Glossary

Glossary

Abscissa – the horizontal base line of a chart, x-axis.

Ad Valorem Tax – A tax levied as a fixed percentage of the value of a particular item.

Aggregate Demand – Total planned or desired spending in the economy as a whole in a given period. It is determined by the aggregate price level and by influences such as investment, government spending, and the money supply.

Aggregate Supply – Total value of goods and services that firms would willingly produce in a given time period. Aggregate supply is a function of the available inputs, technology, and overall price level.

Arbitrage – The act of buying a commodity, bond, stock or currency in one market and simultaneously selling it in another market at a higher price.

Amplitude – The magnitude of fluctuation measured from trough to peak.

Autocorrelation – The correlations between the items in a series of data lagging in time or sequence.

Array – An orderly arrangement of values.

Bain Index – A measure of a firm’s monopoly power based on the divergence between price, P, and average total cost, ATC. A modified version of this index is simply: Bain Index = P -ATC / P

Balance of Payments – A statement showing all of a given nation’s transactions with the rest of the world for a given period. It includes the purchases and sales of goods and services, gifts, government transactions, interest payments and capital transactions.

Balance of Trade – The part of a nation’s Balance of Payments which deals with merchandise (or visible) imports and exports.

Balance on Current Account – The total sum of all visible trade (merchandise) plus “invisibles” which are services. In addition, interest payments on obligations and interest earnings on foreign investments are also included.

Banker’s Acceptance – Bill of exchange drawn on or accepted by a bank instead of an individual or firm.

Basket – An assortment which is grouped together such as a “Basket of Currencies” or a “Basket of Commodities.”

Bartels’ Test – A test developed by Julius Bartels to determine the number of times out of a hundred that a given cycle could be the result of chance.

Bimetallic Standard – A monetary system under which a nation’s unit of currency is defined in terms of a fixed weight of two metals, namely gold and silver.

Bourgeoisie – In Marxian economics, those who own property or capital and are thus not members of the proletariat (working class).

Bretton Woods Agreement – An agreement among 44 nations in 1944, the Bretton Woods System sought to retain what had been seen as the major benefit of the gold standard, that the value of one country’s currency in terms of another (the exchange rate) should be fixed. Under Bretton Woods, the dollar was fixed to gold and other currencies were fixed to the dollar. It was believed that international trade could develop fully only if international exchange rates were stable and that of exchange rates were not fixed by government, fluctuation may be so severe as to inhibit international business. Central banks assured that exchanged rates remained fixed.

Budget Deficit -The excess of total government expenditures over and above total receipts.

Call Money – Money on loan subject to repayment at any time.

Capitalism – Traditionally defined as an economic system in which most property (land and capital) is privately owned.

Capital Market – The market in which funds for the purchase of goods and services is borrowed or loaned.

Capital Flow Analysis – A form of analysis developed by Princeton Economics International in which international capital flows are monitored and studied to provide a basis for forecasting the effects thereof upon domestic markets within a given economy.

Capital Formation – Defined as the total sum of capital invested in plants and machinery, buildings and infrastructure.

Cartel – An association of producers in a given industry whose purpose is to restrict or bar competition within the industry.

Central Bank – A government established agency responsible for control over the nation’s money supply and credit facilities.

Coase Theorem – A view, more than an actual theorem, put forth by Ronald Coase that externalities or economic inefficiencies will be corrected by bargaining between the affected parties.

Cobweb Theorem – A dynamic model of supply and demand in which adaptive (non-rational) expectations lead to perpetual oscillations in prices.

Collective Bargaining – The process of negotiations between a group of workers (normally a union) and their employer.

Command Economy – Also known as a “planned economy” directed by government.

Communism – The combination of a political and economic philosophy in where the ownership of capital goods, including land, is believed to result in the exploitation of workers and is therefore prohibited.

Comparative Advantage (Principle of) – The principle employed in the analysis of foreign trade between countries, according to what a country gains from trade by specializing in the goods in which it possesses the greatest advantage relative to other commodities, or the least disadvantage relative to other commodities.

Composite – Made up of distinctly different parts or elements.

Constant Terms – adjusted for inflation to the base year specified.

Contango – A term used in reference to relationship to two or more variables in which a change in one causes a change in all variables. Normally used in regard to market terminology referring to the interrelationship of several markets together.

Convertibility – Currencies are said to be convertible when they can be freely exchanged for other currencies.

Correlation – The measurement to what extent two different time series exhibit similar variations or patterns.

Consumer Price Index – see “CPI.”

Cost of Government – Defined by PEI as the total sum of all revenue collected by federal, state and local government, including agencies, either through direct or indirect taxation expressed as a percent of nominal GNP.

Cost-Push Inflation – Inflation originating on the supply side of markets for reasons not related to the demand of such goods. For example, damaged crops in agriculture will lead to a rise in prices without a direct change in the actual consumption demand.

Counter-Trend Reaction – A movement in price opposite to the prevailing trend that exceeds 3 units of time and is a separate cycle in and of itself.

CPI – Consumer Price Index which is the most widely employed index of inflation defined also as the cost of living. It is a price index of the cost of a fixed basket of consumer goods in which items are weighted according to the proportion of total expenditures by urban consumers. It does not include the Cost of Government (taxation) and in most countries it also does not include capital investments such as a home. Housing is generally represented by some form of rent with varying degrees of a real estate component included.

Crawling or Pegged Exchange Rates – A system in which a nation’s exchange rate is allowed to crawl up or down within a predefined pegged trading range.

Creeping Inflation – Slow but persistent upward movement in the general level of prices.

Crest – peak, top, highest point in a time series.

Crowding Out – A proposition that suggests that government spending or deficits or government debt reduce the amount of business investment by competing for capital within the system.

Currency Inflation – A PEI term used in reference to rising prices of goods and services caused by a decline in a nation’s currency value on world exchange markets. Currency inflation is independent of supply and demand changes.

Current Account – see “Balance on Current Account.”

Cycle – Taken from the Greek word “kyklos” meaning circle or returning to the point of origin. A rhythm or frequency of repetitive nature as in weather or in regular oscillations from peak to trough in a time series.

Cycle Analysis – The analysis of a time series which isolates regular rhythmic patterns of oscillation.

Dear Money Policy – see “Tight Money Policy.”

Debenture – A fixed interest bond issued by firms empowered to do so by their Articles of Association, as a security for a loan. A fixed debenture is secured against named fixed assets, a floating debenture floats over the stock (current assets), and only results in control of the asset if the terms of the debenture are not honored.

Deflating – The process of converting “nominal” or current monetary valuations into “real” terms meaning adjusted for inflation.

Deflation – A fall in the general level of prices. This does not mean a fall in GNP or a rise in unemployment. It strictly refers to prices.

Deflationary Gap – The amount by which aggregate demand falls short of full-employment aggregate supply, thereby pulling down the real value of a nations output.

Demand Curve – A graph illustrating the quantity of a good that buyers would purchase at each price level, assuming all things remain equal.

Demand Management – A term for fiscal and monetary policies used to influence aggregate demand within an economy.

Demand-Pull Inflation – Price inflation caused by an excess demand for goods in general. Sometimes accompanied by heated speculation i.e. 1980.

Depression – A prolonged period during which unemployment is unusually high and manufacturing facilities are operating well below capacity. This term was first used by President Herbert Hoover in place of the word “panic” because it sounded less dramatic.

Devaluation – A decrease in the official price of a nation’s currency caused by a deliberate government action resulting in a downward valuation relative to world currencies or to gold.

Differential Opportunity – see “Arbitrage”

Diminishing Marginal Utility (Law of) – The law which states that as more and more of any one commodity is consumed, its marginal utility declines.

Diminishing Returns (Law of) – The law of production stating that the incremental output from successive increases in an input will eventually diminish.

Disposable Income – A term referring to the sum equal to GNP, minus all taxes, business savings and depreciation; plus government and other social payments to society including interest payments of government to the private sector.

Divation – The difference or percentage of divation of any item in a time series from the mean value of that series.

Downtrend – A declining trend in a given statistic.

Downtrend Line – A standard technical analysis method of connecting the highest point on a chart to a subsequent reaction high. The resulting trendline is normally interpreted to define the overall trend of the market. A downtrend is said to continue in effect as long as current price activity remains below this downtrend line.

Duopoly – A market situation in which there are only two sellers.

Durable Goods – Equipment or machines that are normally expected to last longer than 3 years (cars, trucks, computers, clocks etc.)

Easy-Money Policy – The policy of a central bank where interest rates are effectively reduced through the means of increasing the available supply of money.

Econometrics – The branch of economics that uses the methods of statistics to measure and estimate quantitative economic relationships.

Economics – A social science concerned chiefly with the way society chooses to employ its limited resources, which have alternative uses, to produce goods and services for present and future consumption. The word economics is Greek in origin compounded from “oikos”, a household, and the semantically complex root, “nem-”, here in its sense of to regulate; administer; organize. The full Greek word is thus “Oikonomikos” which was the title of a book first written by the Athenian philosopher Xenophon before the middle of the fourth century B.C.

Elastic Demand – A term which means that the response of buyers to a price reduction is sufficiently large that total revenue (price times quantity purchased) rises. Conversely, a rise in price will cause a decline in total revenue as the quantity sold declines (inelastic demand.)

Elasticity – A term which refers to the responsiveness of one variable to a change in another. Mathematically, it is the ratio of the percentage change in the quantity (demanded or supplied) to the percentage change in price. Elasticity = [(Q2-Q1)/(Q2+Q1)] / [(P2- P1)/(P2+P1)] where Q1, Q2, P1, and P2 denote the corresponding quantities and prices before and after the change.

Embargo – The suspension of trade, usually a block on exports of a particular commodity or nation.

Empirical – Based on observation rather than theory.

Endogenous – Produced from within.

Ergonomics – The study of the effect of the working environment on the worker and his productive capacity.

Eurodollars – US dollar deposits in banks outside the United States, chiefly in Europe.

Ex Ante – A synonym for “planned” or “intended.”

Exogenous – Produced from without.

Ex Post – A synonym for “actual” or “realized.”

Exponent – A subscript symbol which denotes power signifying the number of times the preceding symbol is to be multiplied by itself.

Extrapolate – Extend with estimated values beyond the final data item.

Fabian Socialism – Form of socialism founded in England in 1884. It emerged as an outgrowth of utopian socialism by advocating gradual and evolutionary reform within a democratic framework.

Fallacy of Composition – Fallacy of assuming that what holds true for an individual also holds true for a group.

Federal Funds Rate – Interest rate in the United States at which banks borrow excess reserves from other banks’ accounts at the Federal Reserve normally on an overnight basis in order to comply with Federal Reserve requirements.

Federal Open Market Committee – The most important policy-making body of the Federal Reserve System. Its chief function is to establish policy for the System’s purchase and sale of government and other securities in the open market (see “Open-Market Operations”).

Fiat Money – A term which refers to money that does not have an intrinsic value (such as modern day paper money).

Fiscal Drag – The automatic growth of government revenue due to the rise of tax revenue during periods of inflation, as nominal incomes increase.

Fiscal Policy – A government’s program with respect to the purchase of goods and services and spending on transfer payments in addition to amount and type of taxes imposed upon its citizens.

Fixed Exchange Rate System – A monetary system in which a nation’s currency value is fixed or tied to a specific quantity of commodity or a specific quantity of another currency (Example – Gold Standard).

Floating Exchange Rate System – The current world monetary system in which the value of a nation’s currency floats freely against the value of all other world currencies and is not backed or fixed by any standard unit of value.

Frequency – The number of complete oscillations within a given period of time (see cycle).

Full Employment – In economic theory, the condition where all factors of production (not just labor) within an economy are being used in production so that factor prices are in equilibrium, and specifically as to labor, that all laborers who are willing to work at the going rate are employed. Thus, full employment is reached where there are an equal number of job openings and laborers looking for that type of work.

Gross Fixed Capital Formation – The value of a nation’s investment before allowing for depreciation over a given period, excluding investment in stocks and working capital.

Gross National Product (GNP) – When normally used, GNP by itself refers to the value at current market prices of all final goods and services produced within a nation for a given period adjusted both for seasonality and inflation.

GNP (Nominal) – The value at current market prices of all final goods and services produced within a nation for a given period without adjustment for inflation or currency fluctuations.GNP (Seasonally Adjusted) – The value at current market prices of all final goods and services produced within a nation for a given period adjusted on a year over year basis to smooth out sharp fluctuations due to summer vacations or the Christmas holiday season.

Harmonic Analysis – a method of describing a time series by fitting sine-cosine curves of harmonic (unit fraction) lengths to the given time series.

Hedging – An action taken by an individual, company, or institution to seek protection against possible adverse effects due to price changes in the future.

Hot Money – Financial funds which are moved from one country to another to take advantage of more favorably interest rates, exchanges rates, inflation rates, taxation rates, labor rates, or security consideration (see International Value Theory).

Hyperinflation – Normally defined as a rate of inflation exceeding 1000 percent annually.

IMF (International Monetary Funds) – Organized in 1945 to provide loans for postwar reconstruction and to promote development of less developed countries.

Implicit Price Index (IPI) – Also known as the GNP Deflator. A weighted average of the price indexes used to deflate the components of GNP. Real GNP = (Nominal GNP / IPI) therefore IPI = (Nominal GNP / Real GNP).

Incidence – The range of occurrence or influence of an economic act.

Indirect Taxation – A tax which can be shifted to someone other than the individual or company originally paying the tax such as excise taxes, taxes on business or business properties.

Inflation – Normally defined as the rate of percentage increase on an annual basis within the general price level. Most often calculated from the rate of change in the CPI index.

Inflationary Gap – The amount by which aggregate demand exceeds aggregate supply at full employment, thereby causing inflationary pressures.

Innovation Theory – An explanation offered by Joseph Schumpeter (1883-1950) which attributes business cycles and economic development to innovations that forward-looking businesspersons adopt in order to reduce costs and increase profits. Once an innovation proves successful, other businesspersons follow with the same or with similar techniques, and these innovations cause fluctuations in investment which result in business cycles. The innovation theory has also been used as a partial explanation of how profits arise in a competitive capitalistic system.

International Value (Terms of) – A PEI term meaning adjusted for foreign exchange value fluctuations.

International Value (Theory of) – A theory set forth by Martin A. Armstrong in which international capital movements are caused by changes in a nation’s labor costs, inflation rate, tax rate, geopolitical considerations, and value of currency relative to other world markets which sets up a natural arbitrage through which capital seeks the most secure and profitable avenue.

Invisible Hand – A concept put forth by Adam Smith in 1776 to describe the paradox of a laissez-faire market economy. The invisible hand doctrine holds that, with each participant pursuing his or her own private objective without interference from the state, furthers the wealth of the economic society through their collective efforts. This effort forms the “invisible hand” and was the surest way to increase efficiency and wealth.

Iron Law of Wages – In Marxian economics, the theory that there is an inevitable tendency in capitalism for wages to be driven down to a subsistence level.

Keynesian Economics – The theory set forth by John Maynard Keynes in his General Theory work. He suggested that primarily because of sticky wages a capitalist system does not automatically tend toward a full-employment equilibrium. Accordingly, the resulting underemployment equilibrium could be corrected through fiscal or monetary policies intended to raise demand. In other words, increasing government spending or lowering interest rates will stimulate consumer demand thereby creating more jobs and thus lowering unemployment.

Macroeconomics – The study of aggregates of firms, households, prices, wages and incomes as opposed to single or individual firms or households.

Malthusian Theory of Population Growth – The belief that the natural tendency of population is to increase at a geometric rate (1, 2, 4, 8…) whereas food tends to increase at an arithmetic rate (1, 2, 3, 4…). Per capita food production would thus decline over time, thereby putting a check on population growth. The theory relies on the diminishing returns law: An increasing population working on a fixed amount of land would reduce per capita output and incomes to the bare subsistence level.

Managed Float – A system in which a currency is allow to float freely but its overall float is “managed” by central bank intervention.

Market Mechanism – A term which refers to the free market interactions of the economy as a whole.

Marginalism – see “Neoclassical Economics.”

Market Socialism -A socialistic economy in which most microeconomic questions are left to the market mechanism. The state would continue to own most capital and land and would also direct investment, but the techniques of production and the exact composition of the output would be left to supply and demand.

Marxism – The set of social, political, and economic doctrines of Karl Marx from the 19th century. In theory, Marxism predicted the collapse of capitalism as a result of its own internal contradictions, especially its tendency to exploit the working classes. The conviction that workers would inevitably be oppressed under capitalism was based on the iron law of wages (see “Iron Law”).

Mean – An arithmetic average obtained by dividing the sum of a time series by the total number of items within that time series.

Median – The figure in the exact middle of a series of numbers ranked from the lowest to the highest unit of value.

Mercantilism – A political doctrine against which Adam Smith fought in 1776. Mercantilists were impressed by the fact that precious metals (namely gold) were in universal demand and that these metals could buy anything. They argued for policies that would yield a favorable balance of trade (excess of exports over imports). They also argued for authoritarian control which would seek to restrict imports thus insuring the retention of gold. Although this theory is disavowed by most nations today, in practice, they still tend to restrict imports whenever possible.

Microeconomics – An analysis with deals with the study of individual markets, economies, people or companies.

Monetarism – A general theory which maintains that changes in the money supply are the major cause of macroeconomic fluctuations. In short, monetarists believe that real output tends toward potential GNP while prices (inflation) tend to move proportionally to the money supply.

Monetary Policy – The policy of the central bank in exercising its control over money, interest rates, and credit conditions. The tools of monetary policy are open-market operations, reserve requirements, and the discount rate (see Easy-Money Policy, Tight- Money Policy).

Money Inflation – see “Currency Inflation.”

Money Supply (M1) – This is the narrowly defined money supply which consists of coins, paper currency, plus all demand or checking deposits.

Money Supply (M2) – Broad definition of money supply which includes M1 plus all “time deposits” (savings deposits) and a variety of money funds against which checks on demand cannot be presented.

Money Velocity – see “Velocity of Money.”

Monopoly – A market structure in which a commodity or service is supplied by only one firm.

Monopsony – The mirror image of a monopoly in which there is only a single buyer.

Moral Suasion-Verbal pressure applied by a central bank to persuade commercial banks to ease or tighten their credit policies.

Moving Average – A series of successive overlapping averages taken from a time series for a specified unit of time.

Neoclassical Economics – An approach to economics which flourished in Europe and the United States during the period of 1870 through World War I. The neoclassicists were primarily concerned with refining the principles of price and allocation theory, “marginalism,” the theory of capital, and related aspects of economics. They made early and extensive use of mathematics, especially differential and integral calculus, in the development of their analysis and models. Much of the structure of modern economic science is built on their work.

Net Investment – Gross investment minus depreciation.

Net National Product (NNP) – GNP less an allowance for depreciation of capital goods.

New Economics – see “Keynesian Economics.”

Normative Economics – An approach to economics which deals with what “ought to be” rather than “what is” (see “Positive Economics”).

Okun’s Law – The relationship put forth by Arthur Okun between cyclical movements in GNP and unemployment. The law states that when actual GNP declines 2 percent relative to potential GNP, the unemployment rate in creases by about 1 percentage point.

Oligopoly – A situation of imperfect competition in which an industry is dominated by a small number of suppliers.

Open Economy – An economy one which allows foreign trade with other countries.

Open-Market Operations – The activities of the central bank designed to regulate the money supply. These operations involve the purchase or sale of government securities, which effectively expands or contracts funds in the banking system, which, in turn, alters bank reserves, causing a multiplier effect on the supply of credit and therefore on economic activity. Open- market operations represent one of the three basic ways the Federal Reserve implement monetary policy. The other two are changes in the member bank Reserve Requirements and raising or lowering the Discount Rate charged to banks borrowing from the Fed to maintain reserves.

Potential GNP – The maximum sustainable level of GNP for a given state of technology and population size, sometimes called “high- employment output.”

Power (Arithmetic) – see “Exponent.”

Price Mechanism – see “Market Mechanism.”

Producer Price Index (PPI) – The price index of wholesale goods and commodities also referred to as the Wholesale Price Index by some nations.

Progression – A succession of number that advances by multiples.

Proletariat – Working Class – see “Bourgeoisie.”

Protectionism – Any policy which seeks to protect a particular domestic industry against competition from imports usually imposed by means of tariff or quota.

Public Debt – The sum total of government obligations in the form of bonds, notes, and bills.

Purchasing Power Theory – A theory which suggests that the rate of exchange between currencies will be such as to enable the actual purchasing power of money to remain the same.

Quantity Equation of Exchange – (MV=PQ) A tautology in which M is money supply, V is the income Velocity of Money, and PQ is price times quantity which is the money value of total output (nominal GNP). This holds exactly since V is defined as money GNP/M.

Quantity Theory of Money & Prices – In terms of the Quantity Equation of Exchange, this theory holds that V and Q are constants or smoothly growing trends. Therefore the level of P (prices) is governed solely by the money supply hence doubling M results in doubling P. The more sophisticated quantity theory maintained by the monetarists, recognizes that money velocity is not so rigidly constant. Instead, velocity changes are relatively predictable, they claim. Hence, control over the money supply in theory is central to control over GNP (see Monetarism).

Quasi-rent – A factor of production, such as a machine, which earns economic rent in the short run only, is said to receive quasi-rent.

Quota – A form of protectionism in which the total quantity of imports of a particular commodity or manufactured item is limited for a given period of time.

Reaction – A move opposite the current trend in price movement that is limited to 2 or 3 units of time. If it extends beyond 3 units in time, then see Counter-Trend Reaction.

Random – An irregular or chance event.

Real – A term used to describe a given statistic or market net of the rate of inflation.

Real Cost – A synonym for opportunity cost. Also used to define a cost net of inflation or in constant dollars.

Real GNP – adjusted for price changes (inflation).

Real Interest Rate – The interest rate less the rate of inflation.

Recession – A term which refers to a downturn in economic activity, defined by many economists as at least two consecutive quarterly declines in a nation’s GNP.

Redemption – Repayment of a loan or other liability.

Reflation – An expansion of aggregate demand after a period of high unemployment or decelerating inflation.

Refunding – A sale of new government securities to replace outstanding maturing government securities.

Regression Analysis – The development of average relationships between variables by means of the least squares method or correlation.

Seasonality – Variations in business or economic activity that recur with regularity as the results of changes in climate, holidays and vacations.

Seasonally Adjusted (SA) – An adjustment or smoothing of data to take into account regular cyclical oscillations subject to Seasonal.

Seigniorage – The profit a nation makes on its currency. It is the final difference between the nominal value of the currency at the actual cost of producing it.

SDR (Special Drawing Rights) – An international monetary unit equal to fixed proportions of major currencies. Rights are allocated to countries that are members of the IMF to borrow in a “special draw” a limited amount from the IMF. Normally, SDR borrowings are made to assist in overcoming temporary balance of payments difficulties.

Sinusoidal – A harmonic curve that is perfectly simple, regular, and symmetrical.

Slope – The degree of deviation from the horizontal axis either in an upward or downward direction.

Soft Currency – Funds of a country that are not acceptable in exchange for the hard currencies of other countries. Example: Soviet Union’s Ruble.

Spectral Analysis – A method of analysis which generates an array of the components of a time series arranged according to cycle length.

Speculative Demand for Money – A part of liquidity preference. The tendency of certain financial speculators to hold, or to sell, their financial assets in the form of cash, rather than bonds, depending on whether they expect the rate of interest to fall.

Stag – A speculator who applies for shares with the goal in mind of reselling those same shares at the date of issue for a profit.

Stagflation – A term coined during the 1970s to describe the condition where underlying prices rise due to rising costs but overall economic growth declines.

Sticky Wages – A term used by John Maynard Keynes that implied that wages do not rise simultaneously with prices.

Structural Unemployment – Unemployment resulting from the fact that the regional or occupational pattern of job vacancies does not match the pattern of worker availability.

Subsidy – A payment by a government to a business, household or foreign nation that provides or consumes a commodity at a level under or above the free market price.

Supply Curve – A graphics representation of the quantities that sellers are prepared to offer for the sale of a given commodity over each of a range of prices during a particular period of time.

Supply & Demand (Law of) – This well known law suggests that under perfect conditions (all things remaining equal), market prices will move to the level at which the quantity purchasers wish to buy equals the quantity that sellers wish to sell.

Supply-Side Economics – A view which suggests that policy measures should be applied to aggregate supply or potential output rather than managing the economy exclusively through demand.

Syndicalism – An economic system in which both the state and capitalism is abolished in favor of reorganizing society into industry-wide associations or syndicates of workers. Each syndicate would then govern its own members in their activities as producers but leave them free from interference in all other matters.

Tariff – Federal tax on imports or exports usually imposed either to raise revenue (revenue tariff) or to protect domestic forms from import competition (protective tariff). A tariff may also be designed to correct an imbalance of payments. Money collected is called duty or customs duty.

Tenders – A system of offering shares and other securities that enables the buyer to make a bid for the named security.

Tight-Money Policy – A central bank policy which restrains the economy by reducing the supply of money which in turns adds pressure within the system to cause a rise in interest rates thus curtailing credit facilities. This policy has been employed to reduce the Real GNP growth and/or inflation. It has also been used in an attempt to support a currency value on international markets and to strengthen the balance of payments by trying to attract international capital.

Time Deposits – Money held in an account for a specific period of time which is not available on demand or may be subjected to penalties for early withdraw.

Timing Models – A modeling process concerned with forecasting changes in trend on a time related basis.

Time Series – A list of data arranged according to time.

Trade Weighting – Expressing a statistic in the form of a weighted basket of currencies arranged according to the amount of foreign trade with various nations relative to the host country.

Trough – bottom; valley; the lowest point within a time series.

Transfer Payments – A term normally employed to the expenditures of a government to an individual. This may be in the form of unemployment compensation, welfare, subsidy, social security, pension fund or some other social payment program. Under some circumstances, this may also refer to foreign aid.

Treasuries – Negotiable debt obligations of the U.S. government, secured by its full faith and credit and issued at various schedules and maturities. The income from Treasury securities Treasury bills, notes and bonds) is exempt from state and local, but not federal, taxes.

Value-Added Tax – A consumption tax levied on the value added to a product at each stage of its manufacturing cycle as well as the time of purchase by the ultimate consumer. The value-added tax is a fixture in European countries and a major source of revenue for the European Common Market.

Velocity – The rate of spending, or turnover of money – how many times a dollar is spent in a given amount of time. It affects the amount of economic activity generated by a given money supply, which includes bank deposits and cash in circulation.

Wave – A single oscillation measured from one peak to the next or from one trough to the next.

Weighting – A mathematical process of assigning varying degrees of importance to specific components within a group of items.

Welfare State – A term normally applied to a highly socialized political system in which the state assumes the burden of financially assisting a large portion of the population at the expense of national production.

Yield – The rate of return on an investment. When referring to bonds, it represents the rate of interest.