Glossary

What was that word again?
Nash equilibrium

A set of strategies, one for each player in the game, such that each player’s strategy is a best response to the strategies chosen by everyone else.

national accounts

The system used for measuring overall output and expenditure in a country.

natural experiment

An empirical study exploiting naturally occurring statistical controls in which researchers do not have the ability to assign participants to treatment and control groups, as is the case in conventional experiments. Instead, differences in law, policy, weather, or other events can offer the opportunity to analyse populations as if they had been part of an experiment. The validity of such studies depends on the premise that the assignment of subjects to the naturally occurring treatment and control groups can be plausibly argued to be random.

natural logarithm

See: logarithmic scale.

natural monopoly

A production process in which the long-run average cost curve is sufficiently downward-sloping to make it impossible to sustain competition among firms in this market.

negative feedback (process)

A process whereby some initial change sets in motion a process that dampens the initial change.

See also: positive feedback (process).

net capital flows

The borrowing and lending tracked by the current account.

See also: current account, current account deficit, current account surplus.

net income

Gross income minus depreciation.

See also: income, gross income, depreciation.

net present value

The present value of a stream of future income minus the associated costs (whether the costs are in the present or the future).

See also: present value.

net worth

Assets less liabilities.

See also: balance sheet, equity.

network economies of scale

These exist when an increase in the number of users of an output of a firm implies an increase in the value of the output to each of them, because they are connected to each other.

network external effects

An external effect of one person’s action on another, occuring because the two are connected in a network.

See also: external effect.

New Deal

US President Franklin Roosevelt’s program, begun in 1933, of emergency public works and relief programs to employ millions of people. It established the basic structures for modern state social welfare programs, labour policies, and regulation.

nominal interest rate

The interest rate uncorrected for inflation. It is the interest rate quoted by high-street banks.

See also: real interest rate, interest rate.

nominal wage

The actual amount received in payment for work, in a particular currency.

Also known as: money wage. See also: real wage.

non-compete contract

A contract of employment containing a provision or agreement by which the worker cannot leave to work for a competitor. This may reduce the reservation option of the worker, lowering the wage that the employer needs to pay.

non-excludable public good

A public good for which it is impossible to exclude anyone from having access.

See also: artificially scarce good.

non-rival good

A good that, if available to anyone, is available to everyone at no additional cost.

See also: rival good, non-excludable public good.

normal profits

Corresponds to zero economic profit and means that the rate of profit is equal to the opportunity cost of capital.

See also: economic profit, opportunity cost of capital.