What Do Economic Terms Mean?

With the roller coaster ride that has become following the stock market lately, terms like depression, recession and deregulation have become frequently used terms.

But understanding what those terms mean, however, can be another story.

Recession

The definition of a recession is two consecutive quarters of declining output, according to Economist.com. However, it’s also looked at as a period of slow or negative economic growth, which is often paired with rising unemployment.

Slump

A slump is where output falls by at least 10 percent, according to Economist.com.

Depression

Businessdictionary.com defines a depression as “the lowest point in an economic cycle characterized by reduced purchasing power; mass unemployment; excess of supply over demand; falling prices or prices rising slower than usual; falling wages or wages rising slower than usual; and general lack of confidence in the future.”

Deregulation

Deregulation is the revision, reduction, or elimination of laws and regulations that hinder free competition in supply of goods and services, Businessdictionary.com said. Economist.com said that according to estimates by the Office of Management and Budget, the annual cost of the rules in the Code of Federal Regulations book was $289 billion, but the annual benefits were $298 billion.

S & P 500

The Standard & Poor’s 500 is a stock market index containing the stocks of 500 Large-Cap corporations, all of which are from the United States.

Dow Jones Industrial Average

The Dow Jones Industrial Average, also widely called the Dow 30, the Dow Jones or The Dow, consists of 30 of the largest and most widely held public companies in the United States. The “industrial” portion of the name is largely historical-many of the 30 modern components have little to do with traditional heavy industry.

NASDAQ

The NASDAQ (National Association of Securities Dealers Automated Quotations) is the largest electronic equity securities trading market in the United States. With approximately 3,200 companies, it has more trading volume per day than any other stock exchange in the world.