Archives: Terms

Definition of Long Run The term “Long Run” refers to an extended period of time in economics during which all inputs can be varied. In the long run, there are no fixed factors of production, meaning that a firm can adjust its production levels, change its technology, and enter or […]

Definition of Lobby A lobby is a group of individuals or organizations that engage in activities aimed at influencing government decisions, policies, or legislation to benefit their own interests. These interests can include promoting specific legislation, regulations, or government funding that aligns with the goals and objectives of the lobby […]

Definition of Living Wage A living wage refers to the minimum income necessary for a person or a family to meet their basic needs and maintain a decent standard of living. It is often considered to be higher than the legally mandated minimum wage, as it takes into account the […]

Definition of Liquidity Trap A liquidity trap refers to a situation in which monetary policy becomes ineffective in stimulating economic growth and combating deflationary pressures. It occurs when interest rates are already at or near zero and individuals and businesses, instead of borrowing and investing, hold onto their money due […]

Definition of Lindahl Equilibrium Lindahl Equilibrium is a concept in economics that represents a situation where individuals voluntarily reveal their preferences for public goods and contribute to their financing based on these preferences. In other words, it is a hypothetical state in which individuals’ individual contributions toward public goods reflect […]

Definition of Limited Government Limited government refers to a system in which the power and authorities of the government are restricted by a constitution or other legal framework. The purpose of limited government is to protect individual rights and prevent the abuse of power by those in positions of authority. […]

Definition of Life Expectancy Life expectancy is a statistical measure that calculates the average number of years a person is expected to live based on certain demographic factors such as age, gender, and location. It is an important indicator of the overall health and quality of life within a particular […]

Definition of Life-Cycle Hypothesis (LCH) The Life-Cycle Hypothesis (LCH) is an economic theory that suggests individuals base their consumption and savings decisions on their expected lifetime income rather than their current income. According to the LCH, individuals strive to maintain a stable standard of living throughout their lifetime by adjusting […]

Definition of Less-Developed Countries (LDC) Less-Developed Countries, often abbreviated as LDCs, refer to nations that have lower living standards, lower income levels, and are less industrialized compared to more developed countries. These countries typically face challenges in terms of poverty, inadequate healthcare, limited access to education, high unemployment rates, and […]

Definition of Lemons Problem The lemons problem, also known as asymmetric information, refers to a situation in which the seller of a product has more information about its quality than the buyer. This lack of information creates an imbalance of power and can lead to adverse selection, where only low-quality […]