What's it: Imperfect competition is a market structure in which sellers or buyers have market power over prices, which prevents the market from operating under perfect competition. Because they have market power, market participants are often in
Economic Context
J-Curve: Devaluation’s Impact on Trade + Its Application in the Private Equity
J-Curve throws a curveball at our intuition. It's a graph shaped like the letter "J" that depicts a surprising trend: sometimes, things might get worse before they get better. This concept applies to two key areas of finance: international trade and
How are Economic Resources Allocated?
Scarcity requires us to make choices to allocate economic resources to their highest use. And, every choice involves opportunity cost, the next best alternative we give up when choosing something.Economics deals with scarcity, which arises
Currency Appreciation: Causes, Impact on Trade, Exports, Imports & More
What's it: Currency appreciation is when the exchange rate of one currency against another currency increases. One unit of currency can buy more of another currency.Appreciation makes foreign products cheaper for domestic buyers, thus
Understanding Currency: History, Types, Exchange & Global Impact
What's it: Currency refers to the money accepted and used as legal tender in a country. It includes banknotes and coins you use daily. The central bank or authority acts as the sole supplier and monitors its circulation in the
Foreign Portfolio Investment: Diversify Globally & Earn Returns (Types, Pros and Cons)
What's it: Foreign portfolio investment refers to short-term investment in financial instruments (such as stocks and bonds) in another country. For purchases on the stock market, this investment does not give the investor direct control and
Human Development Index: Indicators, Ranking, Benefits, Limitations
The Human Development Index (HDI) is a powerful tool that goes beyond traditional economic metrics to measure a country's overall well-being. Developed in 1990, the HDI takes a multidimensional approach, considering not just a nation's economic
Duopoly: Examples, Characteristics, Types, Implications
What's it: Duopoly is a market structure in which only two sellers (producers). This is the basic form of oligopoly competition. The two players serve multiple buyers and sell competing goods and services.In this market, players have a high
Comparative Advantage Explained: Assumptions, Examples, Criticisms
What's it:Â Comparative advantage is a favorable position arising from producing goods and services at a lower opportunity cost. This concept is important in explaining international trade and specialization in production. That answers why countries
Budget Deficit: Causes, Effects and The Debt Debate
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
Understanding the Government Sector: A Pillar of the Macroeconomic Landscape
The macroeconomic sector encompasses two broad categories: the public sector and the private sector. The government sector, a critical pillar within the public sector, plays a central role in shaping a nation's economic trajectory. This page dives
International Fisher Effect: Predicting Currency Movements (Formula, Criticisms)
What's it? The International Fisher Effect shows that changes in the exchange rates of two currencies correlate with the difference in nominal interest rates between the two countries. The term is named after its inventor, Irving Fisher, an American