Archives: Terms

Definition of Idiosyncratic Risk Idiosyncratic risk is the risk that is specific to a particular asset (e.g., security or stock) or a specific group of assets (e.g., a certain sector). That means it describes the risk that is not shared by other assets but is individual to this particular asset […]

Definition of Horizontal Equity Horizontal equity is a principle of taxation that states that people with the same income should pay the same amount of taxes. That means it is a form of fairness in taxation, as it ensures that people with the same ability to pay are treated equally. […]

Definition of Government Purchases Government purchases are the goods and services that the government (national, state, and local) buys from the private sector. That means it includes all the goods and services that the government buys from businesses, such as construction services, military equipment, and office supplies. Example To give […]

Definition of Investment Fund An investment fund is a pool of money from multiple investors that is managed by a professional fund manager. That means it is a collective investment vehicle that allows investors to pool their money together and invest in a variety of assets, such as stocks, bonds, […]

Definition of Labor Force The labor force is defined as the total number of non-institutionalized civilians, aged 16 or older, who are employed or actively looking for work in an economy. That means it includes all working-aged people (both employed and unemployed) who are not active duty members of the […]

Definition of Labor Force Participation Rate The labor force participation rate is a measure of the percentage of the population that is actively participating in the labor force. That means it is calculated as the number of people (aged 16 or older) who are employed or actively looking for work […]

Definition of Law of Demand The law of demand states that all other things equal, the quantity demanded of a good or service is inversely related to its price. That means when the price of a good or service increases, the quantity demanded of it decreases, and vice versa. Example […]

Definition of Law of Supply The law of supply states that, all other things equal, an increase in price leads to an increase in quantity supplied and vice versa. That means that as the price of a good or service increases, producers are willing to supply more of it. Similarly, […]

Definition of Law of Supply and Demand The law of supply and demand is an economic principle that states that when the demand for a product or service increases, the price of that product or service also increases, and vice versa. That means the price of a good or service […]

Definition of GDP Deflator The GDP deflator is an economic indicator used to measure the price level in an economy. It is calculated by dividing the nominal GDP (i.e., GDP at current prices) by the real GDP (i.e., GDP at constant prices) and multiplying the result by 100. The GDP […]