18. Business and Economics. The New Dictionary of Cultural Literacy, Third Edition. 2002

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The New Dictionary of Cultural Literacy, Third Edition. 2002.

Business and Economics

Economics is the social science that deals with the production, distribution, and consumption of goods and services. Business may refer to any gainful economic activity or, more narrowly, to organizations that produce and distribute commodities. Basically, economics is a branch of investigation and study, whereas business connotes activity. Yet the two terms increasingly overlap. Once thought of as a knack or skill that could never be taught in school, business developed claims to scientific status in the twentieth century. Today, there are schools of business administration that, much like departments of economics, engage in study and investigation.

Both economic theory and the growing emphasis on the study of business have spilled over from the universities into the public forum. The 1990s saw one of the longest periods of sustained growth in American history. A rise in productivity, low rates of unemployment, modest inflation, low interest rates, and the popularity of dot-coms contributed to a boom in the stock market. By 1997, American households held 28 percent of their assets in stocks. As the baby boomers of the 1940s and 1950s reached their peak earning years, they prepared for retirement by contributing to pension plans, which plunged huge amounts of money into stocks and bonds. Less obvious but no less important, the deregulation of financial institutions by the federal government and periodic changes in the federal tax code have raised the threshold of financial knowledge for Americans. As late as the 1950s, banks rarely advertised, savings and loan associations did not offer checking accounts, and insurance companies concentrated on selling insurance. Now, all of these institutions advertise and compete with one another by offering similar services. For example, all of them offer pension and retirement plans, and individual investors must be able to sort out and assess their rival claims.

To do so, ordinary Americans need not become professors of economics; however, they must understand the difference between stocks and bonds, and they should understand why the stock market tends to decline when the interest rates rise. This section provides the basic definitions necessary for threading one’s way not only through political debates about the future of the economy but also through the rival claims of financial institutions.

—J.F.K.

Entries

absenteeism	accounting	act of God
actuary	affluent society	agribusiness
American Stock Exchange	amortization	annuity
appraisal	assembly line	assessment
asset	audit	balance of payments
balance of trade	balance sheet	bank run
bankruptcy	barter	bear market
beneficiary	big board	big business
the Big Three	bilateralism	black market
blue chip stock	bond	bond market
bottleneck	bottom line	bourgeoisie
boycott	breach of contract	broker
bubble	bull market	business cycle
buyer’s market	capital	capital expenditure
capital flight	capital formation	capital gain
capital goods	capital resources	capital-intensive
captains of industry	Carnegie, Andrew	cartel
Caveat emptor	certificates of deposit	chain store
Chapter 11 bankruptcy	Chávez, Cesar	class action law suit
closed shop	closing	COD
collateral	collective bargaining	collective farm
commission	commodity	common carrier
compound interest	conflict of interest	conglomerate
constant dollars	consumer	consumer goods
consumer price index	consumerism	contraband
contract	copyright	corporation
cost of living	cost-of-living allowance	credit
credit rating	credit union	creditor
currency	debt	debtor nation
deduction	default	deficit
deficit financing	deflation	demand
demand curve	depletion allowance	depreciation
depression	destructive competition	devaluation
diminishing returns, law of	discount rate	disposable personal income
distribution	divestiture	dividend
division of labor	dot-coms	double indemnity
Dow Jones Industrial Average	down payment	dummy
dumping	durable goods	duty
easy-money policy	economic indicators	economics
EEC	elasticity	embargo
embezzlement	eminent domain	Enron
entrepreneur	equilibrium	equity
escrow	euro	exchange rate
excise tax	expense account	export quota
expropriation	Family and Medical Leave Act of 1993	featherbedding
Federal Deposit Insurance Corporation	Federal Reserve System	Federal Trade Commission
FICA	fiscal policy	fiscal year
fixed exchange rate	flat tax	floating exchange rate
Ford, Henry	foreclosure	foreign exchange
Fortune Five Hundred	401(k) plan	franchise
free enterprise	free market	free trade
Friedman, Milton	fringe benefit	full employment
futures	Galbraith, John Kenneth	global economy
glut	gold standard	golden parachute
goods	Gresham’s law	gross
gross domestic product	Group of Eight	hedging
hidden unemployment	high-tech	holding company
import quota	income	income distribution
Individual Retirement Account	individualism	industrial relations
inelastic demand	inelastic supply	inflation
information economy	insider trading	installment buying
institutional investor	interdependence	interest
interest rate	Internal Revenue Service	International Monetary Fund
Interstate Commerce Commission	inventory	investment
investment tax credit	invisible hand	IOU
IPO	itemized deduction	journeyman
junk bonds	Das Kapital	Keogh plans
Keynes, John Maynard	Keynesian economics	Labor Day
labor market	labor movement	labor union
labor-intensive	laissez-faire	layoff
lease	legal tender	leisure class
leverage	leveraged buyout	Lewis, John L.
liability	lien	limited liability
liquid asset	liquidation	liquidity
list price	lockout	macroeconomics
make-work	Malthus, Thomas	management
marginal cost	marginal tax rate	market economy
Marx, Karl	mass production	mean
median	mediation	mercantilism
merger	microeconomics	minimum wage
mixed economy	monetarism	monetary policy
money market	money supply	monopoly
Morgan, J. Pierpont	mortgage	multinational corporation
multiplier effect	municipal bonds	mutual fund
mutual insurance company	Nader, Ralph	NASDAQ
national debt	nationalization	natural resources
negative income tax	net	New York Stock Exchange
no-fault insurance	obsolescence	oligopoly
open shop	organization man	Organization of Petroleum Exporting Countries
overdraft	overhead	parity price
Parkinson’s Law	partnership	pension
peonage	per capita	per diem
personal property	planned economy	planned obsolescence
postindustrial economy	poverty level	price controls
price fixing	prime rate	principal
private enterprise	private sector	productivity
profit motive	profit sharing	progressive tax
proletariat	property rights	prorate
protective tariff	proxy	public company
public sector	public utility	pump priming
rationing	real cost	real income
real property	real wages	rebate
recession	redistribution	regressive tax
regulation	retail	revenue
revenue sharing	Ricardo, David	right-to-work laws
risk capital	robber barons	Rockefeller, John D.
Route 128	royalty	S&P 500
savings and loan association	savings bond	scab
scarcity	seasonal unemployment	securities
Securities and Exchange Commission	seller’s market	selling short
seniority	service industry	services
shares	shortage	sinking fund
sliding scale	Smith, Adam	Social Security System
stagflation	standard of living	stock
stock exchange	stock market	stock options
stockholders	strike	strikebreaker
structural unemployment	subsidy	subsistence farming
supply	supply and demand	supply-side economics
surplus	surtax	sweatshop
take-home pay	tariff	tax break
tax deduction	tax haven	tax loophole
tax shelter	taxation	technocracy
technological unemployment	tenant farming	tight-money policy
trade	trade barriers	trade deficit
tradeoff	transfer payment	Treasury bills
trust	trust busting	tycoon
unemployment compensation	union shop	urban renewal
urbanization	usury	value-added tax
Vanderbilt, Cornelius	vested interest	voucher
wage scale	wages	Wall Street
warranty	watered stock	welfare
welfare state	What’s good for the country is good for General Motors, and vice versa	wholesale
wildcat strike	windfall	withholding tax
Workmen’s Compensation	yield	zoning

The New Dictionary of Cultural Literacy, Third Edition. Edited by E.D. Hirsch, Jr., Joseph F. Kett, and James Trefil. Copyright © 2002 by Houghton Mifflin Company. Published by Houghton Mifflin Company. All rights reserved.

CONTENTS · INDEX · GUIDE · BIBLIOGRAPHIC RECORD

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