Archives: Terms

Definition of Average Revenue Average Revenue is defined as the total revenue divided by the number of units sold. That means describes the average amount of money a company receives for each unit of its product or service. Example To illustrate this, let’s look at an imaginary company called ABC […]

Definition of Autonomous Expenditure Autonomous expenditure is defined as spending that is not affected by changes in income. That means it is independent of the level of income and remains constant regardless of the economic situation. Autonomous expenditure is also known as autonomous consumption or autonomous investment. Example To illustrate […]

Definition of Automatic Stabilizers Automatic stabilizers are economic policies that are designed to automatically adjust income levels, government spending, and taxation in response to changes in the economy. That means they are designed to reduce the severity of economic fluctuations, such as recessions and booms. Example To illustrate this, let’s […]

Definition of Asset-Backed Securities (ABS) Asset-backed securities (ABS) are financial instruments that are backed by a pool of assets. That means they are created when a company or financial institution bundles together a group of assets, such as loans, mortgages, or credit card receivables, and then sells them to investors. […]

Definition of Appreciation Appreciation is defined as an increase in the value of an asset over time. That means it is the opposite of depreciation, which is a decrease in the value of an asset over time. Appreciation can occur for a variety of reasons, including inflation, increased demand, or […]

Definition of Allocative Efficiency Allocative efficiency is defined as the optimal allocation of resources in an economy. That means it describes the most efficient way to use resources to produce goods and services that meet the needs of society. Or in other words, it is the allocation where the value […]

Definition of Aggregate Demand Curve The aggregate demand curve is a graphical representation of the relationship between the total amount of goods and services demanded in an economy and the overall price level. That means it shows how the total demand for goods and services changes when the price level […]

Definition of Agent An agent is defined as a person or entity that acts on behalf of another person or entity (i.e., the principal). That means it is a third party authorized to make decisions and take actions on behalf of the principal. Agents can be individuals, companies, or even […]

Definition of Actual Spending Actual spending is defined as the amount of money that is actually spent on goods and services (i.e., ex post). That means it is the amount of money that is actually exchanged for goods and services, as opposed to the amount of money that is budgeted […]