Economists commonly use the term recession to mean either a period of two successive calendar quarters each having negative growth[clarification needed] of real gross domestic product[1][2][3]—that is, of the total amount of goods and services produced within a country—or that provided by the National Bureau of Economic Research (NBER): "...a significant decline in economic activity spread across the country, lasting more than a few months, normally visible in real GDP growth, real personal income, employment, industrial production, and wholesale-retail sales.
"[4] Almost all economists and policymakers refer to the NBER's determination for the precise dates of a U.S. recession's beginning and end.
[5] In contrast, in non-expert, everyday usage, recession may refer to a period in which the unemployment rate is substantially higher than normal.
Economists use the word money to mean very liquid assets which are held at any moment in time.
When someone says "She has a lot of money," the intended meaning is almost certainly that she has a lot of what economists would call financial wealth, which includes not only the most liquid assets (which tend to pay low or zero returns), but also stocks, bonds and other financial investments not included in the technical definition.
A related but different everyday usage occurs in the sentence "He makes a lot of money."
While financial economists use the word investment to refer to the acquisition and holding of potentially income-generating forms of wealth such as stocks and bonds,[9] macroeconomists usually use the word for the sum of fixed investment—the purchasing of a certain amount of newly produced productive equipment, buildings or other productive physical assets per unit of time—and inventory investment—the accumulation of inventories over time.
The everyday usage of investment largely coincides with the one used by financial economists—the acquisition and holding of potentially income-generating forms of wealth such as stocks and bonds.
In economic models, transfer payments are normally treated as a negative component of "taxes net of transfers", leaving "government spending on (newly produced) goods and services" as a separate category, often referred to simply as "government spending".
[13] In general usage, including by economists outside the above context, welfare refers to a form of transfer payment.
[14] Economists use the word efficient to mean any of several closely related things:[12] All of these definitions involve the idea that nothing more can be achieved given the resources available.
For example, suppose one wishes to find if the minimum wage rate affects firms' decisions on how much labor to hire.
If a statistical test shows that there is less than, say, a 5% chance that one would have found this particular value if the true value were zero, then it is said that the estimate is "significant at the 5% level".
In common usage, dummy can offensively refer to someone who is silent or unintelligent, as in a mannequin or puppet.
[15] In econometrics, dummy generally refers to a binary variable that indicates whether a certain quality is present or absent.
[15] In economics, rationality means that an economic agent specifies, or acts as if he implicitly specifies, a way to characterize his or someone's well-being, and then takes into account all relevant information in making choices so as to optimize that well-being.
For example, an individual consumer is assumed to be rational in the sense that he maximizes a utility function, which expresses his subjective sense of well-being as a function of the amounts of various goods he consumes; firms are assumed to maximize profit or some related goal.