James d. Gwartney

tariff: A tax levied on goods imported into a country. 
↩ 
tax-deductible: If an amount of money that you spend is tax-deductible, it can be taken away
from the total amount of income you must pay tax on. 
↩ 
transaction costs: The time, effort, and other resources needed to search out, negotiate, and
consummate an exchange of goods or services. 
↩ 
treasury bill: A form of short-term government debt on which interest is paid at the end of the
borrowing period. They are used for managing fluctuations in the government’s short-run cash
needs. 
↩ 
Treasury Inflation Protected Securities (TIPS): Inflation-indexed bonds issued by the U.S.
Department of Treasury. These securities adjust both their principal and coupon interest
payments upward with the rate of inflation so that their real return is not affected by the change
in rate. TIPS have been issued in the United States since January 1997. 
↩ 
VAT: value added tax, a type of tax that is paid by the person who buys goods and services.
↩ 
venture capitalist: A financial investor who specializes in making loans to entrepreneurs with

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promising business ideas. These ideas often have the potential for rapid growth but are usually
also very risky and thus do not qualify for commercial bank loans. 
↩ 
zero-sum game: The situation in game theory in which one person’s gain is equivalent to
another’s loss, so the net change in wealth or benefit is zero. In the financial markets, options
and futures are examples of zero-sum games, excluding transaction costs. 
↩ 

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About the Authors
James D. Gwartney is a Professor of Economics at Florida State University, where he holds
the Gus A. Stavros Eminent Scholar Chair. He is the coauthor of Economics: Private and
Public Choice (Cengage South-Western Press, 2017), a widely used principles of economics
text now in its 16
th
edition, and an economics primer, Common Sense Economics: What
Everyone Should Know About Wealth and Prosperity (St. Martin’s Press, 2016). He is also the
co-author of the annual report Economic Freedom of the World, which provides information on
the consistency of institutions and policies with economic freedom for more than 160
countries. His publications have appeared in scholarly journals, including the American
Economic Review, Journal of Political Economy, Southern Economic Journal, and Journal of
Institutional and Theoretical Economics. During 1999–2000, he served as Chief Economist of
the Joint Economic Committee of the U.S. Congress. He is a past president of the Southern
Economic Association and the Association of Private Enterprise Education. His Ph.D. in
Economics is from the University of Washington.