James d. Gwartney

checking account: Deposit account held at a financial institution that allows withdrawals and
deposits. Also called demand accounts or transactional accounts, checking accounts are very
liquid. 

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checking deposit: A deposit on which checks may be drawn. 
collusion: A secret or illegal cooperation or conspiracy, especially in order to cheat or deceive
others. A group of firms engaged in collusion is often called a cartel. 
competition: A dynamic process of rivalry among parties such as producers or input suppliers,
each of whom seeks to deliver a better deal to buyers when quality, price, and product
information are all considered. Competition implies open entry into the market. Potential
suppliers do not have to obtain permission from the government in order to enter the market.
compound interest: Interest that is earned not only on the principal but also on the interest
previously earned. 
compounded annual rate of return: The amount of compound interest paid on a sum of
constitution: A body of fundamental principles or established precedents according to which a
state or other orcorporate stock: A type of ownership equity in a company or corporation for an investor.
Each share owned by an investor represents a proportionate share of interest in that company,
although the creditors of that company have first right to any claims on assets and earnings.
corporation: A legal entity that has the rights and privileges of a person with respect to
owning property, taking loans and signing contracts. Derived from the Latin word “corpus,”
meaning a body. To “incorporate” literally means to “form into a body.” 
cost-effective: Activity is cost-effective when the value of an activity is good for the amount

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