Terms From The ECONOMIST

Macroeconomics: It is the big picture, i.e. analysing economy-wide phenomena such as growth, inflation and unemployment.

Market Capitalisation: The market value of a company’s shares the quoted share price multiplied by the total number of shares that the company has issued.

Marshall Plan: It was named after General George Marshall, an American secretary of state, who at the end of the second world war proposed giving aid to Western Europe to rebuild its war-torn economies.

Karl Marx: He was a German economist. His two best-known works were the Communist Manifesto, written in 1848 with Friedrich Engels, and Das Kapital, in four volumes published between 1867 and 1910. Most of his economic assumptions were drawn from orthodox classical economics.

Mergers and Acquisitions: When two businesses join together, either by merging or by one company taking over the other.

Microeconomics: The study of the individual pieces that together make an economy. It is the study of the behaviour of individual markets, workers, households and firms.

Misery Index: The sum of a country’s inflation and unemployment rates. The higher the score, the greater is the economic misery.

Mixed Economy: A market economy in which both private-sector firms and firms owned by Government take part in economic activity.

Monetary policy: What a Central Bank does to control the money supply, and thereby manage demand. Monetary policy involves open market operations, reserve requirements and changing the short-term rate of interest. It is one of the two main tools of Macroeconomic Policy, the side-kick of Fiscal Policy.

Money: Makes the world go round and comes in many forms, from shells and beads to GOLD coins to plastic or paper. It is better than barter in enabling an economy’s scarce resources to be allocated efficiently. Money has three main qualities:
• as a medium of exchange, buyers can give it to sellers to pay for goods and services;
• as a unit of account, it can be used to add up apples and oranges in some common value;
• as a store of value, it can be used to transfer purchasing power into the future.

Money Illusion: When people are misled by inflation into thinking that they are getting richer, when in fact the value of money is declining.

Monopoly: When the production of a good or service with no close substitutes is carried out by a single firm with the market power to decide the price of its output.