Economics, 3rd Edition

cost–benefit analysis 

a study that compares the costs and 

benefits to society of providing a public good

countercyclical 

a variable that is below trend when GDP is 

above trend

cream-skimming 

a situation where a firm identifies parts of a 

market that are high in value added and seeks to exploit those 

markets

credit default swap (CDS) 

a means by which a bondholder 

can insure against the risk of default

cronyism 

a situation where the allocation of resources in the 

market is determined in part by political decision making and 

favours rather than by economic forces

cross-price elasticity of demand 

a measure of how much 

the quantity demanded of one good responds to a change in the 

price of another good, computed as the percentage change in 

quantity demanded of the first good divided by the percentage 

change in the price of the second good

crowding out 

a decrease in investment that results from 

government borrowing