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

What inputs are considered to be factors of production?

July 7, 2024 No Comments

A: Factors of production are inputs used to produce an output, or goods and services. They are resources a company requires to attempt to generate a profit by producing goods and services. Factors of production are divided into four categories: land, labor, capital and entrepreneurship. Factors of

What is “marginalism” in microeconomics and why is it important?

July 7, 2024 No Comments

A: “Marginalism” describes both a method of analysis and a theory of value in economics. According to this theory, individuals make economic decisions on the margin; value is determined by how much additional utility an extra unit of a good or service provides. It would

What Factors Cause Shifts in Aggregate Demand?

July 7, 2024 No Comments

A: Aggregate demand (AD) is defined as the total amount of goods and services consumers are willing to purchase in a given economy and during a certain period. Sometimes aggregate demand changes in a way that alters its relationship with aggregate supply (AS); this is

What is a “daisy chain”?

July 7, 2024 No Comments

A: A daisy chain is a term used to describe a group of investors who engage in activities that inflate or deflate the price of a stock for the purpose of selling it for profit or buying it cheaply. Daisy chaining involves creating transactions to

What factors influence a change in demand elasticity?

July 7, 2024 No Comments

A: Demand elasticity is the sensitivity of the demand for a good or service due to a change in another factor. There are many factors that influence a change in demand elasticity. These factors include price, income level and availability of substitutes. Price One factor

What is a forward contract against an export?

July 7, 2024 No Comments

A: A forward contract against an export is an agreement between the importer and exporter to exchange a specified amount of the importer’s currency for the exporter’s currency. This is done on the date payment for an export is due, using the existing currency exchange

What factors influence a change in supply elasticity?

July 7, 2024 No Comments

A: The elasticity of supply measures the percentage change in supply due to a change in another factor. It refers to how the amount supplied of a good or service changes in response to a price or factor change. There are several factors that affect the

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