Archives: Terms

Definition of Welfare Criterion Welfare criterion refers to a standard or rule used within economics to evaluate and compare different economic states or outcomes based on their contributions to the overall welfare or well-being of society. Essentially, it is a method of assessing whether one economic arrangement or policy improves […]

Definition of Weights in Index Numbers Weights in index numbers are factors used to adjust the relative importance of various components within an aggregate measure. They help in accurately reflecting the impact of each component on the overall index. For instance, in an economic index like the Consumer Price Index […]

### Weighted Least Squares Estimator Definition of Weighted Least Squares Estimator The Weighted Least Squares (WLS) estimator is a generalization of the ordinary least squares (OLS) method in regression analysis. Unlike OLS, which assumes equal variance among all observations, WLS assigns different weights to each data point to account for […]

Definition of Weighted Average The weighted average is a measure of central tendency that takes into account the different degrees of importance of the numbers in a data set. In other words, it is an average that multiplies each component by a factor reflecting its significance, before summing the results […]

Definition of Wear and Tear Wear and tear refers to the gradual degradation or damage of an asset due to ordinary use and aging. This concept is often associated with physical assets like machinery, buildings, vehicles, and other equipment that depreciate over time through regular operation. Wear and tear are […]

Definition of Weakening of a Currency Weakening of a currency, also known as currency depreciation, refers to a decline in the value of one currency relative to another currency. This phenomenon occurs in the foreign exchange market, where currencies are traded. A weakened currency means it takes more units of […]

Definition of Weak Stationarity Weak stationarity, also known simply as stationarity or second-order stationarity, is a property of a time series whereby its mean and variance are constant over time, and the covariance between two time periods depends only on the time distance between them, not on the actual time […]

Definition of Weak Convergence Weak convergence, in the context of economics and finance, refers to the notion that a sequence of random variables converges in distribution to a limit random variable. This means that, although the individual random variables may not converge to a single value in the traditional sense, […]

Definition of Ways and Means Advances Ways and Means Advances (WMA) are a short-term credit facility provided by a central bank to the government. This facility enables the government to bridge temporary mismatches in its receipts and expenditures. Essentially, WMAs are financial tools that help manage short-term liquidity requirements without […]

Definition of Wasting Asset A wasting asset, also referred to as a depreciating asset, describes an asset that experiences a decrease in value over time due to usage, expiration, or obsolescence. This concept is prevalent in various sectors, such as natural resources (e.g., oil wells and mines) and fixed assets […]