No Free Lunch: Economics for a Fallen World: Third Edition, Revised

Appendix A Definition Index 477 Entrepreneur: the alert individual who appraises valuations of existing assets in comparison to alternative uses, and is willing to bear the risk of financial loss should his or her forecast be wrong. (Chapter 7—Bible Example Introduction) Equilibrium: a market price where all buyers that want to sell and all buyers that wish to purchase can do so—a state of economic balance where individual plans (and the expectations which guide those plans) are mutually compatible in the sense that all plans can be accomplished. (Chapter 5—Market Price Determination: Equilibrium) Equilibrium point: a price which would allow all willing sellers to sell and all willing buyers to buy. This equilibrium point is almost always changing, to reflect the changing valuations of consumers and changing opportunity costs of producers. Nevertheless, equilibrium is a point to which the market process continually tends toward. (Chapter 5—The Market Process in Action) Ex ante: “before the event.” (Chapter 3—Introduction/Concepts for Demand: A Quick Summary) Ex post: “after the event.” (Chapter 3—Introduction/Concepts for Demand: A Quick Summary) Expectations: market participants’ judgments of future economic realities (prices, demand for goods/services, etc.). (Chapter 2—How Markets Allocate Scarce Resources) Externality: a cost or benefit to a 3rd party who is not part of a market transaction. (Chapter 13—Externalities: Noise Pollution!) F Fallacy: an error in reasoning. (Chapter 1—Uncertainty vs. Risk) Fallacy of composition: the assumption that what is true of the parts is necessarily true of the whole. (Chapter 1—Uncertainty vs. Risk) Federal funds market: an interbank market where banks with excess reserves loan to those banks with insufficient reserves overnight. The interest rate that is charged is the federal funds rate, and the Federal Reserve targets this interest rate in conducting monetary policy. (Chapter 11—Fractional Reserve Banking Explained) Federal funds rate (FFR): the rate of interest charged by banks to one another for overnight loans of money, used to meet regulatory reserve requirements. (Chapter 12— Loanable Funds Framework) Fiat money: a money that has no inherent use or value other than its monetary function, which is declared by “fiat,” or the order of the sovereign. (Chapter 11—Money Creation)