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| Term | Definition |
|---|---|
| Rate Of Profit | In economics and finance, the profit rate is the relative profitability of an investment project, a capitalist enterprise, or a whole capitalist economy. It is similar to the concept of the rate of return on investment. |
| Rational Choice | The idea of making choices by using logic and that people will choose the most beneficial of the options afforded. |
| Rational Expectations | The theory that people optimally change their behavior in response to policy changes. Depending on the situation, their behavioral changes can greatly limit the effectiveness of policy changes. |
| Rationing | Rationing is the controlled distribution of scarce resources, goods, services, or an artificial restriction of demand. Rationing controls the size of the ration, which is one’s allowed portion of the resources being distributed on a particular day or at a particular time. |
| Real GDP | Gross domestic product that has been adjusted for inflation by applying the price deflator. |
| Real Income Effect | The change in consumption resulting from a change in income, adjusted for inflation. |
| Real Interest Rate | The interest rate on a loan, adjusted for the rate of inflation. The real interest rate represents the real burden of an interest payment. Real interest rates must be positive for the lender to attain any real income from the loan. |
| Real Prices | How much of one kind of thing (such as hours worked) you have to give up to get a good or service, no matter what happens to nominal prices. |
| Real Wages | The value of wages, adjusted for the level of consumer prices. If the nominal value of wages is growing faster than consumer prices, then real wages are growing, and hence the real consumption possibilities offered to workers are improving. |
| Recession | A condition in which the total real GDP of an economy shrinks (usually, for at least two consecutive quarters). |
| Recovery | A condition in which real GDP begins to grow again, following a recession. |
| Reflation | Reflation is the act of stimulating the economy by increasing the money supply or by reducing taxes, seeking to bring the economy (specifically the price level) back up to the long-term trend, following a dip in the business cycle. It is the opposite of disinflation. |
| Regional Science | Regional science is a field of the social sciences concerned with analytical approaches to problems that are specifically urban, rural, or regional. |
| Regressive Tax | A tax in which lower-income individuals or households bear a proportionately greater burden of the tax. Sales taxes are generally considered regressive (since lower-income households do not generally save, and hence must pay the sales tax on a larger proportion of their total income). |
| Regulation | Government restrictions on a business firm. |
| Relative Poverty | A measure of poverty based on an individual or family’s relative income compared to the overall average level of income in the economy as a whole. Relative poverty thresholds change over time with growth in overall income levels. Distinct from absolute measures of poverty, which are defined according to a specified level of real consumption. |
| Relative Price | The price of any product or commodity measured relative to the overall level of prices (for example, compared to the consumer price index). |
| Reproduction | The economic process of recreating the workforce. Reproduction involves caring for oneself and one’s family, and raising children. |
| Retail Sales | Purchases of finished goods and services by households and firms. |
| Retained Earnings | Business profits that are not distributed to shareholders (through dividends or other payouts), but instead are retained within the company to finance future investment or other expenditures. |
| Return On Equity | A measure of business profitability equal to net after-tax income divided by the average level of shareholders’ equity in the business. |
| Returns To Scale | In economics, returns to scale describe what happens to long-run returns as the scale of production increases when all input levels, including physical capital usage, are variable (able to be set by the firm). The concept of returns to scale arises in the context of a firm’s production function. |
| Revenue | Total income from sales of output. |
| Right To Work Law | A state law forbidding labor unions from forcing workers to join and pay union dues. |
| Rights | Rights are legal, social, or ethical principles of freedom or entitlement; that is, rights are the fundamental normative rules about what is allowed of people or owed to people according to some legal system, social convention, or ethical theory. |
| Risk Aversion | In economics and finance, risk aversion is the tendency of people to prefer outcomes with low uncertainty to those outcomes with high uncertainty, even if the average outcome of the latter is equal to or higher in monetary value than the more certain outcome. |
| Risk-Return Relationship | The direct relationship between the risk of an investment and its expected return or profit; the higher the risk, the higher the opportunity for gain or loss and vice versa. |
| Rivalry | In economics, a good is said to be rivalrous or a rival if its consumption by one consumer prevents simultaneous consumption by other consumers, or if consumption by one party reduces the ability of another party to consume it. |