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The quantity and quality of human effort available to produce goods and services.
Labor Force
The people in a nation who are aged 16 or over and are employed or actively looking for work.
Labor Market
The labor supply and labor demand curves. The intersection of the labor supply and labor demand curves determines the equilibrium wage and the quantity of hours people work at this equilibrium wage.
Labor Union
An economic institution that represents an organized group of workers (by industry or by type of worker regardless of the industry) to negotiate with management by means of collective bargaining.
Lagging Indicators
Economic variables such as the prime interest rate, labor cost per unit of output, inventories to sales ratio and unemployment duration that tend to change after real output changes.
"Gifts of nature" that can be used to produce goods and services; for example, oceans, air, mineral deposits, virgin forests and actual fields of land. When investments are made to improve fields of land or other natural resources, those resources become, in part, capital resources. Also known as natural resources.
Late Fee
In a credit arrangement, a fee charged when payment is received after the due date.
Law of Demand
An economic principle stating that consumers will purchase less of a good or service at higher prices and more at lower prices.
Law of Diminishing Marginal Returns
Describes a phenomenon observed in all short-run production processes, when at least one input (usually capital) is fixed. As more and more units of a variable input (usually labor) are added to the fixed input, the additional (marginal) output associated with each increase in units of the variable input will eventually decline. In other words, successive increases in a variable factor of production added to fixed factors of production will result in smaller increases in output.
Law of Increasing Opportunity Cost
Law of Supply
An economic principle stating that producers will provide more of a good or service at higher prices and less at lower prices.
Leading Economic Indicators
Measures of economic performance that tend to move ahead of GDP, thus indicating how the economy will perform in the months ahead. Examples include stock prices, the money supply and new business start-ups. (See also Economic forecasting.)
Legal and Social Framework
The system of laws, institutions, traditions and customs, and incentives that forms the basis of a society and its economy.
Legal Forms of Business
Forms of business organizations protected by a nation's laws; in the United States, the three forms of business organization are the corporation, partnership and sole proprietorship.
Legal Foundations of a Market Economy
The laws and institutions that support a market economy; examples include protection of private property and enforcement of contracts.
To grant someone the use of something (a car, for example, or a sum of money), on condition that the object borrowed or its equivalent will be returned (often with interest, in the case of money).
One who lends; may be an individual or a business.
Levels of Competition
Various perspectives concerning economic participation that people fall under with regard to competition for resources.
Legal responsibility to pay for damages or losses one has caused.
Liquid Investments
Investments or savings (such as savings accounts and money market mutual funds) from which money can be accessed immediately.
The ease with which savings or investments can be turned into cash.
Loanable Funds Market
Market in which the supply and demand for money, in the form of bank deposits and loans, determine the interest rate.
Long-Term Goal
Something a person or organization plans to achieve at least five years in the future.
Lorenz Curve
Price elasticity of demand is the percentage change in quantity demanded as a result of the percentage change in demand price. Generally, a relative response of a change in quantity demanded to a relative change in price.