C
| Term | Definition |
|---|---|
| Capacity Utilization | The proportion of a company or economy’s capacity that is actually used in production. High capacity utilization can lead to pressure for new investment and reduced unit cost of production. |
| Capital | Tools used for work to increase productivity. In capitalism, it can also refer to money invested in a business for profit. Includes circulating capital, fixed capital, human capital, machinery, equipment, physical capital, and structures. |
| Capital Adequacy | Loose regulations on banks to ensure sufficient internal resources to withstand fluctuations in lending and profitability, including money from shareholders. |
| Capital Cost | Fixed, one-time expense for land, buildings, construction, and equipment in the production of goods or services. Total cost to make a project commercially operable. |
| Capital Flight | Withdrawal of financial capital from a country due to perceived unfavorable changes in economic policies, political conditions, or other factors. Vulnerable in developing countries. |
| Capital Gain | Profit earned by reselling an asset for more than its cost. Assets include stocks, bonds, real estate, commodities, or fine art. |
| Capital Good | Durable good used in the production of goods or services. One of the three types of producer goods, along with land and labor. |
| Capitalism | Economic system where privately-owned companies undertake most economic activity for private profit. Workers are employed and paid wages or salaries. |
| Capitalist Class | A small percentage of the population in advanced capitalist countries that owns and controls the majority of private corporate wealth. |
| Carbon Tax | An environmental tax on products using carbon-based materials, contributing to greenhouse gas pollution. Tax level depends on the carbon content of each material. |
| Cartel | Group of firms colluding to act as a single entity, restricting output and increasing prices. |
| Central Bank | Public financial institution, usually national, controlling short-term interest rates, lending money to banks, overseeing the credit system, and regulating financial institutions. |
| Central Planning | Economic system where central government planners make crucial decisions on investment, consumption, interest rates, exchange rates, and price determination. |
| Certificate Of Deposit (CD) | Savings instrument earning more interest than a savings account, bound by limits within a contract. |
| Circular Flow Of Income | Economic model representing major exchanges as flows of money, goods, and services between economic agents. Basis of national accounts and macroeconomics. |
| Class | Broad groups in society defined by work, wealth, control over production, and role in the economy. |
| Classical Economics | Economic tradition beginning with Adam Smith, celebrating industrial capitalists’ actions. Focused on capitalism’s development, analyzed economics in class terms, and advocated the labor theory of value. |
| Command Economy | Economic system where the government directs all economic activity. |
| Commerce | The exchange of goods and services, often on a large scale. Involves legal, economic, political, social, cultural, and technological systems in a country or international trade. |
| Commodity | Economic good or service with substantial fungibility, treated as equivalent regardless of the producer. |
| Comparative Advantage | Theory of international trade by David Ricardo, suggesting economies specialize in products they produce most efficiently, even if less efficient than trading partners. |
| Competition | Rivalry between companies producing and selling the same goods or services. Occurs for markets, customers, raw materials, labor, and capital. |
| Competition Law | Law promoting or maintaining market competition by regulating anti-competitive conduct by companies. |
| Competitive Market | Market where many sellers compete to attract customers. Each seller aims to sell at the lowest price to attract customers, driving prices down. |
| Complementary Goods | Goods bought and used together. |
| Compound Interest | Addition of interest to the principal sum of a loan or deposit, often interpreted as “interest on interest.” Results from reinvesting interest. |
| Computational Economics | Research discipline combining economics, computer science, and management science. Encompasses computational modeling of economic systems, econometrics, finance, and tools for designing automated internet markets. |
| Conditionality | Conditions attached by international financial institutions (e.g., World Bank, IMF) to emergency loans in developing countries. Often involves strict neoliberal policies like reducing government spending and privatizing assets. |
| Consumer | Household member spending on goods and services. |
| Consumer Choice | Microeconomic theory relating preferences to consumption expenditures and consumer demand curves. Examines how consumers maximize utility within budget constraints. |
| Consumer Confidence | Economic indicator measuring consumers’ optimism about the economy and their financial situation. |
| Consumer Price Index (CPI) | Measure of the overall price level paid by consumers for goods and services. Tracks changes in the cost of living. |
| Consumer Surplus | Difference between the maximum price a consumer is willing to pay and the actual price paid. Indicates the benefit consumers receive compared to their maximum willingness to pay. |
| Consumerism | Economic policies emphasizing consumption. |
| Consumption | In mainstream economics, the final purchase of goods and services by individuals. Can also refer broadly to all economic activity not involved in the design, production, and marketing of goods and services. |
| Consumption Goods | Goods and services used for their ultimate purpose, meeting human needs or desires. Can be private (financed by personal incomes) or public (government-organized and funded). |
| Consumption Function | Mathematical function describing the relationship between consumption and disposable income. Introduced by John Maynard Keynes to develop the government spending multiplier. |
| Contract Curve | In microeconomics, the set of points representing final allocations resulting from mutually beneficial trading between two people. Pareto efficient allocations where one person can’t be more satisfied without making the other less satisfied. |
| Contract Theory | Study of how economic actors construct contractual arrangements, often in the presence of asymmetric information. Categorized within law and economics, connected to agency and incentives. |
| Convexity | In the Arrow–Debreu model, agents have convex budget sets and preferences. Convex analysis is used to analyze economics, with non-convex phenomena studied using non-smooth analysis. |
| Corporation | Business form as an independent legal entity separate from owners. Provides limited liability for owners, protecting personal wealth from claims against the corporation. |
| Corporatism | System managing wage determination and income distribution centrally based on productivity, profitability, and consultation or negotiation involving unions, employers, and often government. |
| Cost | Value of money used up to produce a good or service, no longer available for further use. Can include acquisition cost and additional transaction costs. |
| Cost Curve | Graph of production costs as a function of total quantity produced. Different types include total cost, average cost, marginal cost, and variable cost curves. |
| Cost Of Job Loss | Out-of-pocket cost experienced by a worker when laid off or fired, influenced by previous earnings, time to find a new job, unemployment benefits, and pay in the new job. |
| Cost Of Living | Cost of maintaining a certain standard of living, often measured using a cost-of-living index. Used for comparing standards of living in different geographic areas. |
| Cost Overrun | Unexpected incurred costs exceeding budgeted amounts. Can occur due to underestimation of actual costs during budgeting. |
| Cost-Benefit Analysis (CBA) | Systematic approach to estimating strengths and weaknesses of alternative options. Compares total benefits and costs, often used for decision-making in projects, policies, and transactions. |
| Cost-Of-Production Theory Of Value | Theory that the price of an object or condition is determined by the sum of the cost of resources used in producing it. Costs can include factors of production (labor, capital, land) and taxation. |
| Counter-Cyclical Policies | Government actions to offset private-sector economic fluctuations, including fiscal policies, monetary policies, and social policies. Aim to stabilize economic growth and employment. |
| Credit | Ability to purchase without immediate payment. Created credit is a significant source of new money and spending power in the economy. |
| Credit Bureau | Agency tracking credit, employment, and housing history, assigning credit scores to consumers. |
| Credit Card | Payment card allowing users to pay merchants based on a promise to pay the card issuer later. Revolving account with a line of credit for borrowing money. |
| Credit Rating | Evaluation of a debtor’s credit risk and likelihood of default. Credit rating agencies assess qualitative and quantitative information to assign ratings. |
| Credit Score | Numerical value indicating a person’s potential ability to repay debt. A good credit score is essential for financial credibility. |
| Credit Squeeze | Reluctance of private banks to issue new loans and credit, often during recessions or financial instability. Can slow economic growth and job creation. |
| Credit Union | Local financial institution owned by its members. |
| Creditor | Person or firm lending money to a borrower. |
| Crowding Out | Phenomenon where increased government involvement in a sector affects the remainder of the market, leading to reduced private investment. Can occur on the supply or demand side. |
| Cultural Economics | Branch of economics studying the relationship between culture and economic outcomes. Focuses on shared beliefs and preferences and their impact on decision-making. |
| Currency | Medium of exchange in the form of circulating banknotes and coins, used in transactions. More generally, a “system” of money within a particular nation. |
| Currency In Circulation | Value of currency or cash issued by a country’s monetary authority, minus the amount removed. Part of the total money supply, including banknotes, coins, and some types of bank deposits. |
| Current Account | Component of a country’s balance of payments, including balance of trade, net primary income, and net cash transfers over a specific period. |
| Cyclical Unemployment | Unemployment resulting from fluctuations in the business cycle, unpredictable in nature. |