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Debt: capital, such as bonds and bank loans, supplied to a firm by lenders; the firm promises to repay the amount borrowed with interest

Decentralization: Organizational structure in which many individuals or subunits can make decisions

Decision tree: A device for structured decision making that spells out the choices and possible consequences of alternative actions

Deficit spending: the situation that exists when government expenditures are greater than revenues

Deflation: a persistent decrease in the general level of prices

Demand: The maximum quantities of some good that people will choose (or buy) at different prices. An identical definition is the relative value of the marginal unit of some good when different quantities of that good are available.

Demand curve: the relationship between quantity demanded of a good and the price, whether for an individual or for the market (all individuals) as a whole

Demand deposits: deposits that can be drawn upon instantly, like checking accounts

Demand-constrained equilibrium: the equilibrium that occurs when prices are stuck at a level above that at which aggregate demand equals aggregate supply at the current price level

Demand-pull inflation: inflation whose initial cause is aggregate demand exceeding aggregate supply at the current price level

Demographic effects: effects that arise from changes in characteristics of the population such as age, birthrates, and location

Depreciation of currency: a change in the exchange rate that enables a unit of one currency to buy fewer units of foreign currency

Depreciation of assets: the decrease in the value of an asset; in particular, the amount that capital goods decrease in value as they are used and become old

Deregulation: the lifting of government regulations to allow the market to function more freely

Devaluation: a reduction in the rate of exchange between one currency and other currencies under a fixed exchange rate system

Developed countries: the wealthiest nations in the world, including Western Europe, the United States, Canada, Japan, Australia, and New Zealand

Diminishing marginal utility: the principle that says that as an individual consumes more and more of a good, each successive unit increases her utility, or enjoyment, less and less

Diminishing Relative Value: The principle that if all other factors remain constant, and individuals relative value of a good will decline as more of that good is obtained. Accordingly, the relative value of a good will increase, other factors remaining constant, as an individual gives up more of that good.

Diminishing Returns: As more and more of a productive resource is added to a given amount to other productive resources, additions to output will eventually diminish other factors, such as technology and the degree of specialization remaining constant.

Diminishing returns to scale: when all inputs are increased by a certain proportion, output increases by a similar proportion

Discount rate: the interest rate charged to banks when they wish to borrow from the central bank

Discouraged workers: workers who would be willing to work but have given up looking for jobs, and thus are not officially counted as unemployed

Discretionary Fiscal Policy: Changes in a fiscal (tax or spending) program initiated by the government in order to change aggregate demand.

Disequilibrium: The quantity demanded does not equal the quantity supplied at the going price.

Disinflation: A slowdown in the rate of inflation.

Disposable Income: The amount of an individuals income that remains after the deduction of income taxes.

Dividends: that portion of corporate profits paid out to shareholders

Division of Labor: Assigning of specific tasks to workers and productive resources; it is a reflection of economic specialization.

Downward rigidity of wages: the situation that exists when wages do not fall quickly in response to a shift in the demand or supply curve for labor, resulting in an excess supply of labor

Dual economy: the separation in many LDCs between an impoverished rural sector and an urban sector that has higher wages and more advanced technology

Duopoly: an industry with only two firms

Durable goods: goods that provide a service over a number of years, such as cars, major appliances, and furniture

Dynamic consistency: a policy is said to have dynamic consistency when government announces a course of action and then has the incentives to actually carry out that policy


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