Global Economy Glossary E to I: Plain-English Definitions

About this page

Finance is full of terms that sound simple until you have to use them. This page is a plain-English glossary for Global Economy, covering entries such as EBIT, EBITDA, Effective federal funds rate, Electrum, EMI, each with a short definition and a pointer to the part of the volume where it is explained.

Keep it open while you read, or use it to settle an argument about what a term really means. Every entry is written to stand on its own, with no jargon left undefined, and the part number beside it tells you where to read more. Use it as a quick reference whenever a term trips you up.

A sample of the entries (82 terms on the full page)

EBIT — Earnings before interest and tax, or operating profit: EBITDA minus depreciation and amortization, showing what the business earns before financing costs and tax.

Electrum — A natural alloy of gold and silver; Lydia’s first stamped coins, around 600 BCE, were made of it.

EPS — Earnings per share: net profit divided by shares outstanding, the building block of the P/E ratio; diluted EPS also counts options and convertibles.

EU AI Act — The European Union’s 2024 law, the first comprehensive AI regulation, which sorts AI uses by risk level, bans some, and imposes heavy requirements on high-risk uses such as credit scoring.

EUV — Extreme ultraviolet lithography, the chip-printing equipment needed for the most advanced chips; ASML of the Netherlands is the only maker.

Expense ratio — A fund’s annual operating costs as a percentage of its assets, deducted from the fund itself.

Federal funds rate — The interest rate on overnight, unsecured loans of reserve balances between banks and other eligible institutions; the Fed’s policy rate, which the FOMC sets as a target range a quarter point wide.

Final goods — Goods and services sold to their end user; GDP counts only these, so inputs such as the steel in a car are not counted twice.

Fiscal multiplier — The change in GDP caused by a one-dollar change in government spending or taxes; a 2019 survey put most estimates of the average US spending multiplier between 0.6 and 1.

Fixed cost — A cost that does not change with output, such as rent or salaried staff; the more of them a business has, the more its profit swings with sales.

Foreign exchange (FX or forex) market — The global market where currencies are traded, the largest financial market in the world: about $9.6 trillion a day in April 2025 (BIS Triennial Survey), with the US dollar on one side of roughly 89% of trades.

Forward contract — A private agreement to exchange currencies or assets at a fixed rate on a future date; companies use currency forwards to lock in exchange rates.

Foundation models — Large AI models trained on broad data that many applications build on, such as GPT, Claude, Gemini and Llama.

Free-float market cap — Market capitalization counting only shares available to trade, excluding blocks held by founders, parents or governments; index providers such as NSE weight stocks this way.

GCC — Global capability center: a captive offshore unit of a multinational that does technology, finance and operations work, the evolution of the BPO model; India hosts a large share of them.

GENIUS Act — The US law of July 18, 2025, that sets reserve, redemption and disclosure rules for payment stablecoins.

Glass-Steagall Act — The 1933 US law that separated commercial banks, which hold deposits, from investment banks, which take market risk; repealed in 1999.

Goods and Services Tax — India’s national consumption tax (GST), introduced in 2017 and set by a council of Union and state finance ministers; since September 22, 2025, its main rates are 5% and 18%, with 40% on a few demerit goods (Part 2 India Lens).

Great Depression — The collapse of the 1930s that followed the 1929 US stock-market crash; its failures left behind the SEC, deposit insurance and modern securities law, and its playbook was deliberately inverted in 2008.

Gross market value — The cost of replacing every derivative contract at current market prices; it is a small fraction of notional.

Hedge fund — A pooled investment fund that uses leverage, short selling and derivatives, open mainly to institutions and wealthy investors and lightly regulated; part of shadow banking.

HFT — High-frequency trading: algorithmic trading that places very large numbers of orders in microseconds to exploit tiny price differences, and has dominated US equity volume since the 2000s.

Hyperinflation — Extremely rapid inflation, conventionally above 50% a month, usually caused by printing money to finance government spending.