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| Term | Definition |
|---|---|
| Value Added | The increase in economic value that results from the production process. It is calculated by subtracting the value of intermediate goods and services from the final value of a product. |
| Velocity of Money | The rate at which money is exchanged or spent in an economy over a specific period. It is a measure of how quickly money circulates and contributes to economic activity. |
| Venture Capital | Capital provided by investors to startup companies and small businesses with high growth potential in exchange for equity or ownership stakes. Venture capital helps fund early-stage and high-risk ventures. |
| Vertical Integration | A business strategy where a company controls or owns the entire supply chain, from the production of raw materials to the distribution of the final product. Vertical integration aims to improve efficiency and reduce costs. |
| VAT (Value-Added Tax) | A consumption tax imposed on the value added at each stage of the production and distribution chain. VAT is levied on the final sale of goods and services to consumers. |
| Volatile Market | A financial market characterized by frequent and significant price fluctuations. Volatility is a measure of the degree of variation of trading prices over time. |
| Voluntary Exchange | The act of individuals or entities willingly engaging in transactions where both parties expect to benefit. Voluntary exchange is a fundamental concept in free-market economies. |
| Variable Costs | Costs that vary with the level of production or output. Examples include raw materials, labor, and energy expenses. |
| Value Chain | The entire sequence of activities involved in the production and delivery of a product or service, from raw material extraction to the end-user. Companies analyze the value chain to identify opportunities for efficiency and cost savings. |
| Voucher System | A method of providing government assistance or subsidies to individuals or businesses by distributing vouchers or coupons that can be redeemed for specific goods or services. |
| Voluntary Unemployment | A situation where individuals choose not to work despite being capable and willing to do so. Voluntary unemployment may occur due to personal preferences, lifestyle choices, or other factors. |
| Voodoo Economics | A colloquial term used to criticize economic policies or theories that are perceived as unrealistic, overly optimistic, or relying on questionable assumptions. The term gained prominence in political discourse. |
| Visible Hand | Coined as a counterpart to Adam Smith’s “invisible hand,” the visible hand represents government intervention or regulation in the economy. It contrasts with the idea that markets can self-regulate without government interference. |
| Value Investing | An investment strategy that involves selecting stocks or securities perceived to be undervalued based on fundamental analysis. Value investors seek assets with intrinsic value that the market may have overlooked. |
| Variable Interest Rate | An interest rate that can change over time based on fluctuations in benchmark rates or market conditions. Variable interest rates are commonly found in adjustable-rate loans. |
| Velocity of Circulation | Another term for the velocity of money, referring to the speed at which money changes hands in the economy. |
| Voluntary Export Restraint (VER) | An agreement between two countries where one agrees to limit its exports of a specific product to the other country. VERs are often negotiated to avoid more stringent trade measures. |
| Venture Philanthropy | A philanthropic approach that applies principles of venture capital to charitable activities. It involves providing funding, mentorship, and strategic support to nonprofit organizations with the goal of achieving social impact. |
| Vertical Equity | A principle of taxation where individuals with different income levels are taxed at varying rates based on their ability to pay. It aims to achieve a fair distribution of the tax burden. |
| Volatility Index (VIX) | A measure of market expectations for future volatility, often referred to as the “fear index.” The VIX is calculated based on options prices and serves as an indicator of investor sentiment. |
| Value | In economics, economic value is a measure of the benefit provided by a good or service to an economic agent. It is generally measured relative to units of currency, and the interpretation is therefore “what is the maximum amount of money a specific actor is willing and able to pay for the good or service”? |
| Value Added | The value added in a particular stage of production equals the value of total output, less the value of intermediate products (including capital equipment, raw materials, and other supplies). By definition, value added is ascribed to the various factors of production (including the wages paid to workers, the profit paid to a company’s owners, and interest paid to lenders). Value added in the total economy equals its gross domestic product (GDP). |
| Value-Added Tax (VAT) | A value-added tax (VAT), known in some countries as a goods and services tax (GST), is a type of tax that is assessed incrementally. It is levied on the price of a product or service at each stage of production, distribution, or sale to the end consumer. If the ultimate consumer is a business that collects and pays to the government VAT on its products or services, it can reclaim the tax paid. It is similar to, and is often compared with, a sales tax. |
| Variable Costs | Any cost that changes in proportion to the amount of goods or services that a firm produces. Variable costs are also the sum of marginal costs over all units produced. |
| Velocity of Money | Also called the velocity of circulation of money. Refers to how fast money passes from one holder to the next. It can refer to the income velocity of money, which is the frequency with which the average same unit of currency is used to purchase newly domestically produced goods and services within a given time period. In other words, it is the number of times one unit of money is spent to buy goods and services per unit time. |