Economy and Business Terms - Charlie, your teacher of English
government. As such, it is illegal to pay an employee less than the minimum wage. The minimum
wage attempts to protect employees from exploitation, allowing them to afford the basic necessities
of life. The minimum wage rate fluctuates between countries, and sometimes between states or
provinces.
Minimum wages have drawn strong criticism from many economists, since it establishes a price
floor on wages. Price floors can lead to a dead weight loss in the economy, which means that
inefficiencies exist. In this case, the minimum wage might force companies to hire fewer employees,
thus increasing unemployment.
Monetarism: It's a macroeconomic theory concerned with the sources of national income and the
causes of inflation. The theory, proposed by and closely associated with Milton Friedman, states
that the amount of money issued by a government should be kept steady, only allowing increases in
the supply of money to allow for natural economic growth. Â Monetarism also states that the rate of
inflation is directly determined by the supply of money available in an economy. Â Friedman
believed that the government should be less focused on controlling the supply of money and more
focused on maintaining price stability, a balance between monetary supply and demand.
Money Supply: It's the entire stock of currency and other liquid instruments in a country's economy
as of a particular time. The money supply can include cash, coins and balances held in checking
and savings accounts. Economists analyze the money supply and develop policies revolving around
it through controlling interest rates and increasing or decreasing the amount of money flowing in the
economy. Money supply data is collected, recorded and published periodically, typically by the
country's government or central bank. Public and private sector analysis is performed because of
the money supply's possible impacts on price level, inflation and the business cycle. In the United
States, the Federal Reserve policy is the most important deciding factor in the money supply.
Monopoly: According to a strict academic definition, a monopoly is a market containing a single
firm. In such instances where a single firm holds monopoly power, the company will typically be
forced to divest its assets. Antimonopoly regulation protects free markets from being dominated by a
single entity.
Monopoly is the extreme case in capitalism. Most believe that, with few exceptions, the system just
doesn't work when there is only one provider of a good or service because there is no incentive to
improve it to meet the demands of consumers. Governments attempt to prevent monopolies from
arising through the use of antitrust laws.
Mortgage: It's a debt instrument, secured by the collateral of specified real estate property, that the
borrower is obliged to pay back with a predetermined set of payments. Mortgages are used by
individuals and businesses to make large real estate purchases without paying the entire value of
the purchase up front. Over a period of many years, the borrower repays the loan, plus interest, until
he/she eventually owns the property free and clear. Mortgages are also known as "liens against
property" or "claims on property." If the borrower stops paying the mortgage, the bank can
foreclose.
Mutual fund: Mutual funds are pools of money that are managed by an investment company. They
offer investors a variety of goals, depending on the fund and its investment charter. Some funds, for
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