Definition of Multiplier Effect The multiplier effect is an economic concept that describes how an initial increase in spending can lead to a much larger increase in total national income. That means it is a process in which an increase in spending due to expansionary fiscal policy produces an even […]
Read moreArchives: Terms
Marginal Cost
Definition of Marginal Cost Marginal cost is defined as the additional cost incurred by producing one additional unit of a good or service. That means it is the cost of producing one more unit of a good or service, taking into account all the additional production costs associated with producing […]
Read moreMacroeconomics
Definition of Macroeconomics Macroeconomics is the branch of economics that studies the behavior and performance of an economy as a whole. That means it looks at the aggregate economic variables such as gross domestic product (GDP), inflation, unemployment, and trade balances. Example To illustrate this, let’s look at the US […]
Read moreLump-Sum Tax
Taxation is a crucial aspect of any government and is used to fund public services and projects. There are several types of tax systems, each with its advantages and disadvantages. One of the most straightforward types of tax systems is the lump-sum tax. In this blog post, we’ll explore the […]
Read moreLiquidity
Definition of Liquidity Liquidity is defined as the ability of an asset to be quickly converted into cash without significantly affecting its market price. That means it describes how easily an asset (e.g., stocks, bonds, securities) can be bought or sold in the market. Assets that can be quickly converted […]
Read moreLibertarianism
Definition of Libertarianism Libertarianism is a political philosophy that advocates for individual liberty and limited government intervention. That means it promotes the idea that individuals should be free to make their own decisions (both in an economic and social context) and that the government should not interfere in their lives […]
Read moreLiberalism
Definition of Liberalism Liberalism is a general political ideology that emphasizes individual freedom, limited government, and free markets. It is based on the belief that individuals should be free to pursue their own interests and that the government should be limited in its power and scope. Example To illustrate this, […]
Read moreInvestment
Definition of Investment Investment is defined as the act of committing money or capital to an endeavor with the expectation of obtaining an additional income or profit. That means it is the process of putting money into a project or asset with the expectation of making a return on that […]
Read moreInternalizing An Externality
Externalities are an inevitable aspect of the economy. They refer to the costs or benefits that are imposed on society by certain actions, which are not reflected in the market price of that action. When externalities are not taken into account, the market fails to provide the right incentives for […]
Read moreInformationally Efficient
Definition of Informationally Efficient Informationally efficient markets are markets in which prices reflect all available information about the underlying asset (e.g., a company’s stock). That means that all relevant information is quickly and accurately incorporated into the price of the asset. As a result, prices in informationally efficient markets are […]
Read more