Definitions What Is a Contingent Liability? A contingent liability is a potential future obligation that depends on uncertain events, like loan guarantees, disputed tax assessments, and pending lawsuits. Here's how it's disclosed, when it becomes a provision, and why it matters to lenders and investors.
Definitions What Is Constant Default Rate (CDR)? The Constant Default Rate (CDR) is an annualised measure of the rate at which loans in a pool default. It is commonly used to assess the performance of loan pools underlying structured credit products such as collateralised loan obligations (CLOs) and asset-backed securities (ABS). Analysts use the CDR to price
Competitive markets Retail Price Maintenance: What It Is & Why It's Restricted Retail price maintenance (RPM), also known as resale price maintenance, is a vertical price restriction: a supplier requires a retailer to sell a product at or above a specified minimum price. It is generally illegal in the UK and the EU. What Counts as Retail Price Maintenance? RPM takes two
Definitions Production Possibility Curve (PPC) A curve that shows all possible combinations of two types of goods that a country can produce is called its production possibility curve (PPC).
Definitions Tax Multiplier Formula In economics, tax multiplier is defined as the ratio between change in national income (∆Y) and change in tax (∆T).
Definitions Theory of Absolute Advantage A country has an absolute advantage in the production of that good, which it can produce in greater quantity than another country.
Definitions Expansionary Monetary Policy Expansionary monetary policy refers to the decrease in interest rates and increase in money supply to boost aggregate demand in an economy.
Definitions Examples of Threats in SWOT Analysis SWOT analysis is the process of conducting research into the resources and environment of a business to assess its current position.
Definitions Producer Surplus Equation Producer surplus is the difference between the amount producers receive and the amount producers are willing to receive.
Definitions Exploring the Paradox of Value Diamonds command a higher price in the market as compared to water, when it is water without which human beings cannot live.
Definitions Proportional Tax A proportional tax is a type of tax in which the tax rate remains constant and does not change with the increase in income of the taxpayer.
Global economics The Evolution and Challenges of the Circular Economy: From Utopia to Reality The circular economy promotes eco-design, product longevity, recycling, and reduced resource use but faces limits from material degradation, resource constraints, and logistical challenges, requiring strong policies and business shifts.
Definitions Privatisation Definition Privatisation is the process of selling a firm owned and controlled by the government to investors in the private sector of the economy.
Definitions Yen Carry Trade Yen carry trade is involved in borrowing Japanese yen at a low interest rate to invest in other currencies and assets offering high returns.
Definitions Collective Bargaining Definition The process of negotiation between management and trade union representatives over terms of employment is called collective bargaining.
Definitions Expansionary Fiscal Stance An expansionary fiscal stance refers to a decrease in tax rates and an increase in government spending in order to boost aggregate demand.
Definitions Cheapening of Electronic Products With the increased production, companies attain economies of scale, due to which the prices of electronic products decrease.
Definitions Austrian School of Economics An economic school of thought that originated during the late 19th century in Vienna is called the Austrian school of economics.
Definitions American National Debt The national debt of America is the total financial liabilities that the federal government has to pay to its creditors.
Definitions Non-Renewable Resources Non-renewable resources refer to natural resources that cannot be regenerated once depleted.
Definitions Broken Window Fallacy A concept that suggests that money spent on repairing the destruction or damage of a property can stimulate economic growth.
Definitions Gross Wages vs. Net Wages Gross wage is the total amount paid to workers, while net wage is the amount of gross wage after making deductions such as tax, insurance, etc.
Definitions What does Hysteresis do? In economics, an economic event that persists even after the factors causing that event have been eliminated or removed is called hysteresis.
Definitions Consumption Function A direct or positive relationship between consumption and household disposable income is called consumption function.
Definitions Expected Utility Theory Expected utility theory is a decision-making tool used by economic agents to analyse situations when the outcomes of decisions are uncertain.
