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economic agent (DO, MO)<br />A person or firm with the power to make decisions about output, investment, prices, etc.
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automatic stabilizer (E3, H3)<br />A built-in feature of tax structures and public expenditure programmes. It reduces fluctuations in an economy, making it respond more easily to shocks. Prominent examples of stabilizers include PROGRESSIVE TAXES (which prevent post-tax income rising at the same rate as pre-tax income) and unemployment insurance (which prevents personal income from falling below a predefined 'floor'). The GOLD STANDARD was a major type of automatic stabilizer. All these stabilizers have the characteristic of preventing the rise or fall of national income, and consequently employment, being as great as it would be in the absence of a government with an ACTIVE FISCAL POLICY. It is the experience of most countries that as these financed by borrowing and the liquidation of assets.
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liquidity (E4, GO)<br />The characteristic of assets immediately available for the discharge of financial obligations: the most liquid of assets is CASH. For there to be pure liquidity, it is necessary that the asset market is perfect with the consequence that the sale of an asset does not affect its price. Also the asset is riskless because its price is constant. Securities are only liquid if there is an organized market for them.
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