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Monday, January 10, 2011

Economic Glossary

NASDAQ
Definition: NASDAQ stands for National Association of Securities Dealers automatic quotation market. A mostly-electronic market of stocks in the United States. There is no 'pit' -- market makers in each stock offer buy and sell prices which are different.

The Leontief Production Function:
Definition: The Leontief Production Function has the form q=min{x1,x2} where q is a quantity of output and x1 and x2 are quantities of inputs or functions of the quantities of inputs.


Liquidity
Definition: Liquidity refers to how quickly and cheaply an asset can be converted into cash. Money (in the form of cash) is the most liquid asset. Assets that generally can only be sold after a long exhaustive search for a buyer are known as illiquid.

Liquidity Trap
Definition: The Liquidity trap is a Keynesian idea. When expected returns from investments in securities or real plant and equipment are low, investment falls, a recession begins, and cash holdings in banks rise. People and businesses then continue to hold cash because they expect spending and investment to be low. This is a self-fulfilling trap.

Bank Run
Definition: A bank run takes place when the customers of a bank fear that the bank will become insolvent. Customers rush to the bank to take out their money as quickly as possible to avoid losing it. Federal Deposit Insurance has ended the phenomenon of bank runs.