Welcome to the SwiftEconomics.com Glossary! Each word will come to life using witty jokes, satire, and colorful examples. The glossary is meant to amuse and educate; not to be traditional or academic. The SwiftEconomics.com team wants to hammer home a few vital ideas throughout the vocabulary lesson. For example, keep an eye on asymmetric information’s effect on health insurance. Please share the SwiftEconomics.com Glossary with colleagues, friends, and family!
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Terms beginning with G
It helps you with dating; cut through the games (ironic, game theory helping with dating games), circles and bouncing between Facebook, MySpace and texting. Take the sophistication up a notch with game theory. Your dating success will skyrocket and you’ll save yourself loads of time, inconvenience and tribulation, once you find out, strategically, when it’s time to move on.
Game theory is strategic gamesmanship where one individual, firm, or government, decides the best course of action based on the likely actions of other players. The goal is to choose a Nash Equilibrium where, based on full information at hand of all strategies, of all players, you can watch A Beautiful Mind with the one you admire. Well, actually it is where a player knows all possible strategies of each opposing player, and cannot benefit from changing their own. No player has motivation to deviate from a Nash Equilibrium strategy.
Such gamesmanship helps players develop their optimal strategy, something often unseen in the world of dating.
The ultimate metaphor for a Nash Equilibrium strategy is a warped wooden desk and a marble. The desktop is wavy and looks like a collection of miniature half pipes connected in random chaos. If you were to drop a marble onto the desk, it does not reach a Nash Equilibrium until it comes to a resting position. As long as the marble is moving a better strategy exists for the player.
Dominant strategies generate the best results for a player regardless of what other players do. These strategies, although nice, do not always exist in every game.
With a Nash Equilibrium, you’ve achieved the best outcome you can in full knowledge of other player’s strategies. Game theory can be used to destroy opposing players in a winner-take-all battle royale (zero-sum game). It also can be used in cooperation with other players to make all players better off (positive-sum game). Coalitions occur between players in reality TV shows all the time in such positive-sum games. Often those alliances only last for one iteration as a way to advance to the next round.
Game theory is applied in political arms races so give it a try on your next dating prospect.
Gross domestic product, a country’s annual economic tally. This includes activities of business investment, private consumption, government spending, and the annual trade balance. GDP provides only a rough estimate of economic activity. The underground economy is neglected in this figure and lord knows government officials don’t pay all their taxes. It fails to reflect costs and externalities to the environment or the utility gained from leisure (aka glide mode). Its critics generally feel the figure isn’t appropriately used and fails to reflect overall social well being. When I slip into a far off place I see it as an acronym for Go Ducks! The “P” isn’t important.
A product class economists recognize but aren’t even sure if it exists in the real world. That tells you all you need to know. It’s out there somewhere with the mythological creatures uni-kitty and zebra-phant.
Sounds sketchy and there must have been a self-fulfilling prophecy here. Gilts are interest-paying securities that have very low risk of default and traditionally a term dedicated to government bonds. Treasury Bills have long been considered “risk-free” assets in finance. The U.S. government is totally good for all their debt…right?
A popular term thrown around by allegedly smart people. It’s the notion that world economies are continually more intertwined with one another. In other words, we’re all in this together. Better get on board OPEC countries – alternative energy is a bitch.
You’ve seen the website commercials offering you cash in exchange for gold family heirlooms. These folks must not have a lot of confidence in the value of the dollar. Gold is the precious metal our currency used to be pegged to pre-1971. Some economists (Austrian economists especially) believe the failure to peg our currency to a physical asset will cause the dollar’s ultimate demise.
Do unto others as…wait a second, I blacked out there for a second. The economic definition may be pretty important, too: never borrow money to finance current spending. Borrowed money should only go towards investment; that is, infrastructure and assets that will provide dollar returns for years to come. The Golden Rule isn’t followed very often.
When a country’s currency has the physical asset of gold backing each and every unit of currency in circulation. In this system, people are allowed to exchange their currency for actual gold at any time. Makes you wonder why great things are known as the “gold standard” of their class. In countries with fiat currency (money is created without backing of a physical asset), the only thing that gives currency value is trust. If trust in the monetary system crumbled, people would have to barter chickens again.