Hysteresis is a phenomenon in which the current state of a system is dependent on its past history. In economics, hysteresis refers to the persistence of high unemployment even after economic conditions have improved. The theory of hysteresis suggests that once an economy enters a period of high unemployment, it is more likely to stay … Read more
A recessionary gap is an economic situation in which the demand for goods and services is insufficient to keep the economy operating at full capacity. This can lead to a decrease in economic activity and an increase in unemployment. Is the United States in an inflationary or recessionary gap? There is no definitive answer to … Read more
Cyclical unemployment is when joblessness rises during economic downturns. It is caused by a lack of aggregate demand in the economy. Cyclical unemployment can be mitigated by government spending and monetary policy. What is the Phillips curve in macroeconomics? The Phillips curve is a macroeconomic model that describes the relationship between inflation and unemployment. It … Read more
Net foreign factor income (NFFI) is a measure of a nation’s payments to and receipts from the rest of the world for all factors of production. In essence, it represents the net cost or benefit to a nation of owning foreign assets and liabilities. NFFI is composed of two components: net foreign direct investment income … Read more
In macroeconomics, “dear money” is a situation in which money becomes more expensive, or the cost of borrowing money increases. This can happen when the demand for money increases, or when the supply of money decreases. In either case, the result is higher interest rates. Dear money can also refer to a situation in which … Read more
Response lag is the amount of time it takes for a country’s government to recognize and react to an economic problem. This can be a serious issue because, by the time the government takes action, the problem may have already caused serious damage to the economy. How do inside lags and outside lags affect monetary … Read more
Debasement is the process of lowering the value of a currency. This can be done by printing more money, which reduces the value of each individual unit of currency. Debasement can also be caused by lowering the quality of the metal used to make coins. For example, if a country’s coins are made of gold, … Read more
A buyer’s market is defined as a market in which there is an excess of buyers over sellers, resulting in lower prices. What degree is needed to be a buyer? In order to be a buyer, one does not need any specific degree. However, buyers typically have a degree in business, economics, or a related … Read more
The abacus is a tool used for mathematical calculations that has been in use for centuries. It consists of a frame with a series of beads or disks that can be moved up or down on wires or rods. Each bead or disk represents a different value, and the user can move them around to … Read more
A V-shaped recovery is a type of economic recovery in which growth is rapid and sustained following a period of sharp decline. The term “V-shaped” refers to the shape of the recovery curve, which is similar to the letter V. V-shaped recoveries are generally seen as the best possible outcome following a recession or period … Read more
