Archives: Terms

Definition of Prescriptive Statement A prescriptive statement is a declaration that presents a recommended course of action, value, or standard that should be followed. These statements are subjective in nature and based on beliefs, values, or preferences about how things ought to be, rather than how they actually are. In […]

Definition of Premium Bond A premium bond refers to a bond that is trading above its face value or par value. This situation typically arises when the bond offers a higher interest rate compared to the prevailing rates in the market. Investors are willing to pay a premium for bonds […]

Definition of Premium A premium can be understood in multiple contexts within economics and finance. Generally, it refers to an amount paid in addition to a standard rate or price. In the insurance industry, a premium is the amount paid by policyholders to insurance companies for coverage against specific risks. […]

Definition of Preferences Preferences in economics refer to the subjective tastes and choices of individuals when faced with different goods and services. These preferences determine how consumers allocate their limited resources to maximize their utility or satisfaction. The concept of preferences is foundational to the theory of consumer choice, which […]

Definition of Preference Share Preference shares, also known as preferred stock, represent a class of ownership in a corporation that has a higher claim on assets and earnings than common shares. Preference shares typically receive dividends before common shareholders and have a fixed dividend rate, making them similar to debt […]

Definition of Predictor A predictor is a variable or factor used in statistical models and analyses to forecast or estimate an outcome or dependent variable. Predictors, often referred to as independent variables, help economists, analysts, and researchers understand relationships and patterns in data and subsequently make informed predictions, decisions, or […]

Definition of Predetermined Variable Predetermined variables are variables in an economic model whose past values and current values are known and not subject to future randomness. These variables typically play a critical role in econometric models as they are decided in the past and influence current economic decisions and outcomes, […]

Definition of Predatory Pricing Predatory pricing is a strategic pricing tactic used by a company to temporarily reduce the prices of its products or services to a level that is unsustainable for its competitors. The primary aim of predatory pricing is to eliminate or significantly weaken competitors, thereby gaining a […]

Definition of Precautionary Motive The precautionary motive refers to the desire to hold cash or liquid assets to guard against unexpected needs or emergencies that could result in financial stresses or shortfalls. This motive is one of the primary reasons individuals, households, and businesses choose to save money instead of […]

Definition of Prebisch Thesis The Prebisch Thesis, attributed to economist Raúl Prebisch, posits that over the long term, the terms of trade for primary commodity exporters tend to deteriorate relative to those of manufacturers of industrial goods. In simpler terms, this means that countries heavily reliant on exporting raw materials […]