Archives: Terms

Definition of Depreciation Depreciation is defined as the gradual decrease in the value of an asset over time due to wear and tear, obsolescence, or other factors. That means it is an accounting method used to spread the cost of an asset over its useful life. Example To illustrate this, […]

Definition of Demand Schedule A demand schedule is a table that shows the quantity of a good or service that consumers are willing and able to purchase at different prices. That means it shows the relationship between the price of a good or service and the quantity demanded by consumers. […]

Definition of Credit Default Swaps (CDS) Credit Default Swaps (CDS) are financial instruments that provide protection against the risk of default on a loan or other debt instrument. That means they are a type of insurance that can be purchased by the lender or borrower of a loan. In the […]

Definition of Cross-Price Elasticity of Demand The Cross-Price Elasticity of Demand is a measure of how the demand for one good changes when the price of another good changes. It is calculated as the percentage change in the quantity demanded of the first good, divided by the percentage change in […]

Definition of Crowding Out Crowding out is an economic concept that describes the decrease in private investment that results from an increase in government spending. That means when the government increases its spending, it competes with private investors for resources, such as capital and labor. As a result, private investment […]

Definition of Customs Union A customs union is an agreement between two or more countries to eliminate tariffs and other trade barriers between them. That means goods and services can move freely between the countries without any additional taxes or restrictions. In addition, the countries also agree to impose the […]

Definition of Currency Currency is defined as a medium of exchange that is used to facilitate transactions between two parties. That means it is a form of money that is accepted by most people in a given society. It is usually issued by a government or central bank and is […]

Definition of Diminishing Marginal Product Diminishing marginal product is defined as the decrease in the marginal product of a factor of production as more of that factor is employed. That means it describes the situation where the output of a certain factor of production (e.g., labor, capital, land) decreases as […]

Definition of Diminishing Returns The concept of diminishing returns states that as more of a factor of production is added to a production process, its marginal output will eventually decrease. That means the additional output from each additional input unit will eventually become smaller. Example To illustrate this, let’s look […]

Definition of Direct Tax A direct tax is a tax that is paid directly by an individual or business to the government. That means it is not collected through intermediaries, such as employers or retailers. Examples of direct taxes include income taxes, property taxes, and inheritance taxes. Example To illustrate […]