What are the 41 Economic Terms Used in Daily Life?

Terms and Concepts Everyone Should Know in Economics

Economics or Economics is “what economists do.” It is said, but is it actually like this? To put it in a word, the subject of economics is wealth. It is money. It is the management of money. Economics deals with resources, money. Isn't money what everyone is interested in? So, since every person understands money to a greater or lesser extent, isn't every person an 'economist' to a greater or lesser extent?

Undoubtedly, being an economist or an economist should not be this easy. It's not easy anyway. Essentially, economics is a field that deals with changes in production and distribution over time. Economists are experts in the field who focus on the efficiency of systems that control production and distribution.

In recent years, the economy has undergone a radical breakthrough in terms of interest and fame. Economists suddenly found themselves in a position where they not only studied wealth but also enjoyed it. This situation is largely due to their relations with politicians. Kings or politicians, who once relied on soothsayers and astrologers to foresee the future, today turn to economists on this issue. Nearly every elected official, every political candidate, has a favorite economist who will predict the economic benefits associated with their views. Or, he needs to show the public that he understands economics enough to claim that he is an economist, or rather, he needs to convince the public. For example, Itamar Franco in Brazil, Macron in France, and Erdoğan in Turkey claimed to understand money and became 'saviors' in the eyes of the public.

On the other hand, people of the modern era; If they have a few cents, they are searching for how to invest it, how to protect the value of my money against inflation, or where I should invest my money to increase a portion of my salary. People want to be able to buy mutual fund shares, buy and sell the right shares on time, know when the foreign currency will increase or decrease, follow real estate prices, predict when they can buy or sell a car, and even shop knowing when they need to buy tomatoes to make tomato paste. Those who do this follow their neighbors, and those who know a little are known as 'economists'.

Therefore, economic literacy has emerged as a necessity for every individual to be able to control their financial situations and manage their assets. Economic literacy enables people to understand their own economy and interpret events that will directly or indirectly affect them. It also plays an active role in a person's ability to make decisions in more microeconomic areas, such as buying a house or investing in the stock market. Having control over the investments that an individual will make enables him to use the professional help he receives in the most effective way, if he wishes. Additionally, the final decision will be made by the individual, not the consultant. Because the money that will be put at risk is the individual's own money, not the consultant's.

When we start to research these issues in more depth and browse some websites, we come across jargon that we call "economist's mouth". Today, I would like to talk about this jargon, economic jargon that can be a guide for those who want to follow the economy more closely. After all, 2024 looks set to be an economically difficult year for all of us. Even if the value of the money in our pocket does not increase, the value of spending money correctly increases. I believe it would be beneficial for each of us to have at least a knowledge level of the jargon and economist jargon used by money experts.

41 Common Economic Terms

1. What Does Crony Capitalism Mean?

The system in which business people carry out their business based on their close relations with the political power and bureaucrats is called crony capitalism. The permits, tenders, incentives and supports given by the political power and the bureaucracy working according to its instructions are the 'working area' where crony capitalism is primarily effective.

2. Why is Minimum Wage Important?

Minimum wage is applied in economies where the social state concept is valid. Minimum wage is the minimum monthly wage that a worker should receive, calculated according to certain criteria so that the worker and his family can live humanely according to the economic and social conditions of the day. The employer cannot legally pay the employee a lower wage.

3. What does bad loan mean?

It refers to loans that have not been paid even though they are due and that have continued despite the fact that the non-payment has been followed up and notified to the debtor.

4. What is BIST 100 Index?

The institution, which first started operating in 1986 under the name İMKB (Istanbul Stock Exchange), was restructured as Borsa Istanbul (BIST) as of April 5, 2013. Borsa Istanbul is used as the main index for the Equity Market. Companies traded in the national market in Turkey and real estate investment trusts traded in the corporate products market. It consists of the stocks of 100 companies selected from among bee and venture capital investment trusts. It also includes stocks included in BIST 100, BIST 30 and BIST 50 indices. Istanbul Stock Exchange value means BIST 100 index.

What is BIST 50 Index?

It consists of 50 shares selected from companies traded in the National Market, real estate investment trusts and venture capital investment trusts traded in the Corporate Products Market, and also includes stocks included in the BIST 30 index.

What is BIST 30 Index?

It consists of 30 shares selected among companies traded on the National Market, real estate investment trusts and venture capital investment trusts traded on the Corporate Products Market.

What is BIST 10 Bank Index?

It consists of 10 shares selected from among the banks traded on the National Market.

5. What is Bitcoin?

It is a virtual currency used via the Internet, not affiliated with any central authority or intermediary institution. Individuals or institutions can spend or accept money just like they do with real money. The exchange rate of Bitcoin is determined in the market according to supply and demand, just like the real money exchange rate.

6. What Does Debt Stock Mean?

The amount of debt accumulated by a state, company or person as of a certain date is called debt stock. When public debt stock is mentioned, the total amount of domestic and external debts of the public sector accumulated as of a certain date is understood.

7. What is a Budget?

Budget is an estimate that shows the revenues to be obtained and the expenses planned to be made for a certain period. The difference between the public budget and others is taxes. Only the public sector can collect taxes, which are unrequited income. Another difference between the public sector budget and private budgets is that it is a law. The budget law is a law that gives one-year authority.

8. What Does the Fundamental Law of Economics, Supply and Demand Mean?

Supply is the amount of something a person would be willing to sell at a given price, while demand is the amount of something a person would be willing to buy at a given price. Economists have a lot of fun asking you to predict what the relationship between supply and demand will be when quantities or prices change.

In an economy, all else being equal, if the supply of a product or service increases, its price decreases, but if the demand for that product or service increases, the price also increases. A simple inference is that when there is excess wheat production, wheat prices decrease. The opposite is also true.

9. What is Growth Rate?

Economic growth is defined as the increase in tools and products that will meet human needs in a country or region. The shortest way to measure this is to look at whether there is a real increase (adjusted for price increases) from one period to the next in GDP, which expresses the market price equivalent of all measurable values produced by an economy. The growth of an economy is often measured by the GDP growth rate. Since GDP is a measure of national income, this growth rate is an approximate indication of how the average person's income is growing each year.

10. What does Ceteris Paribus (Other Variables Remain Constant or Other Things Being Equal) Mean?

One of the things economists like to do when analyzing a complex situation with many variables is to treat one of them as a variable and the others as constants. This method allows them to do two things: First, focus on the importance of a particular element. Second, to prove the truth of a favorite theory. This thing called ceteris paribus is the magic phrase that economists mumble while doing this job. The literal meaning is "other things being equal."

11. What does Foreign Trade Balance mean?

The difference between the foreign exchange payments a country makes for the goods it imports by paying foreign currency from abroad and the foreign exchange revenues it obtains from the goods it sells abroad in exchange for foreign currency is called the foreign trade balance.

12. What is Dollarization?

The widespread use of foreign currencies in addition to domestic currencies in a country in daily shopping or determining value is called dollarization.

13. What Do Externalities Mean in Economics?

Effects or consequences felt outside the closed world of production and consumption. In other words, things like environmental pollution. Economists keep their world tidy by labeling all these things that create confusion as "externalities" and then eliminating them all.

14. What Does Inflation Mean?

Inflation, one of the usual problems of the current economy, is simply an increase or an upward trend in the average level of all prices. The percentage increase observed compared to the previous period (mostly the previous month or year) is called inflation. If there is a decrease in the general level of prices, the term "deflation" is used. It may be that easy to define inflation, but once it rises, it is very difficult to reduce it. Inflation is experienced to a greater or lesser extent in almost every economy in the world. In fact, in some countries, inflation is followed as a growth policy. Inflation in a country.

It should not be forgotten that in order to be able to talk about it, the increase in prices must occur not in a single or a group of products, but in all goods and services, that is, in the general level of prices.

15. What Do Interest Rates Mean?

It is the percentage of proceeds obtained as a result of the sale of a debt agreement. In the short term, this rate is usually set by central banks. In the long term, it is determined by the market and depends on inflation and the long-term expectations of the economy. The mechanism by which central banks control short-term rates is called monetary policy.

16. What is the Relationship between Interest Rates and Growth?

There is an almost inverse relationship between interest rates and growth. Interest is the cost of money, and as interest rates rise, it becomes more costly to invest. Therefore, when interest rates increase, investments decrease and economic growth tends to decrease.

17. What is Opportunity Cost?

Opportunity cost is whatever you say is the idea behind the saying "I could buy a BMW if I wanted". In economics, there is a cost to using your resources (time, money, etc.) in this way rather than this way. There is a difference between buying land in region A and buying land in region B in terms of the return it will bring over time. Even if there is land return in both regions, it is higher in one region. Investing by purchasing land in region B instead of A also has its own opportunity cost.

When we perform an activity, we tend to analyze how good and useful this activity is by comparing it with possible alternatives. For example, we may be working on a project on a day off and want to spend time with our family. In this case, the current plan, that is, the work plan, must have more attractive or profitable aspects than the alternative plan, that is, spending time with the family. This value of the alternative is called the "opportunity cost" and is the value of what you are giving up. With another approach, if you leave a job where you earn 10 thousand TL per month, your initial opportunity cost will still be 10 thousand TL per month. General rule; Your earnings must be higher than what you gave up.

18. What Do Gross National Product (GNP) and Gross Domestic Product (GDP) Mean?

GNP is an amount expressing in currency units the total value of all things produced in a national economy in a year. If this figure goes up from year to year, that economy is said to be growing. Again, when you divide this amount by the number of people living in the country in question, you find the income per capita. In GDP, an alternative scale, foreign investments and foreign trade are not taken into account and the scale of production is limited to the flow of goods and services within the country. GDP equals the sum of the market value of all goods and services produced. Conceptually, it refers to the total income of all employees in that country or the national income of that country. GDP is the basic measure of the size of an economy. Some economists believe that GDP is a more accurate basis for comparisons between countries. The components of GDP are as follows:

GDP = Consumption + Investment + Government Expenditures + Net Exports

Regardless of whether the scale you use is GNP or GDP, the underlying idea is that more is better.

19. What is Human Capital or Human Resources?

At first glance, it may seem strange to put the words "human" and "capital" together. But in the field of economics, human capital refers to the investments that businesses make for their employees, such as training and courses, or, in a broader sense, the company's assets represented by employees and the skills they have. In today's economy, everything is a commodity. The human being is also seen that way. In this respect, it does not matter whether it is human, robot or machine. At the end of the day, we look at who produced what and what benefits they provided.

20. Business cycle

The rise and fall periods of economies are approximately 7-year cycles. The beginning of the cycle sees rapid economic growth, then a peak, followed by a contraction that leads to a recession (a period of negative growth and/or rising unemployment), followed by an expansion at the end.

21. What does profit mean?

Profit or return is the situation in which the income obtained from the production of a good or service is higher than the cost. If this relationship is reversed, damage will occur.

22. What is Mixed Economy?

Another term for economic reality, "mixed economy" is the middle ground between the free market (the good guys) and the planned economy (the bad guys).

23. What Does Added Value Mean?

Value added is a measure of the difference between the value of the inputs involved in an activity and the value of the product produced by this activity. For example, when Superman takes a piece of coal, squeezes it between his hands, and uses his superior strength to turn the coal into a flawless diamond, the added value expressed in the power Superman exerts is significant. This term explains how wealth is created, but also helps people justify the hours they spend in front of a gaming machine.

24. Value Added Tax (VAT):

As the name suggests, it is a tax on added value. At each stage of the value-added chain, the buyer pays a tax to the seller, based on the value of the service involved. This tax is deducted from export products and applied to imported products. It is preferred to collect VAT from consumption rather than income. Ultimately, it means that the state touches the money coming out of the consumer's pocket through indirect taxes. All Western European countries have VAT; But it is a practice that generally shakes the poor more than the rich.

25. What is Exchange Rate Basket?

The basket created with more than one foreign currency to measure the value of a country's currency against foreign currencies is called an exchange rate basket.

26. What does Laissez-faire mean?

It seems that whenever economists want to describe an imaginary world, they tend to turn to a foreign language. Laissez-faire, which literally means "laissez-faire", evokes an understanding of the economy that is completely free from state intervention, where market forces are allowed to operate freely, and where the preferences that direct supply and demand and production and consumption are determined naturally, that is, "purely".

27. What is the difference between Macroeconomics and Microeconomics?

These two terms are further evidence of the economists' tendency to see things twice. These two terms are known as the two main streams of economics. Here, macro is the side of economics that looks at the big picture, that is, things like total input, total employment. Macroeconomics deals with issues such as interest rates, gross domestic product (GDP), employment, unemployment, inflation, and total production. Micro looks at the small picture, that is, how specific resources are used by firms or households, or how income distribution changes due to specific price changes or government policies. Microeconomics; It answers questions such as what, how and for whom it will be produced. It also investigates how consumers and companies make decisions and how they are influenced by each other in the market.

28. What is Marginal Benefit?

Generally, when individuals own an object or product, the value of that object begins to seem lower to the individual. Therefore, when we earn 1000 TL per month, 100 TL will be more valuable than when we earn 10 thousand TL per month. This is commonly used in setting prices.

29. What does meta mean?

This concept is generally divided into two categories: tangible goods and intangible services.

30. What is Monetary Policy?

It is the name given to the set of policies implemented by central banks to ensure the stability of the money they put into the market by affecting the amount of money in the market by using some tools.

31. What is Parity? What is the difference in meaning with Quran?

The trading value of two countries' currencies with each other is called parity. Although parity and exchange rate are actually words that mean the same thing, in practice exchange rate is used for the coefficient that establishes the equality of our currency with foreign currencies, and parity is used for the coefficient that establishes the equality of two foreign currencies with each other.

32. In what sense is Market Imperfection used?

When things do not go in the direction that economists based on the laissez-faire system want, the result is attributed to a market imperfection. Thus, economists do not make mistakes. They basically told the truth, but the market misunderstood it.

33. What is the difference between Free Market Economy and Planned Economy?

In the first of these, the decisions taken by households and businesses rather than the state determine how resources will be used. When you reverse this, the second one emerges. For those living in the United States, it's probably a nice idea to associate free market economics with the good guys and planned economy with the bad guys. If you find yourself in Cuba, all you have to do to keep up with the received theology is to turn this definition on its head.

34. What is Hot Money?

It is the name given to foreign currency coming to a country to benefit from high interest rates and high returns.

35. What Does Speculation Mean? Who is called a speculator?

It is a market term. It is the act of trying to make a profit from future price changes by assuming risks regarding an investment instrument or commodity. In speculation, there is no guarantee of the price that will occur in the future; although a profit can be made, the probability of encountering a loss is also quite high.

A speculator is a person or institution who tries to predict price changes with his knowledge and experience, and who makes a profit from the risk he takes if he makes a correct prediction.

36. What Does Technical Analysis Mean?

It is the process of making price predictions for the future by analyzing past market movements based on indicators such as price, quantity and volume.

37. What is a Tip? Is it a crime?

Information that has not been disclosed to the public and may have an impact on a capital market instrument is called a tip. The person who gives this information is called the tip giver, and the person who receives it is called the tip taker. Since this type of information is information that has not yet been disclosed to the public, it is not possible for the person receiving the information to benefit or make a profit.

causes or prevents harm. This action is among the crimes of information misuse, which are among the capital market crimes.

38. What do Long Term and Short Term mean in Economics?

Short term; It refers to a time period that is too short to allow economic inputs to change, while long term, as you can imagine, refers to a time period that is long enough to allow all economic inputs to change. Terms become important when you start thinking about how individuals or companies adapt to the circumstances and whether they succeed. For some economists, the long run is particularly useful when defending a favorite theory. For example, during periods of economic decline and high unemployment, economists may oppose any government intervention on the grounds that the market will make the necessary adjustment in the long run to correct the situation. The problem, naturally, is that most people live in the short term and, as economist John Maynard Keynes once warned, we will all die in the long term.

39. What are the Factors of Production? What is Production Function?

Ordinary people talk about resources—things like land, labor, or capital that are used to produce or provide other things. Economists call these factors of production. Understanding what the economist is saying can sometimes be more difficult than understanding the land you cultivate to produce something.

The production function is the expression of the relationship between the production factors consisting of labor, capital, natural resources and entrepreneurial power used in the production of a good, and the products obtained with other input quantities, within the framework of a function. Technology is the factor that determines the nature of the relationship between production factors and inputs and the product quantities obtained, that is, the production function.

40. What Does Productivity Mean?

Productivity, one of the big words in the field of economics, is simply a measure of the relationship between the amount of input and the amount of output. For example, if it took you two days to write your term paper while you were in college, and your roommate hired someone else to finish the job in one day, his productivity is twice yours and he probably got a better grade than you.

41. What Does Efficiency Mean?

Productivity is the ratio of how much product is obtained with a unit of input in a certain period of time. If the subject is the productivity of the workforce, then we can calculate the annual productivity of the workforce by dividing the annual production by the time the workforce works in a year. The increase or decrease in this ratio from one year to the next shows us the change in labor productivity.

References

Halkbank Website, 10 terms in economics that everyone should know, https://www.halkbank.com.tr/tr/blog/finans/ekonomide-herkesin-blerini-gereken-10-terim.html

Judy Jones, William Wilson, Too Much Culture Doesn't Matter, Boyner Holding Publications, BZD Publishing, Istanbul, 1999.

Mahfi Eğilmez, Economy Dictionary, https://www.mahfiegilmez.com/p/ekonomi-sozlugu.html