Definition of Central Bank A central bank is a financial institution that is responsible for managing a country’s or region’s monetary policy. That means it is responsible for setting interest rates, controlling the money supply, and regulating the banking system. It is also responsible for issuing currency and providing financial […]
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Collective Bargaining
Definition of Collective Bargaining Collective Bargaining is a process of negotiation between employers and a group of employees (often worker unions) to determine the terms and conditions of employment. That means it is a process of negotiation between the two parties to reach an agreement on wages, working hours, benefits, […]
Read moreCommodity Money
Definition of Commodity Money Commodity money is a form of money that is based on a commodity with intrinsic value. That means it is a medium of exchange that is backed by a physical asset, such as gold or silver. This type of money was used in many societies before […]
Read moreComparative Advantage
Definition of Comparative Advantage Comparative Advantage is an economic concept that describes the ability of a country or an individual to produce a good or service at a lower opportunity cost than its competitors. That means it is the ability to produce a good or service at a lower cost […]
Read moreCompetitive Market
Definition of a Competitive Market A competitive market is defined as a market in which there are many buyers and sellers, and none of them have the power to influence prices. That means the market is characterized by perfect competition, where all participants are price takers and have no control […]
Read moreComplements
Definition of Complements Complements are goods or services that are used together and increase in value when used together. That means they are two goods or services that work better when combined and are more valuable when used together than when used separately. Example To illustrate this, let’s look at […]
Read moreClassical Dichotomy
Definition of Classical Dichotomy The classical dichotomy is a theoretical economic concept that states that real variables (e.g., output, employment, and real interest rates) and nominal variables (e.g., money supply and money demand) are independent of each other. That means changes in nominal variables do not affect real variables and […]
Read moreCatch-Up Effect
Definition of the Catch-up Effect The catch-up effect is an economic phenomenon in which countries with lower levels of development tend to grow faster than countries with higher levels of development. That means countries that are behind in terms of economic development tend to grow faster than countries that are […]
Read moreCommon Currency Area
Definition of Common Currency Area A common currency area (also commonly referred to as optimum currency area (OCA)) is an economic region in which two or more countries have adopted a single currency as their official currency. That means all the countries in the region use the same currency for […]
Read moreClosed Economy
Definition of Closed Economy A closed economy is an economic system in which all transactions take place within the domestic economy. That means it does not involve any international trade or capital flows. In other words, a closed economy is a self-contained economic system that does not interact with other […]
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