ECONOMIC TERMS COMMONLY USED IN DEBATE

ANCHOR TENANT: Usually used in the context of a mall, such as a department store attracting enough customers that smaller stores feel confident that the can rent space in the mall. This year, people will argue that NASA, by providing a guaranteed market for space products, acts as an anchor tenant in the space business. DEBT: total accumulated deficits over time. Public debt is the combined total of the debt held by the public (all federal securities held by institutions of individuals inside or outside the US) + securities administered by the USFG (such as Social Security). It is currently around $14.32 trillion, or around 98% of GDP. Standard & Poors downgraded the USs credit outlook to negative this spring. DEFICIT: amount we spend in excess of receipts per year. It is currently well over a trillion a year ($1.56 in 2010, probably less in 2011 but still around $1.3 trillion). DEFLATION: occurs when the inflation rate is less than 0%. This increases the real value of money (or the ability of money to purchase goods and services). It is generally correlated with depressions. DISINFLATION: when the inflation rate slows but does not turn negative. DEPRESSION:there is no agreed upon definition but it is at least 10% or more prolonged decrease in economic output. DISCRETIONARY SPENDING: spending that the Congress can adjust on a yearly basis because there are not pre-enacted laws demanding a certain level of funding. NASA funding is all discretionary spending. ECONONOMIC DEVELOPMENT: resource extraction or expansion of the manufacturing base. This may cause growth but they are not synonymous. ECONOMIES OF SCALE:reductions in unit cost as the size of a facility and usage level increases. Bulk purchasing, expert management, lower interest borrowing available to large and successful businesses, marketing success or technological advances due to experience are all examples of economies of scale. These arguments will particularly be used as a reason why NASA (as opposed to smaller private ventures) is the real future of space travel (especially as it relates to launch costs). ENTITLEMENTSPENIDNG: examples include Social Security, Medicare/Medicaid and veterans benefits. These are budget costs that are required by law and cannot be adjusted by the Congress (without altering the laws). FISCAL POLICY: Public spending and taxation. It can be used to influence demand in the economy, such as the use of tax breaks to encourage growth in some sectors (such as tax breaks for private space programs). GDP: gross domestic product, a measure of economic activity in a country. Calculated by adding private consumption + investment + public spending + the change in inventories + (exports imports). GNP: gross national product. Calculated by adding the GDP + (income earned by residents from investments abroad income sent home by foreigners living within the nation).

GROWTH: Growth is measured as the percent rate of increase in real gross domestic product (the market value of all final goods and services made within the borders of a nation in a year). HYPER INFLATION: Very, very bad. Although people debate when, precisely, very rapid inflation turns into hyperinflation (a 100% or more increase in prices a year?) nobody questions that it wreaks huge economic damageaka Germany after WWI or modern Zimbabwe. INFLATION: too many dollars chasing too few goods. Inflation can be caused on the supply side or the demand sidethere can be an excess of cash (supply side) or a rise in the price of key commodities (like oil, demand side, causing most if not all of the inflation we have today). Inflation is also a decline in the real value of moneya loss of purchasing power. LIQUIDITY: How easily an asset can be spent. Cash is wholly liquid. The liquidity of other assets is usually less; how much less may be measured by the ease with which they can be exchanged for cash (that is, liquidated). MONETARY POLICY: What a central bank does to manage the money supply and thereby influence demand. The main mechanism of monetary policy is adjusting interest rates (with the Federal Reserve Bank in the US). Higher interest rates create incentives to save and deter people from taking out loans (removing money from the economy) while lower interest rates do the opposite. The FRB can also change reserve requirements (higher reserve requirements mop up money, lower requirements inject money into the economy) or buying and sellingsecurities. OPPORTUNITY COST: The true cost of something is what you give up to get it. This includes not only the money spent in buying (or doing) the something, but also the economic benefits that you did without because you bought (or did) that particular something and thus can no longer buy (or do) something else. TRADE DEFICIT: aggregate measure of exports v imports; it has nothing to do with the federal budget. RECESSION: Two or more consecutives quarters of negative economic growth (as measured by declining output). UNEMPLOYMENT RATE: You know what this is but a common criticism is that it underestimates the actual unemployment rate because it only includes those actively looking for work. During prolonged recessions, some people give up looking for work and are no longer counted.

Some information taken from: http://www.economist.com/research/economics/