Stagnation Definition
In economics, stagnation is where a nation experiences an extended period of low economic growth. This occurs when real economic growth fails to exceed 2 percent.
Macroeconomics
Relative Poverty Definition
Relative Poverty occurs when households earn less than 60 percent of the average wage. This means that they have an income, but are unable to buy anything but basics.
Frictional Unemployment Definition
Frictional unemployment occurs in the period between leaving one job and joining another. In other words, the individual is left unemployed for a certain period as they transition into their new role.
3 Tools of Monetary Policy
There are three main tools of monetary policy – open market operations, reserve requirements, and the discount rate. These are decided by central banks such as the Federal Reserve.
3 Types of Fiscal Policy
There are three types of fiscal policy; neutral, expansionary, and contractionary.
A neutral policy refers to a balanced budget. In other words, government brings in enough taxation to pay for its expenditures.
Expansionary fiscal policy is where government spends more than it takes in through taxes.
Contractionary fiscal policy is where government collects more in taxes than it spends.
Exchange Rate Definition
An exchange rate is the value by which two currencies are swapped with each other. In other words, it is the rate or value at which one currency can purchase another currency.
Budget Deficit Definition
A budget deficit is where we spend more than we receive. If our monthly salary is $1,000, but we spend $1,100; our budget deficit is $100. This is because we are spending $100 more than we receive from our salary. Budgets deficits apply to any person or entity.
Comparative Advantage Definition
What is Comparative Advantage Comparative Advantage Examples Absolute Advantage vs Comparative Advantage How to Calculate Comparative Advantage Comparative Advantage Definition WRITTEN BY PAUL BOYCE | Updated 25 April 2022 What is Comparative Advantage Comparative advantage is where a nation is able to produce a product at a lower opportunity cost. In other words, a nation …
Central Bank Definition
A central bank controls the supply of money as well as how it reaches the consumer. It can not only print and inject money into the economy, but also regulate commercial banks distribution of it.
Dependency Ratio Definition
The dependency ratio is the percentage of children and those over 64 years old, compared to the people who are of working age. In other words, young and old people who are not in work, are dependent on the taxpayer to pay for public services. That includes public pensions, schooling, or other forms of social security.
