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
Economic Context
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
Terms of Trade: Understanding a Country’s Trading Power and & Its Impact
Terms of trade (TOT) are a crucial concept in international trade, reflecting a country's relative trading position. They essentially measure how much a country can import with its exports. By understanding it and the factors that influence it, you
Herfindahl-Hirschman Index: Concept, How to Calculate, Pros and Cons
What's it: Herfindahl-Hirschman Index (HHI) is a measure of market concentration. You compute it by summing the squares of each firm's market share in the industry. This is an alternative to the n-firm concentration ratio.This index is important
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
Trade Bloc: Boosting Economies or Building Walls? Types, Pros, Cons
What's it? A trade bloc is a group of countries joined together through a trade agreement to achieve economic integration. This means they work together to reduce barriers between their economies, fostering a more interconnected system. This can
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
Fixed Cost: Meaning, Examples and Why It Matters
What's it: Fixed costs are types of costs whose value is unaffected by changes in the amount of output. When a firm increases output or decreases output, it does not change.For example, the factory machine's rental cost is $15,000,000 for 1 year.
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