Glossary of Business Terms

abatement:Reduction of the amount of tax levied on an entity

abolitionist movement: Nineteenth century movement to do away with slavery

accounting: Systematic recording, analyzing, and reporting the financial data of a business or corporation

accounts payable: Balance due to a creditor in a current account

accounts receivable: Balance due from a debtor on a current account

affirmative action: Positive steps taken to increase representation of women and minorities in areas of employment, education, and business

agency shop: In labor law, a unionized workplace where employees who are nonunion workers must pay fees to the union; illegal in states with right-to-work laws

agency theory: Theory explaining the relationship between the principals (shareholders) and agents (company managers); an issue is ensuring that their goals are compatible

aggregate demand: Total amount of goods and services demanded in an economy in a given time period

agribusiness: Industry engaged in the production and sale of crops and livestock on a large scale

agricultural revolution: Period during which farmers began to produce crops using different, more efficient methods

agriculture: Sector of the economy encompassing the production of food crops and livestock

American Dream: Belief or hope that an energetic, hardworking person can become prosperous

amortization: Gradual reduction of book value of an asset

annual report: Yearly financial report of a corporation, used to assess performance by stockholders, investors, and analysts

annuity: Type of insurance that provides the insured a regular income after reaching a specific age in return for paying a set premium

antitrust laws: Laws to protect trade and commerce from unlawful restraints and monopolies or unfair business practices

appreciation: Increase in value of currency or other assets; the opposite of depreciation

apprenticeship: Practice of learning a trade through practical experience under skilled workers

arbitrage: Almost simultaneous purchase and sale of securities in different markets so as to profit from price discrepancies

arbitration: Means of settling disputes so as to avoid or resolve strike issues

artificial seniority: In discrimination law, granting minority or female workers extra years of work credit to make up for past acts of discrimination

artisans: Workers who make products in limited quantities, often using traditional methods

assembly line: Physical arrangement whereby partially finished goods move from worker to worker

asset: Something of value that a person or business owns

asset, intangible:See intangible asset

associationalism: Government-business cooperation to boost speed of output

associative state: Process by which government facilitates private interactions without having a source of power itself

assumption-of-risk doctrine: Principle that holds that when workers take a job, they are aware of and accept any risks involved

audit: Official examination of a company’s financial accounts and records for the purpose of verification

augmented product: Core product plus any additional services and benefits supplied.See also core product

automated teller machine (ATM): Computerized device that provides customers of a financial institution access to funds or account balances

automation: Technique of making an apparatus, process, or system operate by mechanical or electronic means

baby boom: Marked rise in birthrate between 1946 and 1964

back pay: Compensation for past economic loss caused by an employer’s discriminatory employment practices or other failure to pay wages due an employee

backward integration: Obtaining ownership or increased control of an organization’s supply systems.See also forward integration, vertical integration

bailout: Government intervention, through loans or other means, to save failing institutions or corporations considered vital to the economy

balance of trade, favorable: Situation in which a country’s exports exceed its imports for a given time period

balance of trade, unfavorable: Situation in which a country’s imports exceed its exports for a given time period

bank failure: Inability of a bank to meet credit obligations; closing of insolvent banks

bankruptcy laws: Laws that allow businesses or individuals with more debts than assets to liquidate their assets to relieve their debts; businesses and individuals may also receive partial relief for their debts and reorganize or create a repayment plan, respectively

bartering: Trading by exchanging commodities rather than cash

bear market: Market in which the main trend in security or commodity prices is downward and each high and low is lower than the previous.See also bull market

benefit segmentation: Dividing the population into different groups according to the benefits wanted or needed and the costs to be avoided

bimetallism: Use of two metals jointly as a monetary standard

Black Friday: September 24, 1869, the date on which a financial panic began on Wall Street

Black Monday: October 19, 1987, when the Down Jones Industrial Average of stocks fell by more than 500 points.

Black Tuesday: October 29, 1929, when the stock prices on the New York Stock Exchange collapsed, leading to the Great Depression

blacklisting: Figuratively or actually listing persons or companies to stop doing business with

block trades: Large amounts of securities being traded, usually by institutional investors

blue-sky laws: Laws that regulate the offering and sale of securities

board of trade: Association of bankers and businesspeople to promote common commercial interests

bond: Interest-bearing certificate sold by corporations and governments to raise money for expansion or capital

bottom-up planning: Management system in which programs are developed by middle- and lower-level managers plus other employees or volunteers, who work out the details and follow through on them.See also top-down planning

boycott: Cessation of dealings with a business to show disapproval or force acceptance of some condition

bracket creep: Movement into a higher tax bracket resulting from income increases intended to offset inflation

brand equity manager: Person who monitors brand management to prevent dissipating brand value through short-term profit maximization

breach of contract: Failure, lacking legal excuse, of a promisor to perform according to contract terms

breakeven: Point at which the revenues from sales equal the financial costs of a product

bull market: Market in which the main trend in security or commodity prices is upward, and each high and low is higher than the previous.See also bear market

business cycles: Repetitive cycles of economic expansion and recession within an industry

business school: Institution that offers courses in aspects of business such as marketing, finance, and law

capital: Collective term for a body of goods and monies from which future income can be derived

capital market: Market for securities in which companies and governments can raise long-term funds

capitalism: Economic system based on private ownership and control of the means of production

capital-intensive business: Business that requires large amounts of financial resources to produce goods or services

cartel: Combination of independent companies designed to limit competition or fix prices

cash flow: Cash money flowing into and out of a business

catalog shopping: Purchasing items after viewing descriptions and often a photograph of the items in a publication from a mail-order company.See also mail order

catchment area: Geographic region from which the bulk of an organization’s customers are drawn

category killers: Giant cut-rate retailers that threaten small stores in the categories of products sold by the big stores

caveat emptor: Principle in commerce by which the buyer alone is responsible for determining a product’s quality before purchasing it

center firm: Big, capital-intensive business; the opposite of a peripheral firm

certificate of deposit: Time deposit that cannot be withdrawn until its maturity date, at which time it can be renewed or withdrawn

chain store: Store that is part of a group of stores that share the same ownership and name and sell the same line of goods

charter: Document conferring rights on an individual or group of people

chattel: Movable article of personal property not attached to a building

checks and balances: Practice of dispensing political power and creating mutual accountability among political entities

chief executive officer (CEO): Top-level officer in a corporation, often chair of the board of directors or president

chief financial officer (CFO): Top-level financial officer in a corporation

chief operating officer (COO): Corporation officer who manages day-to-day operations

child labor: Employment of children under the legally determined age in factories, stores, and other locations

civil rights: Rights of personal liberty guaranteed to citizens

Civil Rights movement: Large-scale social movement during the 1950’s and 1960’s that fought racial discrimination in employment, housing, travel, and public accommodations

closed shop: Establishment that hires only union members in good standing

cluster sampling: Sampling of a population by dividing it into heterogeneous groups (clusters), each of which is representative of the total population

codes of fair competition: Plans intended to standardize prices for the same products made by different companies

COLA:See cost-of-living adjustment

collective bargaining: Process in which union representatives negotiate with management over the terms of agreements dictating the conditions of employment

commodity: Any item that can be bought or sold and delivered, and is indistinguishable among producers

communism: Economic system characterized by the collective ownership of property and the organization of labor to benefit all workers

community property: Property owned in common by husband and wife

Confederate currency: Paper money that lacked gold or silver backing but was used by Southerners during the U.S. Civil War as a medium of exchange

conglomerate: Corporation that is made up of companies operating in diverse, unrelated fields

conglomerate merger: Merger between two noncompetitive companies

consignment shop: Store that sells goods and pays a percentage of the sales price of any particular item to the person who brought it in

consumer price index (CPI): Economic indicator published monthly by the U.S. Bureau of Labor Statistics that measures changes in the average cost of goods and services bought by consumers

contingency budget: Funds set aside in advance to finance a response to an unexpected event

contract:See specific type of contract

contract laws: Laws pertaining to an agreement between or among parties in which each party has obligations and consequences for breach of those obligations

contributing negligence doctrine: Principle under which, if an accident occurs at work, the employee is at least partially responsible

convenience goods: Products that consumers purchase frequently, immediately, and with a minimum of effort in comparison and shopping.See also shopping goods, specialty goods

“coolie” labor: Derogatory term applied to the unskilled workers from China and other parts of Asia who supplied manual labor after the abolition of slavery

cooperative: Business owned and controlled by those who use its services or are employed by it

coordinated decentralization: Concept whereby local entities are held accountable to state or federal standards while adapting methods to local conditions

copyright: Document granting exclusive right to publish and sell literary, musical, or artistic work

corporation: Organization created by a government charter that allows people to associate for a common purpose under a common name

core product: Central elements of a product that serve basic consumer or societal needs.See also augmented product

cost-of-living adjustment (COLA): Adjustment made to a source of income to counteract effects of inflation

cotton gin: Machine that mechanically removes the seeds from cotton fibers

counterfeiting: Production of imitations with the intent to present them as the real, original item

counting house: Originally, the site at which a business operated; later, the accounting operations of a firm

coupon: Certificate entitling its owner to something of value, such as interest in the case of a bond or a price discount from a retail store

covenant: In property law, a written agreement that places restrictions on use of property; normally passes from owner to owner over time

CPI:See consumer price index

craft union: Union organized on the basis of a specified set of skills or occupations

creative destruction: Technology that replaces outmoded technologies

credit card: Card allowing its owner to buy goods and services by charging them to an account and paying for them later

credit unions: Cooperative financial institutions that are privately owned and controlled by their members

currency: Unit of exchange that facilitates the transfer of goods and services; one form of money

customer service: All the supplementary services provided to satisfy consumers and outdo competitors

dairy industry: Sector of the agricultural industry that produces milk, butter, and cheese, mainly from cattle

daylight saving time (DST): Practice of advancing or turning back clocks for purposes such as extending daylight, safety, and utility savings

debit card: Card that allows its user to deduct money from a bank account after entering a personal identification number (PIN) either to obtain cash or to pay a retailer

deficit financing: Borrowing by a government agency to make up for a revenue shortfall

deficit spending: Spending of public funds raised by borrowing rather than by taxation

deflation: Falling prices.See also inflation, stagflation

demand, elasticity of:See elasticity of demand

demand, pent-up:See pent-up demand

demand-side economics: Theory that advocates the use of government spending and growth in the money supply to stimulate demand for goods and thus economic expansion

demographic segmentation: Differentiating people according to variables such as age, sex, religion, and income

department store: Store selling a wide variety of goods that is divided into separate sections featuring different types of products

depletion allowances: In tax law, deductions from gross income allowed for use of exhaustible commodities

depreciation: Noncash expense that reduces the value of an asset as a result of wear, age, or obsolescence, or loss of value of a country’s currency relative to that of other countries; the opposite of appreciation

depression: Severe or long recession; often an economic downturn in which the real gross domestic product declines by more than 10 percent.See also Great Depression, recession

deregulation: Process by which governments remove, reduce, or simplify restrictions on businesses

discount store: Store that sells products at prices below those of traditional retailers

diversification: Process of entering new markets with products that were not previously offered by the organization

dividend: Portion of profit or earnings distributed by a corporation to its stockholders

dot-com bubble: Period, roughly 1995-2001, during which stock market values in Western countries rose rapidly in the Internet sector before declining

Dow Jones Industrial Average (DJIA): One of several stock market indices that gauge the performance of American stock markets

downsizing: Decrease in employees to enhance continued company profitability

drug trafficking: Criminal trade in illegal or controlled substances

dry county/town: County or town whose government prohibits the sale of alcoholic beverages.See also wet county/town

DST:See daylight saving time

dual economy: Existence of two separate economic systems in a nation or area

due process: Constitutional limitation providing for a person’s right not to be deprived of life, liberty, or property without a fair and just hearing

dumping: Trade practice of selling products in foreign countries at artificially low prices

Dust Bowl: Period during the 1930’s of severe dust storms, causing major ecological and agricultural damage to American prairie lands

duty: Tax imposed on the exportation or importation of goods

e-commerce: Purchasing or selling goods on the Internet.See also online marketing

economies of scale: Lower per-unit costs that result from production facilities with greater capacity

elasticity of demand: Responsiveness of the demand for a good or service to an increase or decrease in its price

e-mail: Sending and receiving messages through a computer or other electronic device

embargo: Legal prohibition of commerce and trade

emigration: Outflow of nationals from a country; the opposite of immigration

empowerment: Increasing capacity of employees to make choices that may result in their desired actions and outcomes

energy crisis: Steep decrease in the supply of energy resources in a community, leading to higher prices

entrepreneur: Person organizing, managing, and assuming the risk of a new business

environmental movement: Scientific, social, and political movement for addressing environmental concerns

e-payments: Electronic transfer of funds to make payments to creditors

equal opportunity employer: Employer who agrees not to discriminate against any employee or job applicant because of race, color, religion, national origin, sex, physical or mental disability, or age

equity: In security law, an ownership claim on a business interest, usually a security with no repayment terms such as a share of stock

excise tax: Tax on the sale of goods

exculpatory contract: Contract that releases one party from liability for wrongdoing

exports: Goods conveyed from one country or region to another for purposes of trade; the opposite of imports

farm subsidies: Government programs to support prices of agricultural products and stabilize farm income

fast food: Food, usually of lower quality and price, that can be prepared and served quickly

fellow-servant doctrine: Principle that holds that an employer is not responsible for an employee’s injury if it is caused by a coworker’s negligence

feminist movement: Social and political movement to advance women’s rights

financing, deficit:See deficit financing

fixed cost: Cost that remains unchanged for a given time period despite changes in the number of items produced or services performed.See also variable cost

flat tax: Tax, usually based on income, that has the same tax rate for each taxable unit

food stamps: Government-issued coupons redeemable for food that are sold or given to low-income persons

foreclosure: Termination of a mortgage, in which after the borrower defaults, the mortgage holder takes possession of the property by court order

formalization: Process in which management establishes structures and procedures to determine priorities among competing management objectives

forward integration: Obtaining ownership or increased control of a company’s distribution chain.See also backward integration, vertical integration

401(k) retirement plan: Retirement savings account funded through pretax payroll deductions

fourP’s: Product, price, place, and promotion, the basic ingredients in marketing that influence a consumer’s decision to buy

franchise: License granted to individuals or businesses to market a company’s goods or services in a given area

free silver movement: Nineteenth century movement advocating unlimited coinage of silver

free trade: Trading of goods among countries without tariffs or other governmental interference

frequent-flyer program: Service offered by airlines to reward customer loyalty

futures: Agreements to deliver a commodity at a future date at a specific price

garnishment: Legal process by which a creditor appropriates a debtor’s wages

gas wars: Competition, by lowering prices, between or among service station owners to stay competitive

GDP:See gross domestic product

generic competitor: Competitor offering a product that, while different, satisfies the same general consumer need

genetic engineering: Direct manipulation of an organism’s genes to enhance or impart a desired characteristic

Gilded Age: Period during the late nineteenth century of major American population growth and extravagant display of wealth

glass ceiling: Figurative barrier that keeps women from advancing into management positions

globalization: Integration of national economies into international ones

GNP:See gross national product

gold rush: Period of feverish migration into an area where gold has been discovered, in search of wealth

gold standard: Commitment among countries to fix prices of domestic currencies in terms of a specified amount of gold

golden parachute: Generous severance agreement that a corporation manager negotiates

gospel of wealth: View associated with Andrew Carnegie that large sums of money should not be in the hands of those ill-equipped to handle them

Granger movement: Nineteenth century American agrarian movement centered on advocacy groups known as the Grange

Great Depression: Worldwide economic depression brought on in part by the collapse of the U.S. stock market in 1929.See also depression

Great Migration: Migration of about 7 million African Americans out of the southern states to other areas of the United States

Great Society: Set of domestic programs involving social reforms that were proposed or enacted on the initiative of President Lyndon B. Johnson

greed decade: 1980’s, when financial innovators received outrageously high earnings relative to their responsibilities

greenback: U.S. Treasury note printed with green ink, which replaced gold and silver as legal tender for most public and private debts

gross domestic product (GDP): Total market value of the goods and services produced in a given year; investment, government, and consumer spending plus the value of exports, minus the value of imports; includes only goods and services produced in the United States, regardless of the nationality of the producer

gross national product (GNP): Value of all the goods and services produced in a given year plus the value of the goods and services imported, minus the value of the goods and services exported; includes goods and services produced by U.S. firms operating overseas but does not include goods and services produced by foreign firms in the United States

handshake agreement: Business transaction carried out without a contract

hedge fund: Fund that invests in almost any opportunity in any market in which impressive gain at reduced risk seems possible

holding company: Corporation that owns enough voting stock in one or more companies to exercise control over them

homestead exemption laws: Laws that protect home values from property taxes, creditors, and circumstances arising from death of a homeowner’s spouse

homesteading: Acquisition of U.S. public land by filing an application, living on and cultivating the tract, and filing for a deed

horizontal price fixing: Agreement among competitors to charge noncompetitive prices

hostile takeover: Attempt to gain control of a company that is strongly resisted by the target firm

hunter-gatherer society: Society whose primary means of subsistence is direct procurement of edible plants and animals from the wild

identity theft: Fraud that involves getting benefits by pretending to be someone else

immigration: Inflow of foreign nationals into a country; the opposite of emigration

imports: Goods brought in from another country or area for purposes of trade; the opposite of exports

income tax: Tax on a corporation or person’s income; may be local, state, or federal

indentured labor: Work done for a prespecified period of time to pay off a debt, or workers under such contracts

Indian removal: Federal policy that sought to relocate Native American tribes east of the Mississippi River to lands west of the river during the 1830’s

individual retirement account (IRA): Retirement savings account that offers tax advantages for the depositor

Industrial Revolution, American: Period between 1790 and 1914, when the United States changed from an agrarian to an industrialized economy

industrialization: Social and economic change from an agrarian society to one that relies on mechanized production

inequality of wealth: Disparity in the distribution of economic assets

inflation: Rise in price levels over time.See also deflation, stagflation

infrastructure: Public and quasi-public facilities and utilities, such as transportation and communications systems, water and power lines, and schools, that are necessary for the functioning of an economy

insider trading: Trading of a corporation’s securities by people with access to nonpublic information

installment buying: System of paying for goods or services with payments over time

intangible asset: Something of value that has no physical substance, such as goodwill in a firm, a brand, or patent

interest rate: Percentage of the principal paid as a fee on borrowed capital

interlocking directorate: Practice of corporate board directors serving on boards of multiple corporations

internal migration: Movement of groups of people from one area of a country to another

IRA:See individual retirement account

jobber: Person who buys buy merchandise from manufacturers and sells it to retailers

joint-stock company: Company in which only the amount invested can be lost, unlike in a partnership

junk bond: High-risk bond that offers high yields; a speculative bond

just-in-time manufacturing: A management technique in which raw materials and parts are not stored in inventory but bought and delivered as needed

Keynesian economics: Theory of economics that holds that active governmental intervention in the marketplace and monetary policy is the best way to ensure economic growth and stability

labor union: Organization of workers formed to advance the interests of its members

laissez-faire: Theory or system of government that holds that governments should not intervene in the economy

lend-lease: Program during World War II in which the president of the United States supplied Allied nations with war materiel in return for payments made directly or indirectly

leveraged buyout: Use of a target company’s asset value to finance acquisition debt

loan, nonperforming:See nonperforming loan

lottery: Form of gambling in which the winner is selected by the drawing of lots from people who have paid to participate

Louisiana Purchase: Acquisition of the vast Louisiana Territory from France in 1803

machine boss: Person at the head of a political group that controls enough votes to ensure political and administrative dominance in a community

macroeconomics: Study of broad, aggregate variable and how they affect the economy as a whole

mail order: Order for goods, online, by telephone, or through the mail, to be delivered by conventional or express mail.See also catalog shopping

market niche: Segment of a market that can be distinguished from the rest of the market by specific characteristics

market penetration: Percentage of a market captured by a specific product

market segmentation: Identification of homogeneous submarkets or segments within the target market

marketing, online:See online marketing

Marshall Plan: Four-year program begun in 1947 to provide reconstruction assistance to seventeen European nations following World War II

mass production: Large-scale production of goods with interchangeable, standardized parts, typically to reduce per-unit costs and thereby increase sales

Medicaid: U.S. government-administered health program for low-income individuals

Medicare: U.S. government-administered health insurance program for people aged sixty-five or over or who meet other special criteria

merchant marine: Fleet of U.S.-owned ships engaged in transportation of goods in and out of the United States in peacetime that, in wartime, serves as an auxiliary to the Navy to deliver troops and military supplies

merger: Combination of two or more companies to form a single one

microeconomics: Study of economics that analyzes the market behavior of individual companies, households, or specific industries

migration: Movement from one locality to another.See also Great Migration, internal migration

minority: Portion of the population that differs from the majority population in some respect

mint: Place where coins, medals, or tokens are made

mixed economy: Capitalist economy in which part of the production is owned by the government

mom-and-pop store: Small business establishment owned and run primarily by members of a family

mommy track: Career path for female employees who reduce their work commitment in an implicit or explicit reduction in opportunities for advancement

monetarism: Theory that stable economic growth can be ensured only when the rate of increase in the money supply matches the capacity for productivity growth

money supply: Total amount of money available in an economy

monopoly: Situation in which a single company owns all or most of the means of producing or selling a service or commodity

moonlighting: Working at more than one job

mortgage: Loan document creating a lien against property that becomes void on payment

muckraking: Searching out and publicly exposing real or apparent misconduct of prominent people or businesses

mugwumps: Republican political activists who supported the Democratic candidate Grover Cleveland in the 1884 presidential election because they rejected the corruption associated with the Republican candidate

multinational corporation: Corporation that manages production or delivers services in at least two countries

mutual fund: Investment company that combines the money of its shareholders and invests the funds in a wide variety of securities

natural disaster: Emergency situation that poses a threat to human life or property and has a natural cause

net income: All revenues and gains minus all costs and expenses; also called net profit

net worth: Total assets minus total liabilities

New Deal: Set of domestic programs proposed or enacted on the initiative of President Franklin D. Roosevelt to combat the Great Depression

nonperforming loan: Loan on which interest is overdue and the principal is not likely to be paid back because its value is greater than the asset, such as real estate, against which the loan was made

nonprobability sampling: Sampling technique that does not employ techniques that enable inference from information obtained from samples to the general population

obsolescence, planned or built-in: Making an item in such a way as to ensure the likelihood of its wearing out or becoming outdated

oligopoly: Market in which an industry is dominated by a small number of sellers

online marketing: Shopping on the Internet.See also e-commerce

opinion leader: Individual who influences other people’s buying and consumption behavior

opportunity cost: Possible benefits from an alternative that must be given up to pursue a certain course of action

option: Right to buy or sell a particular asset at a specified price

organized crime: Operation of illegal businesses by groups formed and bound together by the pursuit of monetary profit

outsourcing: Use of workers from outside companies (often at lower pay) to perform duties previously done by workers within the core firm

over-the-counter market: Stock market for securities not sold in large volumes and therefore not listed on a stock exchange

panic: Sudden, widespread fright concerning financial affairs

patent: Grant made by a government that gives the creator of a particular invention the sole right to control the manufacture, use, and sale of that invention

pay television: Subscription-based television services

peddler: Traveling trader who played a significant role in supplying isolated populations with basic and diverse goods, particularly during the U.S. Civil War era

pension: Sum of money paid regularly, usually as a retirement benefit

pent-up demand: Strong consumer demand resulting from the unavailability of a product

peripheral firm: Small, labor-intensive business; the opposite of a center firm

physiocrat: Member of a group of economists who held that government should not interfere with the operation of natural laws and that land is the source of all wealth

piracy: Unauthorized use of another’s product, invention, or concept

plantation agriculture: System of agriculture based on large-scale land ownership and exploitation of labor and the environment

Ponzi scheme: Investment swindle that appears to be paying high returns by paying off early investors with money put up by later investors; typically the only source of revenue is through new investors

Populist movement: Movement critical of big business in the 1870’s that started with farmers and became a national political party; favored agrarian interests, free silver coinage, and government control of monopolies

portfolio: Collection of security holdings of an individual or company

price elasticity: Extent to which an increase or decrease in the price of a product results in a corresponding fall or rise in demand for the product

prime rate: Interest rate announced by a bank to be the lowest available at a particular time to its most creditworthy customers

principal: Face value of a note on which interest is calculated

privatization: Conversion from public to private control or ownership

proactive selling: Seller’s actively seeking out prospective consumers.See also reactive selling

progressive tax: Tax structure in which those who have higher income levels pay a higher percentage of their incomes.See also regressive tax

Progressive movement: Movement in the first two decades of the twentieth century characterized by reformers touting social justice, general equality, and public safety

Prohibition: Ban on the sale, manufacture, and consumption of alcohol from 1920 to 1933 in the United States

psychographic segmentation: Division of the market according to people’s lifestyles, values, attitudes, and personality

property tax: Tax levied on real or personal property

public utilities: Public or quasi-public businesses, subject to government regulation, that provide essential commodities or services such as water and electric power

quality circle technique: Technique in which small groups regularly meet to address work-related problems, especially those involving quality of a product or service

quality control: Process used to ensure a desired level of quality in a product or service

quota sample: Sample group chosen to reflect the makeup of the group from which it was selected

rational expectations theory: Theory of economist John Muth that proposes that people in the economy make choices based on their rational outlook, past experiences, and the available information; thus economic expectations predict the future state of the economy

reactive selling: Seller’s responding to consumers seeking a product.See also proactive selling

real income: Income measured by how much the money will buy rather than the amount received

rebate: Return of a portion of the cost of an item, either immediate or by mail

recession: Period lasting longer than a few months of significant reduced economic activity across the economy; technically two consecutive quarters of negative economic growth measured by a country’s gross domestic product.See also depression

red herring: In securities law, a prospectus not yet approved by the Securities Exchange Commission

regressive tax: Tax that is applied so that those with lower incomes spend a larger portion of their income on taxes than those with higher incomes.See also progressive tax

rescission: Cancellation of a contract

retirement plan: Plan for setting aside money to be used in retirement

return on investment (ROI): Ratio of net profit to total investment (total debt plus total equity)

revolving charge account: Credit account in which the borrow pays no interest or fees if the full balance is paid within a set time, usually thirty days after the transaction

sales tax: Tax levied on the sale of goods and services, usually calculated on a percentage of purchase price

sampling, nonprobability:See nonprobability sampling

savings bond: Debt security issued by the U.S. Department of the Treasury to pay for the government’s borrowing needs

scab: Nonunion worker who replaces a striking worker, or a union member who refuses to strike or returns to work before the strike is over

segmentation:See specific type of segmentation

selling, proactive:See proactive selling

selling, reactive:See reactive selling

seniority, artificial:See artificial seniority

sharecropping: System of agriculture in which a person uses someone else’s land in return for a share of the crop

shopping goods: Goods that are purchased by consumers only after they have comparison shopped.See also convenience goods, specialty goods

sit-down strike: Strike in which groups of workers take possession of a workplace by “sitting down” at their workstations

sit-in strike: Strike in which protesters occupy a place in which they are unwanted and refuse to leave voluntarily

smuggling: To import or export goods without paying customs or other taxes

Social Security: Government program designed to provide for basic economic welfare of individuals and their dependents

socialism: Economic system in which the means of production, distribution, and exchange are owned collectively or by a centralized government

soil bank: Program under which the U.S. government pays farmers to take cropland out of production

space race: Competition between the Soviet and U.S. governments to be the first to accomplish landmarks in space exploration

specialty goods: Items that are unique or unusual enough for consumers to seek them.See also convenience goods, shopping goods

spending, deficit:See deficit spending

stagflation: Period of sluggish economic growth accompanied by inflation and high unemployment.See also deflation, inflation

Standard & Poor’s: Company that publicizes financial research and analyses on stocks and bonds

stock: Share of ownership in a corporation

stock exchange: Organized market for buying and selling securities

stock market crash: Sudden, dramatic decline of stock prices across a significant cross-section of a stock market

stockout: When demand for an item cannot be fulfilled from on-hand inventory

stockpiling: Gradual accumulation of a reserve of some item

stratified sampling: Process of grouping members of a population into homogeneous subgroups before doing random sampling within each group

strike: Collective, organized cessation or slowdown of work.See also sit-down strike, sit-in strike

strikebreaking: Actions taken to end strikes, including hiring of workers to replace striking workers

subsidies, farm:See farm subsidies

sunbelt migration: Movement of populations into the southern United States

supply-side economics: Theory that holds that greater tax cuts for those earning large incomes will improve the economy and result in increased revenue for the government by providing incentives for those with money to increase investments and produce more goods and services

surety: Agreement to fulfill an obligation if a principal fails to pay or act as promised

surtax: Graduated tax in addition to the normal tax on an amount by which income exceeds a specified sum

sweepstake: Marketing promotion that entices consumers to enter a drawing of chance

synergy: Phenomenon in which two or more agents get together to create an effect greater than could be gained from the separate entities

takeover, hostile:See hostile takeover

target market: That portion of the total market that a company selects to serve

tariff: Tax imposed on products imported into a country

tax:See specific type of tax

telemarketing: Telephone solicitation of sales of products or services

temperance movement: Movement in the late nineteenth century that pushed for laws to prohibit consumption of alcoholic beverages

third-party payer: Person or organization that provides funding for projects, products, or services that benefit the user or consumer

thrift store: Store that sells used items, often for charity

time zones: Geographic regions within which the same standard time is used

top-down planning: Management system in which programs are implemented by top-level management, with little or no input from lower-level employees.See also bottom-up planning

trade show: Large exposition designed to promote awareness and sales of products, especially new ones within an industry

trademark: Brand or part of a brand given legal protection by restricting its use to owners

trading post: Shop or store where trade is conducted, usually in sparsely settled regions

trading stamp: Stamp, given to retail customers for purchasing a certain amount of goods, that can be redeemed for selected merchandise

trafficking: Illegal or improper exchange of goods

transatlantic steamer service: Ocean crossing by steamboat, beginning in the early nineteenth century

transcontinental railroad: Railroad line over the Rocky Mountains that connected a Midwest terminal and the Pacific Ocean, thus enabling travel by railroad across the United States

travelers’ check: Internationally redeemable draft payable on purchaser’s endorsement against the original signature on the draft

trickle-down theory: Economic theory that holds that investing money in companies and giving tax breaks to the wealthy is the best way to stimulate the economy and that the benefits will trickle down to the lower classes

trust: Property interest administered, invested, or held by one person for the benefit of another

turnpike: Expressway that charges a toll for its use

undifferentiated marketing strategy: Strategy in which the market is viewed as an aggregate and products and promotions are designed to appeal to the greatest number of consumers possible

unenforceable contract: Agreement that is otherwise valid, but when breached, cannot be enforced by a court of law

union:See labor union

unit contribution margin: Difference between a product’s selling price and the costs associated with producing and selling it

usury laws: Statutes that prohibit finance charges above a certain level

value-added tax: Tax in which a tax is levied on a product’s value at each stage of production, thus becoming a cumulative tax paid by the consumer

variable cost: Cost that changes as the number of items produced or services performed changes.See also fixed cost

vending machines: Coin-operated machines that dispense merchandise, often food items

venture capital: Money invested, often at sizable risk, in a new business or new product

vertical integration: Obtaining control of all or most of the progressive stages between raw material and finished product.See also backward integration, forward integration

voodoo economics: Term used by President George H. W. Bush during the 1970’s to describe supply-side economics

Wall Street: Name of the financial district in lower Manhattan in New York where major stock exchanges, brokerages, and banks are located

war surplus materials: Wide variety of merchandise no longer needed by the military and sold to the public

wealth, inequality of:See inequality of wealth

wet county/town: County or town whose government allows sale and consumption of alcoholic beverages.See also dry county/town

whistle-blower: Employee who, against the will or knowledge of an employer, informs the public about a harmful or illegal activity undertaken by the company

white-collar crime: Crimes committed by individuals or corporations during the course of business, usually for economic reasons

withholding tax: Tax deducted from wages and forwarded to the Internal Revenue Service by a person’s employer

working capital: Assets of a business that can be applied to its operation

yellow-dog contract: Agreement in which employees understand that they will be dismissed if they join a union

zoning: Division of a jurisdiction by ordinance into sections reserved for different uses