Archives: Terms

Definition of Rate of Return Pricing Rate of return pricing is a method used by companies to set the prices of their products based on the desired rate of return on investment (ROI). This strategy involves calculating the total costs of producing a product, including fixed and variable costs, and […]

Definition of Rate of Profit The rate of profit, in economic terms, refers to the ratio of profits earned (net income) to the capital invested. It is a measure of the efficiency and effectiveness with which a company or an investor uses capital to generate earnings. This rate is crucial […]

Definition of Ramsey–Cass–Koopmans Model The Ramsey–Cass–Koopmans model, also known as the neoclassical growth model, is a framework in economics that extends the Solow-Swan model by introducing optimal consumer behavior to determine the savings rate. Unlike the Solow model, which assumes a constant savings rate, the Ramsey–Cass–Koopmans model allows the savings […]

Definition of the Ramsey Problem The Ramsey Problem refers to a fundamental challenge in the field of economics, concerning the optimal taxation and government spending policy to minimize social welfare loss over time. It derives from a model developed by Frank P. Ramsey in 1927, aiming to determine the best […]

Definition of the Rahn Curve The Rahn Curve is a theoretical representation illustrating the relationship between government spending and economic growth. Named after economist Paul Rahn, the curve suggests there is an optimal level of government expenditure that maximizes economic growth. Beyond this optimal point, additional government spending can lead […]

Understanding Ragnar Nurkse’s Balanced Growth Theory Ragnar Nurkse’s Balanced Growth Theory is an economic concept that emerged in the mid-20th century, advocating for a specific strategy in the economic development of underdeveloped countries. Nurkse, an Estonian economist prominent for his contributions to development economics, posited that a strategic, simultaneous investment […]

Definition of Rabin Fairness Rabin fairness is a concept that emerges from the field of behavioral economics, named after the economist Matthew Rabin. It challenges the traditional assumption of rational self-interest in economic models by incorporating fairness into decision-making processes. Rabin’s theory suggests that people are willing to sacrifice personal […]

Definition of Quantitative Easing Quantitative Easing (QE) is a monetary policy instrument used by central banks to stimulate the national economy when traditional monetary policy tools have become ineffective. QE involves the central bank purchasing government securities or other securities from the market to increase the money supply and encourage […]

Definition of Pure Competition Pure competition, also known as perfect competition, refers to a market structure characterized by a large number of small firms, each selling identical products, with no single firm able to influence the market price. This idealized market scenario assumes that there are no barriers to entry […]

Definition of Public Economics Public economics is a branch of economics that deals with the study of government policy from the point of view of economic efficiency and equity. It encompasses a broad range of activities, including the provision and financing of public goods, analysis of taxation and government expenditure, […]