Connected glossary
Learn a concept where it does real work.
Definitions become memorable when they unlock a live question. Every concept links back to the mechanisms that use it.
Adjustment cost
The cost borne while workers, capital and places move between activities after trade patterns change.
1 connected LeverAggregate demand
Total spending on goods and services in an economy.
1 connected LeverAsset freeze
A prohibition on transferring or dealing with specified property under the sanctioning authority's jurisdiction.
1 connected LeverBargaining power
The ability of workers or employers to influence pay and working conditions.
1 connected LeverBargaining range
The set of deals both sides prefer to the expected cost and risk of fighting.
1 connected LeverBasis risk
The risk that the futures price and the local physical price do not move together exactly.
1 connected LeverBenchmark price
A reference price used across many physical and financial transactions.
1 connected LeverCapitalisation
The process by which expected benefits or constraints become embedded in asset prices.
2 connected LeversChokepoint
A narrow route carrying flows that are difficult to reroute.
1 connected LeverCluster
A geographic concentration of linked skills, suppliers and infrastructure.
1 connected LeverCollective defence
An arrangement in which participants promise assistance when one of them is attacked.
1 connected LeverComparative advantage
The ability to produce something at a lower opportunity cost than an alternative producer.
1 connected LeverConcentration risk
Exposure created when many activities depend on the same location or supplier.
1 connected LeverCost pass-through
The extent to which a firm's higher costs appear in the prices paid by customers.
1 connected LeverCoupon
A bond's scheduled interest payment.
1 connected LeverCredible commitment
A promise or threat others have good reason to expect will be carried out.
1 connected LeverDebt service
Interest and principal payments due on outstanding debt.
1 connected LeverDeterrence
Changing another actor's choice by making aggression look too costly or unlikely to succeed.
1 connected LeverDollar funding
Borrowing or obtaining dollars needed to finance assets, trade, or payments denominated in dollars.
1 connected LeverDuration
A measure of how sensitive a bond's price is to interest-rate changes.
1 connected LeverEconomic incidence
The parties whose real income ultimately falls because of a tax.
1 connected LeverEconomies of scale
Lower average cost made possible by producing at a larger scale.
1 connected LeverEffective capacity
The amount a transport network can move within a given time, accounting for delays and distance.
1 connected LeverElasticity
How strongly quantity responds to a change in price.
1 connected LeverEnergy intensity
The amount of energy used to produce a unit of output.
1 connected LeverEnergy security
Reliable access to energy at manageable cost.
1 connected LeverExport control
A legal restriction on transferring specified goods, software or know-how.
1 connected LeverFixed-rate mortgage
A mortgage whose contracted interest rate stays fixed for a defined period or term.
1 connected LeverFoundry
A company that manufactures chips designed by other firms.
1 connected LeverFutures contract
A standardised exchange-traded agreement tied to a later purchase or sale.
1 connected LeverGeneral-purpose technology
A technology used across many sectors and applications.
2 connected LeversHedging
Taking a position designed to offset an existing price risk.
1 connected LeverIndustrial policy
Government action intended to shape the location or capabilities of production.
1 connected LeverInflation expectations
Beliefs about future price growth that can influence decisions today.
1 connected LeverInput-output network
The web of industries buying inputs from and selling outputs to one another.
1 connected LeverInventory buffer
Stock held to keep operating when deliveries are late or uncertain.
1 connected LeverInvoicing currency
The currency used to state the price and payment obligation in a trade contract.
1 connected LeverJurisdiction
The legal reach within which an authority can require or prohibit conduct.
1 connected LeverLabour productivity
Output produced per worker or per hour worked.
1 connected LeverLand-use regulation
Rules governing what and how much may be built on land.
1 connected LeverLeading edge
The most advanced commercially produced process technologies.
1 connected LeverLegal incidence
The party legally required to remit a tax.
1 connected LeverLNG
Natural gas cooled into liquid form for shipping and later regasified.
1 connected LeverMarginal product
The additional output associated with one more unit of labour under given conditions.
2 connected LeversNetwork effect
A system becomes more useful to each participant as more other participants use it.
1 connected LeverOil benchmark
A reference price, such as Brent or WTI, used to price many physical oil transactions.
1 connected LeverOpportunity cost
The value of the best alternative forgone when a choice is made.
1 connected LeverOvercompliance
When firms avoid lawful activity because screening uncertainty or penalties make the perceived risk too high.
2 connected LeversPass-through
The share of a cost change reflected in later prices.
1 connected LeverPath dependence
Past investment choices constrain the options available later.
1 connected LeverPersistence
The extent to which inflation continues after its initial trigger.
1 connected LeverPipeline lock-in
Dependence created by fixed transport infrastructure and connected demand.
1 connected LeverPolicy lag
The delay between a rate change and its broader economic effects.
2 connected LeversPolicy rate
The short-term interest rate directly influenced by a central bank.
1 connected LeverPresent value
Today's value of future payments discounted at a required return.
1 connected LeverPrice discovery
Combining trades and information into a market price.
1 connected LeverPrice-to-income ratio
A comparison of home prices with household incomes.
1 connected LeverPurchasing power parity
A comparison that adjusts currencies for differences in local price levels.
1 connected LeverReal interest rate
An interest rate adjusted for expected inflation.
1 connected LeverRefinancing risk
The risk that maturing debt cannot be replaced at an affordable rate.
1 connected LeverReserve currency
A currency and its assets held by central banks for intervention, liquidity, and precautionary needs.
1 connected LeverRisk premium
Extra compensation demanded for bearing uncertain losses.
2 connected LeversSafe asset
An asset expected to preserve value, remain liquid, and be accepted as collateral, especially during stress.
1 connected LeverSecond-round effect
A later wage or price response that extends an initial shock beyond its direct impact.
1 connected LeverSecondary exposure
Risk faced by third-country firms when dealing with a target may threaten their access to the sender's market.
1 connected LeverSecurity dilemma
A situation where one actor's attempt to become safer makes another feel less safe.
1 connected LeverSovereign currency
A currency issued by the government or central bank whose debt is being discussed.
1 connected LeverSpare capacity
Production or transport capability available beyond current use.
1 connected LeverSupply elasticity
How strongly new housing supply responds to higher prices.
1 connected LeverSupply shock
An abrupt change in the cost or availability of important inputs.
1 connected LeverTechnological chokepoint
A hard-to-substitute capability controlled by few suppliers.
1 connected LeverTransmission
The channels through which a policy decision affects financing, demand and prices.
1 connected LeverVariable-rate mortgage
A mortgage whose rate can reset with a reference rate or lender schedule.
1 connected LeverVehicle currency
A currency used between parties even when neither party uses it at home.
1 connected LeverYield
Return implied by a bond's price and promised cash flows.
1 connected LeverYield curve
The set of market interest rates for borrowing over different maturities.