Economics

Fisher Effect

Fisher effect is the concept that the real interest rate equals nominal interest rate minus expected inflation rate. It is based on the premise that the real interest rate in an economy is constant and any changes in nominal interest rates stem from changes in expected inflation rate.

Automatic Stabilizers

Automatic stabilizers are economic phenomena which moderate the effect of economic expansions and slowdowns. In periods of economic booms, such factors restrict the growth and in periods of slowdown they partially mitigate the drop in aggregate output.

Producer Price Index

Producer price index (PPI) is a measure of average prices received by producers of domestically produced goods and services. It is calculated by dividing the current prices received by the sellers of a representative basket of goods by their prices in some base year multiplied by 100.

Consumer Behavior

Consumer behavior is a field of study in economics which tries to explain consumer choices and their decisions in the context of limited income and the perceived benefit they derive from various goods and services they purchase.

Budget Line

Budget line (also known as budget constraint) is a schedule or a curve that shows a series of various combinations of two products that can be purchased while the income and product prices remain constant.

Diseconomies of Scale

Diseconomies of scale are disadvantages that result from large scale production or provision of services by a single firm. Diseconomies are the result of factors such as coordination difficulties, duplication of job positions, etc.

Barriers to Entry

In economics, the term barriers to entry refers to obstacles that make it difficult for new firms to enter into a given market or industry.

Price Ceiling

Price ceiling (also known as price cap) is an upper limit imposed by government or another statutory body on the price of a product or a service. A price ceiling legally prohibit sellers from charging a price higher than the upper limit.

Natural Monopoly

Natural monopoly is a monopoly that exists as a result of a market situation in which a single monopolistic firm can supply a particular product or service to the entire market at a lower unit cost than what could be achieved by a number of competing firms.

Market Equilibrium

Market equilibrium is the state of product or service market at which the intentions of producers and consumers, regarding the quantity and price of the product or service, match.