Archives: Terms

Definition of the Friedman Rule The Friedman rule, named after the renowned economist Milton Friedman, is a monetary policy framework that suggests the optimal nominal interest rate set by the central bank should be zero. According to Friedman, this approach would minimize the opportunity cost of holding money, leading to […]

## Freshwater Economics ### Definition of Freshwater Economics Freshwater economics refers to a school of thought in macroeconomics that emphasizes the efficiency of financial markets, the effectiveness of market-based policies, and the limitations of government intervention in the economy. Originating from economists mainly associated with universities located near the Great […]

Definition of the Freiburg School The Freiburg School, also known as the Ordo-liberal School, is an economic and legal framework developed in the early 20th century, primarily by economists and legal scholars at the University of Freiburg in Germany. It emphasizes the importance of a strong legal framework and effective […]

Definition of a Free Good A free good is described as a commodity which is available in as great a quantity as desired with zero opportunity cost to society. These goods are naturally abundant and not limited by the amount of available economic resources. Unlike most goods in an economy, […]

Definition of Framing Effect The framing effect is a cognitive bias where people’s decisions are influenced by the way information is presented, rather than just by the information itself. Different presentations of the same information can lead to different decisions or perceptions. This concept is highly relevant in behavioral economics, […]

Definition of Foreign Exchange Market The foreign exchange market, often referred to as the forex or FX market, is a global decentralized or over-the-counter (OTC) market for the trading of currencies. This market determines foreign exchange rates for every currency. It includes all aspects of buying, selling, and exchanging currencies […]

Definition of Fixed Costs Fixed costs refer to the business expenses that remain constant regardless of the level of production or sales. These costs do not fluctuate with the volume of production or business activity. Fixed costs are an essential component of a company’s financial structure and play a crucial […]

Definition of Fisher Separation Theorem The Fisher separation theorem is an important concept in the field of economics that delineates the relationship between investment and consumption under certain conditions. Named after economist Irving Fisher, the theorem asserts that the decision of a firm regarding investment should be separate from the […]

Definition of Fisher Equation The Fisher Equation, named after the American economist Irving Fisher, is a fundamental concept in economics that describes the relationship between nominal interest rates, real interest rates, and inflation. Specifically, it states that the nominal interest rate is equal to the real interest rate plus the […]

Definition of Fiscal Theory of the Price Level The Fiscal Theory of the Price Level (FTPL) is an economic theory that posits the price level (and therefore inflation) is determined by the fiscal policy of the government rather than the monetary policy enacted by the central bank. It suggests that […]