Archives: Terms

Definition of Certificate of Deposit A Certificate of Deposit (CD) is a financial instrument provided by banks that offers an interest rate premium in exchange for the customer agreeing to leave a lump-sum deposit untouched for a predetermined period. Essentially, it’s a time-bound deposit that restricts access to your funds […]

Definition of Deadweight Loss Deadweight loss refers to the decrease in total surplus within a market due to inefficiencies caused by factors such as taxes, subsidies, price floors, or price ceilings. This concept is a critical aspect of welfare economics, illustrating the loss in social welfare that occurs when market […]

**Capital Intensity** Definition of Capital Intensity Capital intensity refers to the degree to which a production process or industry relies on capital, as opposed to labor, to create value. An industry with a high capital intensity typically requires significant investment in physical assets such as machinery, tools, and equipment to […]

Definition of Capital Good Capital goods, also known as fixed assets or producer goods, refer to tangible assets that an organization uses in the production process to manufacture products and services that are subsequently sold to consumers. These goods are not finished products; instead, they serve the purpose of facilitating […]

Definition of Capital Formation Capital formation refers to the process of building up the stock of real assets in an economy. It includes investments made in building, machinery, equipment, and innovations that contribute to increased production capacity. This process plays a critical role in economic growth and development, as it […]

Definition of Capital Cost Capital cost refers to the one-time expenditure or investment made in assets that will provide benefit to a company, organization, or individual over multiple years. These costs are incurred when building, purchasing, or upgrading physical assets such as buildings, machinery, equipment, or vehicles. Capital costs are […]

Definition of Capital Accumulation Capital accumulation refers to the process by which entities, such as individuals, businesses, or societies, increase their wealth through investment in capital assets. These assets can include anything from physical capital, like machinery and buildings, to financial assets and human capital. The central aim of capital […]

Definition of Capacity Utilization Capacity Utilization refers to the percentage of an enterprise’s total potential output that is actually being achieved in a given period. It measures how well a firm or an economy is using its productive capacity, which is the maximum possible output it can produce with existing […]

Definition of Cap and Trade (CAT) Cap and trade, often abbreviated as CAT, is an environmental policy tool designed to reduce pollution in the most cost-efficient way. The system works by setting a ‘cap’ on the total amount of pollution that can be emitted by all participating entities. Tradable permits […]

Definition of Cameralism Cameralism was a school of economic thought that arose in the 16th and 17th centuries in German-speaking states within the Holy Roman Empire. It emphasized the role of the state in controlling the economy, aiming to increase national wealth and power through centralized planning, regulation, and intervention. […]