Key Economic & Public Finance Concepts Explained
Essential Economic and Public Finance Concepts
Euribor: Euro Area Interbank Rate
Euribor (Euro Interbank Offered Rate) is the interest rate at which a large panel of European banks lend to one another in the euro wholesale money market. Depending on the loan term, different types of Euribor are used:
- Euribor One Week
- Euribor One Month
- Euribor One Year
The one-year Euribor is a crucial financial market reference, significantly impacting mortgage loans and other bank financing. Its value is updated daily.
Read MoreStock Market Dynamics: Features, Factors, and Market Types
Features of the Secondary (Stock) Market
Market Intermediaries
The stock market involves various intermediaries, including stockbrokers, depositories, and clearing corporations. Stockbrokers facilitate the buying and selling of securities, depositories like NSDL and CDSL handle the electronic holding of securities, and clearing corporations ensure the settlement of trades.
Market Segments
The Indian stock market is segmented into different categories, including equity markets for stocks, derivatives
Core Macroeconomic Definitions & Formulas
This document provides a comprehensive reference for key macroeconomic terms, concepts, and essential formulas. Understanding these definitions is crucial for analyzing economic performance and policy.
Key Economic Indicators & Concepts
Gross Domestic Product (GDP) & Output
- GDP Omissions: GDP calculations do not include:
- Nonmarket Goods and Services
- Used Goods
- Financial Transactions
- Government Transfers
- Real GDP: The value of the entire output produced annually within a country’s borders, adjusted
Global Trade Dynamics & Economic Policy Insights
International Trade Fundamentals
Is there economic justification for dumping?
Answer: There is no good economic justification for dumping to be considered particularly harmful.
What is an advantage of specialization from international trade?
One advantage of the specialization that results from international trade is that countries can take advantage of:
Answer: Scale economies
What constrains production scale when trade opens?
When trade is opened, the scale of production possible in a country is constrained
Read MoreExternalities Explained: Market Failure & Economic Solutions
Understanding Externalities in Economics
An externality occurs when someone’s actions affect others without paying or being paid for it, and these effects don’t go through the market. The problem arises because the full social cost or benefit isn’t reflected in the price.
The Nature of Externalities
This concept explains externalities—situations where one person’s or firm’s actions affect the well-being of others outside the market system (i.e., not through prices).
Consider the example of Bart,
Read MoreCapitalism & Market Principles: Essential Economic Concepts
Core Principles of Capitalism
Voluntary exchange is a second characteristic of capitalism, defined as the voluntary act of buyers and sellers freely and willingly engaging in market transactions.
Another major feature of capitalism is private property rights, which allow people to own and control their possessions as they wish. Private property gives people the incentive to work, save, and invest.
The Profit Motive
The profit motive is the incentive to improve one’s material well-being.
Profit Defined
Profit:
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