What is the difference between a monopolistic market and perfect competition?

July 7, 2024 No Comments

A: A monopolistic market and a perfectly competitive market are two market structures that have several key distinctions, such as market share, price control and barriers to entry. In a monopoly, there is only one firm that dictates the price and supply levels of goods

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

What is the average length of the boom and bust cycle in the U.S. economy?

July 7, 2024 No Comments

A: The boom and bust, better defined as expansion and contraction, business cycles of the U.S. economy averaged 38.7 months in expansion and 17.5 months in contraction between 1854 and 2009. According to the National Bureau of Economic Research, there were 33 business cycles between

What is the best way to measure the total market?

July 7, 2024 No Comments

A: There is a variety of market indices which function as statistical gauges of the market’s activities. Many investors look at the Dow Jones Industrial Average or the Nasdaq Composite Index as benchmarks or representatives of the stock market as a whole. However, these indices

What is the broken window fallacy?

July 7, 2024 No Comments

A: The broken window fallacy was first expressed by the great French economist, Frederic Bastiat. Bastiat used the parable of a broken window to point out why destruction doesn’t benefit the economy. In Bastiat’s tale, a man’s son breaks a pane of glass, meaning the

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