Definition of Game Theory Game theory is the study of strategic decision-making. That means it is the study of how people behave and interact when they have to make strategic decisions that affect each other. It is used to analyze and predict the behavior of individuals and groups in these […]
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Future Value
Definition of Future Value Future value (FV) is the value of a financial asset at a specific point in the future based on an assumed rate of return. That means it is the amount of money that a current investment will be worth at a specific point in the future, […]
Read moreFundamental Analysis
Definition of Fundamental Analysis Fundamental analysis is an investment strategy that focuses on analyzing the financial health of a company in order to determine its intrinsic value. That means it looks at the company’s financial statements, such as its income statement, balance sheet, and cash flow statement, in order to […]
Read moreFractional-Reserve Banking
Definition of Fractional-Reserve Banking Fractional-reserve banking is a banking system in which banks are required to hold only a fraction of their deposits as reserves. That means they can lend out the rest of the money to other customers. This system is used by most commercial banks around the world […]
Read moreFiscal Federalism
Definition of Fiscal Federalism Fiscal federalism is the concept of how different levels of government (e.g., federal, state, and local) share the responsibility for providing public services and raising revenue. That means it describes the relationship between the different levels of government and how they interact with each other in […]
Read moreFisher Effect
Definition of Fisher Effect The Fisher effect is an economic theory that states that the real interest rate is equal to the nominal interest rate minus the expected inflation rate. It was named after the economist Irving Fisher, who first described this relationship between nominal, real and expected interest rates. […]
Read moreFree Rider
Definition of Free Rider A free rider is someone who benefits from a good or service without paying for it. That means they are able to take advantage of the efforts of others without contributing anything themselves. Example To illustrate this, let’s look at a group of friends who are […]
Read moreAverage Variable Cost
Definition of Average Variable Cost Average Variable Cost (AVC) is defined as the total variable cost per unit of output. That means it is the average cost of producing one unit of output, including all the variable costs associated with it. Variable costs are those costs that vary with the […]
Read moreBalanced Trade
Definition of Balanced Trade Balanced trade is defined as a situation in which a country’s exports and imports are equal. That means the value of goods and services a country exports is equal to the value of goods and services it imports. Example To illustrate this, let’s look at an […]
Read moreCartel
Definition of Cartel A cartel is an agreement between two or more firms to limit competition in a particular market. That means it is a formal arrangement between companies to control prices, production, and other aspects of the market. Cartels are illegal in most countries, as they are considered anti-competitive […]
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