What is the difference between external economies and external diseconomies?

July 7, 2024 No Comments

A: There are two types of phenomena that owe their names to external economies and external diseconomies. In standard microeconomics and macroeconomics, an external economy refers to a positive externality, and an external diseconomy refers to a negative externality. In economics of the firm, an

What is the difference between fiat money and legal tender?

July 7, 2024 No Comments

A: Fiat money does not have any intrinsic value. What value it has depends on public confidence in the currency’s issuer. Legal tender is any currency declared legal by a government. Many governments issue a fiat currency and then make it legal tender by setting

What is the difference between horizontal integration and vertical integration?

July 7, 2024 No Comments

A: When a company wishes to grow through a horizontal integration, it is looking to acquire a similar company in the same industry. It may be seeking to increase its size, diversify its product offerings or services, achieve economies of scale, reduce competition, or gain access to

What is the difference between induced consumption and autonomous consumption?

July 7, 2024 No Comments

A: The first step to determining the difference between autonomous and induced consumption is to look at what each of these terms mean. The key difference between autonomous consumption and induced consumption lies in the factor of income. Autonomous Consumption Autonomous consumption is defined as

What is the difference between a simple random sample and a stratified random sample?

July 7, 2024 No Comments

A: Simple random samples and stratified random samples differ in how the sample is drawn from the overall population of data. Simple random samples involve the random selection of data from the entire population so each possible sample is equally likely to occur. In contrast,

What is general equilibrium theory in macroeconomics?

July 7, 2024 No Comments

A: General equilibrium theory is a macroeconomic theory that explains how supply and demand in an economy with many markets interact dynamically and eventually culminate in an equilibrium of prices. The theory assumes that there is a gap between actual prices and equilibrium prices. The

What is human capital and how is it used?

July 7, 2024 No Comments

A: Human capital is a loose term that refers to knowledge, experience and skills of an employee. The theory of human capital is relatively new in finance and economics. It states that companies have an incentive to seek productive human capital and to add to

What is market capitulation?

July 7, 2024 No Comments

A: By definition, capitulation means to surrender or give up. In financial circles, this term is used to indicate the point in time when investors have decided to give up on trying to recapture lost gains as a result of falling stock prices. Suppose a

What is QE3 (quantitative easing)?

July 7, 2024 No Comments

A: “Quantitative easing” refers to steps that the U.S. Federal Reserve takes in attempting to boost the country’s lagging economy. Historically, the Fed’s main tool for spurring growth has been lowering short-term rates. However, QE employs expansionary monetary policy, which involves the purchasing of bonds

What is the “percentage off the 52-week high or low”? How is this calculated?

July 7, 2024 No Comments

A: The “percentage off the 52-week high or low” refers to when a security’s current price is relative to where it has traded over the last 52 weeks. This gives investors an idea of how much the security has moved in the last year and

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