Archives: Terms

Definition of Balanced Budget Multiplier The balanced budget multiplier concept is a principle in Keynesian economics that states an equal increase in government spending and taxation will have a positive effect on the national income. Essentially, it suggests when a government increases its spending on goods and services while simultaneously […]

Definition of Balanced Budget Amendment A Balanced Budget Amendment refers to a proposed amendment to the United States Constitution that would require the federal government to not spend more than its income. It is intended to constrain the growth of government and prevent deficits, ensuring that government spending is covered […]

Definition of Balance-of-Payments Crisis A balance-of-payments crisis occurs when a country cannot pay for its imports or service its debt repayments due to a lack of foreign currency reserves. This situation often leads to a rapid depreciation of the country’s currency value, causing more problems like inflation and potentially forcing […]

Definition of Bad Debt Provision A bad debt provision, also referred to as an allowance for doubtful accounts, is an accounting concept used to represent the estimate of non-collectible amounts from customers. In simpler terms, it’s the amount of receivables that a company does not expect to collect due to […]

Definition of Bad Debt Bad debt refers to the portion of receivables that can no longer be collected, typically because the debtor is unable to fulfill their financial obligations. In other words, it is money owed to a creditor that is unlikely to be paid and, therefore, written off as […]

Definition of Backwardation Backwardation is a term used in the commodities futures market to describe a situation where the current price of a commodity (the spot price) is higher than the prices trading in the futures market. This is the opposite of contango, where the future price is higher than […]

Definition of Backward-Bending Supply Curve A backward-bending supply curve represents a scenario in labor economics where, beyond a certain level of wage, as wages increase, the quantity of labor supplied decreases. This concept is commonly applied to human labor but can be observed in other contexts. The curve initially slopes […]

Definition of Backward Integration Backward integration is a business strategy used by companies to strengthen their supply chain and gain more control over their production processes. This approach involves a company acquiring or merging with suppliers upstream or initiating its own supply units. The primary goal of backward integration is […]

Definition of Axioms of Preference Axioms of preference are foundational principles used to describe and analyze individual decision-making processes in the realm of economics, particularly in consumer choice theory. These axioms help to rationalize how individuals prioritize different bundles of goods based on their preferences, ultimately guiding choices that maximize […]

Definition of Axiom An axiom in economics, as in other sciences, refers to a fundamental principle or set of principles that are accepted as true without controversy or question. These are foundational assertions or premises upon which theories and models are developed and upon which further economic reasoning and analysis […]