Archives: Terms

Definition of Excludability Excludability refers to the characteristic of a good or service that allows its provider to prevent some people from using it. This concept is crucial in the field of economics as it helps categorize goods into different types based on whether their use is restricted to paying […]

Definition of Exchange Rate Regime An exchange rate regime is the method by which a country manages its currency in relation to foreign currencies and the foreign exchange market. It reflects how a country’s monetary authority, typically its central bank, controls the exchange rate of its own currency against others. […]

Definition of Exchange Rate An exchange rate is the price at which one currency can be exchanged for another. It specifies how much one currency is worth in terms of another currency. Exchange rates fluctuate constantly due to changes in the supply and demand for different currencies. These fluctuations can […]

Definition of Excess Burden of Taxation Excess burden of taxation, also known as the deadweight loss of taxation, refers to the economic loss that society incurs as a result of taxes that distort market behavior. When a tax is imposed, it can lead to changes in the quantity of goods […]

Definition of Eurosclerosis Eurosclerosis is a term that refers to the economic stagnation resulting from government regulations and overly generous social welfare policies. Describing a phenomenon primarily observed in European countries during the late 1970s and 1980s, the term combines “euro” (indicating its European context) and “sclerosis” (from medical terminology, […]

Definition of Equity Premium Puzzle The equity premium puzzle refers to the phenomenon observed by economists Rajnish Mehra and Edward C. Prescott in 1985, wherein the historical returns on stocks over government bonds have been significantly higher than can be explained by standard financial theories. According to these theories, the […]

Definition of Equity Home Bias Puzzle The Equity Home Bias Puzzle refers to the phenomenon where investors show a preference for domestic equities despite the potential benefits of diversifying into foreign stocks. This bias leads to portfolios that are disproportionately weighted towards an investor’s home country, contrary to the principles […]

Definition of Equal Opportunity Equal opportunity is a foundational principle aimed at ensuring that all individuals are afforded the same chances and opportunities without discrimination based on characteristics such as race, color, age, sex, national origin, religion, disability, or any other status protected by law. This principle is crucial in […]

Definition of the Envelope Theorem The Envelope Theorem is a fundamental concept in microeconomics and optimization theory, offering significant insights into how changes in external parameters impact a decision maker’s optimal choice and the resulting value of an objective function. In essence, it quantifies the sensitivity of an optimization problem’s […]

Definition of Entrepreneurship Entrepreneurship refers to the process of designing, launching, and running a new business, often presented as a startup company, which initially begins as a small venture offering a product, service, or process not currently being offered elsewhere in the same way. The aim is to meet a […]