Macroeconomics

Cobb–Douglas production function:

A produc-

tion function of the form F(K, L)

 AK



L

1



,

where K is capital, L is labor, and A and

 are 

parameters.

Commodity money:

Money that is intrinsically

useful and would be valued even if it did not serve as

money. (Cf. fiat money, money.)

Competition:

A situation in which there are many

individuals or firms, so that the actions of any one of

them do not influence market prices.

Conditional convergence:

The tendency of

economies with different initial levels of income, but

similar economic policies and institutions, to become

more similar in income over time.

Constant returns to scale:

A property of a pro-

duction function whereby a proportionate increase

in all factors of production leads to an increase in

output of the same proportion.