How do tariffs protect domestic industries?

June 30, 2024 No Comments

A: Tariffs are essentially taxes or duties placed on an imported good or service by a domestic government, making domestic goods cheaper for domestic consumers and imported goods more expensive for companies exporting goods from their industry into the domestic industry. Tariffs are normally levied

How Does GDP Affect the Standard of Living?

June 30, 2024 No Comments

A: Gross domestic product (GDP) measures the total output of an entire economy by adding up total consumption, investment, government expenditure and net exports. GDP is therefore considered a quality approximation of income for an entire economy in a given period. Per capita GDP is

How do financial market exhibit asymmetric information?

June 30, 2024 No Comments

A: Financial markets exhibit asymmetric information in that in a financial transaction, one of the two parties involved will have more information than the other and will have the ability to make a more informed decision. When it comes to the purchase or sale of

How Do Fixed and Variable Costs Affect the Marginal Cost of Production?

June 30, 2024 No Comments

A: The total cost of a business is comprised of fixed costs and variable costs. Fixed costs and variable costs affect the marginal cost of production only if variable costs exist. The marginal cost of production is calculated by dividing the change in the total

How do government bailouts increase moral hazard?

June 30, 2024 No Comments

A: Government bailouts increase moral hazard by engendering a business climate in which companies feel they will be protected from the consequences of poor decisions and risky behavior. Because they no longer fear these consequences – at least not to the level they should –

How do government subsidies help an industry?

June 30, 2024 No Comments

A: Government subsidies help an industry by paying for part of the cost of the production of a good or service by offering tax credits or reimbursements or by paying for part of the cost a consumer would pay to purchase a good or service.

How do I differentiate between micro and macro economics?

June 30, 2024 No Comments

A: Microeconomics is the field of economics that looks at the economic behaviours of individuals, households and companies. Macroeconomics takes a wider view and looks at the economies on a much larger scale – regional, national, continental or even global. Microeconomics and macroeconomics are both

How do I invest in the Nasdaq or the NYSE? Is it even possible? Would I want to?

June 30, 2024 No Comments

A: The Nasdaq and the NYSE are stock exchanges that trade securities. Nasdaq stands for National Association of Securities Dealers Automated Quotation and NYSE stands for New York Stock Exchange. (For more information about this topic, read our related article The Tale of Two Exchanges:

How do interest rates coordinate savings and investment in the economy?

June 30, 2024 No Comments

A: In modern economies, some individuals earn more money than they need to spend on present goods. There are other individuals who have a desire for more money than they can presently access. A natural market arises between those who have a surplus of present

How do investment banks help the economy?

June 30, 2024 No Comments

A: There are two broadly recognized functions of investment banks: capital market intermediation and trading. These are distinct and separate from the functions typically associated with commercial banks, which accept deposits and make loans. Investment banks are critical agents of capital formation and price setting.

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