Economy and Business Terms - Charlie, your teacher of English
an investor were able to lock in a 5% interest rate for the coming year and anticipated a 2% rise in
prices, they would expect to earn a real interest rate of 3%. This is not a single number, as different
investors have different expectations of future inflation. Since the inflation rate over the course of a
loan is not known initially, volatility in inflation represents a risk to both the lender and the borrower.
Real values: In economics, a nominal value is an economic value expressed in historical nominal
monetary terms. By contrast, a real value is a value that has been adjusted from a nominal value to
remove the effects of general price level changes over time and is thus measured in terms of the
general price level in some reference year (the base year). For example, changes in the nominal
value of some commodity bundle over time can happen because of a change in the quantities in the
bundle or their associated prices, whereas changes in real values reflect only changes in quantities.
The process of converting from nominal to real terms is known as inflation adjustment.
Recession: A recession is a significant decline in activity across the economy, lasting longer than a
few months. It is visible in industrial production, employment, real income and wholesale-retail trade.
The technical indicator of a recession is two consecutive quarters of negative economic growth as
measured by a country's gross domestic product (GDP), although the National Bureau of Economic
Research (NBER) does not necessarily need to see this occur to call a recession.
Recovery, economic: An economic recovery is a period of increasing business activity signaling
the end of a recession. Much like a recession, an economic recovery is not always easy to
recognize until at least several months after it has begun. Economists use a variety of indicators,
including gross domestic product (GDP), inflation, financial markets and unemployment to analyze
the state of the economy and determine whether a recovery is in progress.
Recruiting: It is the process of finding and hiring, from within or outside of an organization, the bestqualified candidate for a job opening, in a timely and cost effective manner. The recruitment process
includes analyzing the requirements of a job, attracting employees to that job, screening and
selecting applicants, hiring, and integrating the new employee to the organization.
Representation (in a contract): It is acting in place of, or standing for another party by an
authorization or legal right through an agent or proxy on behalf of a principal; through a counsel on
behalf of a client; though an administrator or executor on behalf of a deceased; or through an
elected representative in a legislative body on behalf of the electorate in his or her constituency. It is
also a presentation of facts or reasons expressed in words or inferred from conduct to induce a
particular course of action, such as signing of a contract. Representation includes any condition,
warranty, or undertaking, whether oral or written. A person induced into a contract on the basis of
an untrue or misleading representation may sue for rescission of the contract and/or for damages.
Repudiation: Disputing the validity of a contract and refusing to honor its terms. In investing,
repudiation is most relevant in fixed income securities, particularly sovereign debt. Fixed income
instruments are fundamentally contracts where the borrower lends a certain amount of principal in
return for payments of interest and principal on a preset schedule. Repudiation occurs if the
borrower refuses to honor this contract and stops making the agreed upon payments.
Regressive tax: It is a tax imposed in such a manner that the tax rate decreases as the amount
subject to taxation increases. "Regressive" describes a distribution effect on income or expenditure,
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