Archives: Terms

Definition of Velocity of Circulation The velocity of circulation, often referred to as the velocity of money, is the rate at which money changes hands in an economy. It measures the frequency with which a unit of currency is used to purchase domestically-produced goods and services within a given time […]

Definition of Vehicle Currency A vehicle currency refers to a currency that is widely used for international trade and financial transactions, even between countries that do not issue the currency. This type of currency acts as an intermediary or ‘vehicle’ that facilitates trade and investment globally, enhancing liquidity and reducing […]

Definition of Vector Error Correction Model (VECM) A Vector Error Correction Model (VECM) is a multivariate statistical model used in time series analysis to understand the long-run relationship between integrated variables. In layman’s terms, it helps economists and analysts determine how different economic or financial variables adjust towards equilibrium over […]

Definition of Vector Autoregressive (VAR) Model The Vector Autoregressive (VAR) model is a statistical model used in econometrics that captures the linear interdependencies among multiple time series data. This means that the VAR model considers each variable in the system as a function of the past values of itself and […]

Definition of VAT Return A VAT return is a form that businesses file with the government to report their value-added tax (VAT) liability. It details the total sales and purchases made over a specific period and calculates the VAT amount owed to or recoverable from tax authorities. Through this return, […]

Definition of VAT Registration Value Added Tax (VAT) registration is the process by which a business registers with the government tax authorities in order to be able to charge VAT on their sales and reclaim the VAT on their purchases. This is a crucial step for businesses that meet specific […]

Definition of VAT VAT, or Value Added Tax, is a consumption tax levied on the added value of goods and services at each stage of production or distribution. Unlike a sales tax, which is collected only at the point of sale to the end consumer, VAT is collected incrementally at […]

Definition of Variance Variance is a statistical measurement that describes the spread or dispersion of a set of data points around their mean value. It illustrates how much the data points differ from the average value (mean) and hence from each other. More specifically, the variance is calculated as the […]

Definition of Variable Factor Proportions Variable Factor Proportions refer to the concept in economics where the input proportions (or factors of production) used can be adjusted according to the needs of production. Essentially, this theory acknowledges that not all factors need to be fixed and that varying them can lead […]

Definition of Variable Cost Variable costs are expenses that change in direct proportion to the level of production or sales volume. Unlike fixed costs, which remain constant regardless of the level of production, variable costs increase as production increases and decrease when production declines. Common examples of variable costs include […]