Terms From The ECONOMIST

Nafta: Stands for North American Free-Trade Agreement. In 1993, the United States, Mexico and Canada agreed to lower the barriers to trade among the three economies.

Nash Equilibrium: An important concept in GAME THEORY, a Nash equilibrium occurs when each player is pursuing their best possible strategy in the full knowledge of the strategies of all other players. Once a Nash equilibrium is reached, nobody has any incentive to change their strategy. It is named after John Nash, a mathematician and Nobel prize-winning economist.

National Debt: The national debt is a total of all the money ever raised by a government that has yet to be paid off or the total outstanding borrowing of a country’s Government; this is very different from an annual public-sector budget deficit.

National Income: Everything that is produced, earned or spent in a country.

Nationalisation: When a Government takes ownership of a private-sector business. State-owned businesses often enjoy a legally protected monopoly, and the lack of competition means the firms face little pressure to be efficient.

Neo-Classical Economics: The school of economics that developed the free-market ideas of classical economics into a full-scale model of how an economy works. The best-known neo-classical economist was Alfred Marshall, the father of marginal analysis. Neo-classical thinking, which mostly assumes that markets tend towards equilibrium, was attacked by Keynes and became unfashionable during the Keynesian-dominated decades after the second world war.

Net Present Value: A measure used to help decide whether or not to proceed with an investment. Net means that both the costs and benefits of the investment are included.

Network effect: When the value of a good to a consumer changes because the number of people using it changes.

Nominal value: The value of anything expressed simply in the money of the day. Since inflation means that money can lose its value over time, nominal figures can be misleading when used to compare values in different periods. It is better to compare their real value, by adjusting the nominal figures to remove the inflationary distortions.