What's it? A budget deficit means expenditures exceed income. While the term is commonly used to refer to government budgets, it also applies to individuals, households, non-profit entities, and public bodies. When an individual or household is in
Macroeconomics
Labor Force: Composition, Why it Matters
What's it: Labor force refers to the share of the working-age population currently employed and those actively looking for work. The working-age population usually refers to those aged 16 to 64 years. However, in some countries, the definition
Labor Force Participation Rate: Formula, Determinants, and Impacts on the Economy
What's it: The labor force participation rate is the labor force's proportion to the working-age population. The labor force consists of working-age individuals who are currently employed and those who are not yet employed but are actively
Expansionary Monetary Policy: Boosting Growth with Lower Rates – Goals, Tools, Effects
What's it: An expansionary monetary policy, or a loose monetary policy, is a monetary policy aiming to increase the economy's money supply. The increased money supply should stimulate economic growth through aggregate demand. The injection of money
Abenomics: Reviving Japan’s Economy – Programs
What's it: Abenomics refers to the Japanese prime minister's economic policies, Shinzo Abe. The naming is similar to Obamanomics, proposed by Barack Obama, Clintonomics by Bill Clinton, and Reaganomics by Ronald Reagan.When Prime Minister Abe
Gini Coefficient: Unveiling the Math Behind Income Inequality (Calculation, Pros, Cons)
The Gini coefficient, or the Gini ratio or Gini index, is a powerful tool for measuring income inequality within a society. It goes beyond simply looking at a country's average income and sheds light on how wealth is distributed among its citizens.
Gold Standard: Pros, Cons, History (Why It Ended, Is it Coming Back?)
What's it: A gold standard is a monetary system in which the government pegs the domestic currency to gold. Under this system, the face value of your money is equivalent to the gold you will get when you exchange it. So, the government agreed to
Contractionary Monetary Policy: Taming Inflation With Higher Rates – Tools, Impacts
What's it? A contractionary monetary policy, tight monetary policy, or restrictive monetary policy is a monetary policy aimed at reducing the money supply's growth rate in the economy. Its aim is to reduce the pressure caused by high inflation and to
Trickle-Down Effect: Meaning, How it Works, Effects, Criticism
What's it: The trickle-down effect, also known as trickle-down economics, is a theory that's been around for decades. It argues that economic benefits should flow from the top down. In simpler terms, the theory suggests that by giving tax breaks and
Solow Growth Model: Understanding Long-Term Economic Growth
The Solow Growth Model, a cornerstone of economic theory, sheds light on the long-term forces that drive a nation's economic prosperity. Developed by Robert Solow, this model explores how factors like capital investment, labor growth, and
Laffer Curve Explained: Tax Rates & Optimal Revenue
What's it: The Laffer curve is a graphical representation of the relationship between the tax rate and total government tax revenue. The curve takes its name from Arthur Laffer, the American economist.This curve shows you the revenue-maximizing
Economic Crisis: Understanding Downturns and Recoveries [Types and Effects]
Economic crisis disrupts the smooth functioning of an economy, causing widespread hardship. Understanding economic crises – what causes them, how they impact economies, and how to navigate them – is crucial in staying informed about major economic