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

Appendix A Definition Index 488 Rules vs. discretion: a debate over how the central bank should conduct monetary policy (i.e., should the central bank be mandated to follow a fixed rule that will guarantee stability, or should the central bank be allowed flexibility in implementing policy to deal with unforeseeable contingencies?). (Chapter 12—2nd Best Policy Recommendations) S Say’s Law: production of valued goods and services generates the potential purchasing power to enable demand of other goods and services. (Chapter 17—Say’s Law of Markets) Scarcity: We face unlimited wants and limited means to satisfy those wants (the central economic problem). (Chapter 2—Introduction) Simple interest: The interest rate is applied only to the principle of a loan. (Chapter 16—Valuing the Future—Concepts in Capital and Finance) Socialism: an economic system where the means of production are owned by the state but consumers’ goods are owned by individuals. (Chapter 1—Economic Systems) Special interest group: a group of individuals with a strong interest in a particular interest. This interest overcomes the tendency toward rational ignorance, and leads to disproportionate influence on public policies. (Chapter 14—Government Failure) Specialization: This occurs when individuals in a production process of many steps each concentrate on a limited number of the necessary steps and become very proficient at those particular tasks. (Chapter 15—Comparative Advantage-Redux) Standard of deferred payment: Money facilitates transactions across time by providing a standard for (or format of) what the final payment in the future will be. (Chapter 11—Functions of Money) Steady state: a state or process that does not change over time. (Chapter 6—Market Limitations) Stewardship: the care of assigned resources that are owned by another. In a biblical sense, stewardship is the careful management of the time, treasures, and talents that God has given us, in order to bring glory to God. (Chapter 5—Introduction) Store of value: Money is considered a store of value because its role as a medium of exchange can be both now as well as in the future. When held for its future purchasing power, money is a store of value. (Chapter 11—Functions of Money) Strategic behavior: when individuals have an incentive to hide their true preferences (as in a negotiation) due to competing interests . (Chapter 13—Public Goods)