Growth accounting is a technique used in macroeconomics to measure economic growth. It decomposes the growth rate of GDP into the contribution of different factors of production, such as labor, capital, and productivity. Growth accounting can be used to measure the contribution of each factor to economic growth, and to identify the sources of economic … Read more
Understanding financial accounts is basically understanding how money flows in and out of a business. This includes knowing where the money comes from (revenue), where it goes (expenses), and how much is left over (profit). Most businesses have three main financial accounts: the balance sheet, the income statement, and the cash flow statement. The balance … Read more
Currency depreciation is a decrease in the value of a currency in relation to other currencies. This can be caused by a number of factors, including inflation, central bank intervention, and a country’s political or economic stability. A currency can also be said to be “devalued” when its value is decreased in relation to other … Read more
Recognition lag is the time that it takes for businesses and individuals to realize that the economy has changed and to adjust their behavior accordingly. This can lead to a lag in the response of economic activity to changes in conditions. Why is there a lag time when fiscal policy is used? When fiscal policy … Read more
Structural Adjustment Definition – A structural adjustment is a government policy or program which is implemented in order to improve the overall performance of an economy. Structural adjustments are usually undertaken in response to economic difficulties, such as a balance of payments crisis. The main aim of a structural adjustment is to correct economic imbalances … Read more
Gross national product (GNP) is a measure of a country’s economic activity. It represents the total value of all the final goods and services produced in a country in a given period of time. GNP is often used as a gauge of a country’s standard of living and economic health. GNP is calculated by adding … Read more
Definition, Calculation, and Example. What is Regression? Regression is a statistical technique that is used to estimate the relationships between variables. It is used to determine the strength of the relationship between the dependent and independent variables. How do you calculate the regression coefficient? The regression coefficient is calculated by taking the difference between the … Read more
Classical growth theory definition is a theory that suggests that economic growth is a function of the amount of capital available in an economy. The theory was developed by Adam Smith and David Ricardo, and it has been refined and extended by many economists since. What does classical growth theory say will eventually end economic … Read more
Multinomial distribution is a probability distribution that describes the outcomes of a multinomial experiment. A multinomial experiment is an experiment that has multiple outcomes, each of which can be classified into one of several mutually exclusive categories. For example, consider an experiment that consists of flipping a coin three times. The possible outcomes of this … Read more
A grey swan is an event with low probability of occurring but with potentially severe consequences. The term was coined by Nassim Nicholas Taleb in his 2007 book The Black Swan. Taleb argues that the problem with predicting rare events is that they are often wrongly considered to be impossible. This leads to a false … Read more
