More generally, innovation simply refers to finding better ways to produce better goods and services.

A lender charges interest as the price of lending money (or some other asset) to a borrower. Interest is typically charged as a specified percentage of the loan’s value, per specified time period (eg. percent per year).

Products (including both goods and services) which are not produced in order to be consumed, but rather are produced in order to be used in the production of some other good or service. Capital goods and raw materials are examples of intermediate products.

Investment represents production which is not consumed, but rather is utilized in the production of other additional output. Investment also represents an addition to the capital stock of an economy.

A form of business in which the company’s assets are jointly divided among a large number of different individual owners, each of whom owns a specified share of the company’s total wealth. Joint stock companies are governed by a weighted voting system in which investors’ influence depends on the number of shares they own.

The total population of working-age people who are willing and able to work, and who hence have “entered” the labor market. The labor force includes individuals who are employed, and those who are “actively” seeking employment.

Longer-term periods of growth or stagnation in the economy, that can last for a decade or more and reflect broader changes in technology, politics, and international relations. For example, most developed capitalist countries experienced a long wave of economic expansion after World War II (the “Golden Age”), followed by a long period of stagnation during the 1980s and 1990s.