What's it: In a broad definition, based on Lexico.com, capital refers to wealth owned by individuals or companies and available or contributed for a specific purpose such as starting a company or investing. It can be money or other assets,
Economic Context
Positive and Negative Effects of Industrialization
Industrialization brings both positive and negative effects. During industrialization, the manufacturing sector enjoyed a rapid increase in output. It also creates more jobs and income in the economy as it increases the value-added of primary sector
What are the rewards for factors of production?
Suppliers of factors of production are rewarded or compensated, which varies depending on what factors they supply. If we add up, we know the compensation as a factor income. If it is calculated for all economic actors in an economy, it is national
Why is Money Not an Economic Resource?
The reason money is not an economic resource is because it is not productive. For example, have you ever seen a copywriter write with money or an employee transporting goods from a factory with money instead of a logistics vehicle?We create
Monopoly: Meaning, Examples, Characteristics, Causes, Advantages, Disadvantages
What's it: a monopoly is a market structure with only one seller and serving many buyers. The seller is called a monopolist.Unlike in perfectly competitive markets, the monopolist has absolute control over market supply and prices.Since there
Business Investment: Objectives, Types, Evaluation and Impact on Aggregate Demand
Business investment fuels economic growth and prosperity. It's the lifeblood of companies, driving expansion, innovation, and job creation. This comprehensive guide dives into the objectives, types, and evaluation methods of business investment.
Macroeconomics Goals: Balancing Growth, Prices, Jobs and More
Macroeconomic goals act as a blueprint for a nation's economic health, impacting everything from income potential to investment stability. Let's delve into the five main macroeconomic goals that governments and central banks strive to achieve and
Full Employment Explained: Why It’s Not Zero Unemployment
Does full employment mean no unemployment? The answer is no. When the economy operates at full employment, unemployment remains. The unemployment rate is not zero.Why not zero percent?Only the cyclical unemployment rate is zero percent during
Behavioral Economics: Importance, Examples of Concepts
What's it: Behavioral economics is a branch of economics on how psychological factors influence and explain economic decision making. It studies the cognitive, emotional, cultural, and social effects on decisions made by economic
Social Cost in Economics: Meaning, Components, Formulas, and Effects
What's it: Social cost is private cost plus external cost. Private cost is borne by individuals directly involved in economic transactions or activities. Meanwhile, the external cost is borne by third parties not directly involved in the
Total Factor Productivity (TFP): Growth Engine Beyond Labor and Capital – Determinants
What's it: Total factor productivity quantifies the share of economic growth not explained by increases in labor and capital when both are used together in the production process. We also often refer to it as the residual Solow model or multifactor
Foreign Exchange Reserves: A Nation’s Economic Shield for Economic Stability
What's it: Foreign exchange reserves are liquid assets denominated in foreign currency held by the central bank or government for future use. This includes reserves in hard currency (such as dollars, euros, and yen), government securities