Found 153 Articles for Economics and Finance

Introduction Exchange rate refers to the value of a currency when it is compared to another currency. That means the exchange rate shows how much local currency would be required to buy a certain amount of another currency. Usually, the comparison of local currency is done with US dollars. There are two types of exchange rate systems − Fixed and Flexible. In the case of a fixed exchange rate system, the government or the central bank interferes to keep the value of currency fixed. On the other hand, in the case of a flexible exchange rate system, the supply and ... Read More

What is the meaning of Government Deficit? Usually, in most cases, a government’s expenditure is not equal to its earnings. This creates a gap between earnings and expenses. When the spending of the government exceeds income through revenues, a government deficit occurs. In other words, the government deficit is the amount that shows the gap between earnings and expenditure. A government deficit is an indicator of the ‘ill health’ of an economy because it shows the expenses that have not been met by the government. Therefore, governments take many remedial steps to minimize the gap between earnings and expenses. Some ... Read More

Introduction: What are Inferior Goods? Inferior goods refer to items that have a negative elastic relationship with demand and wages. When income increases, people tend to buy less of inferior goods. On the other hand, when income decreases, people tend to buy more inferior goods. One notable aspect that must be considered here is that inferior goods do not imply that the quality of the good is inferior. It just shows the goods’ level of demand when wages fluctuate. When the economy is in good shape and income increases, people buy fewer inferior goods but when the economy is ... Read More

Introduction: Production and Cost Production is the process via which inputs are changed into outputs. Usually, it is a manufacturing firm that is responsible for production. A manufacturing enterprise obtains different inputs, such as raw materials, machinery, and labor, and uses them to produce the finished goods or products. These finished goods are called outputs. Outputs may be consumed by consumers or it can be used as an input again to produce some other outputs. For example, the producer of wheat may use fertilizers, land, labor, pesticides, etc. to produce wheat. An automobile manufacturer may use machinery, steel, labor, aluminum, ... Read More

Introduction Organizations have different sizes, markets, governance, and employee bases. In fact, all companies are different from one point of view or another. Depending on these differences organizations are divided into three major types which are private, public, and global enterprises. It is notable that although there are differences in these three types of organizations there are many similarities too. That is why when we look at the structure, motives, and management procedures of organizations, we find many common threads apart from the differences. For example, it is notable that except for a few nonprofit firms, the objective of all ... Read More

What is Private Placement? Generally, when companies want to expand, they raise capital via an initial public offering (IPO). It is a public phenomenon where all investors are allowed to buy shares of the company. This process takes place in primary markets. Later on, the shares sold in primary markets are traded in secondary markets. There is another process of raising capital that is known as private placement. In private placements, shares are sold especially to wealthy investors, banks, pension funds, etc. It is a completely private process where the public cannot take part. In such a process, the share-issuing ... Read More

Introduction: What is Price Mix? Price mix is the price or value of a product that is determined by the producer. Generally, prices of products are fixed in a way so that the producer can save a portion of the profit from the sale of the product. However, sometimes, the price of the product may be kept low to grab market share or to promote the product in the market. There are various factors that affect the price mix of a product. However, it may be noted that the price mix for different products is different. Therefore, the price mix ... Read More

What is Prepaid Expense? A prepaid expense is a type of expenditure that the companies make in advance for goods or services before getting them or availing the benefits of them. It is the opposite of unpaid expenses in which the company pays for the services and goods at a future date. In the case of prepaid expense, it is recorded as an asset in the balance sheet. It is an expense in the company’s income statements. The services or goods for which a prepaid expense has been made offer value for an extended amount of time in the future. ... Read More

Introduction: What is Power? Power refers to the energy reserve of a nation that runs the industries and helps the nation achieve economic growth. Power is an inseparable part of all modern economies. No country can survive and grow without adequate power resources. Power resources can be divided into hydro, oil, gas, coal, nuclear, etc. It is important to note that the growth of modern economies is fully dependent on the availability of power as it is needed to run factories, vehicles, and other modes of transport and industries. Power is also needed in households where it helps run household ... Read More

Introduction: What is Monetary Policy? The monetary policy includes actions taken by the central bank of a nation to promote healthy economic growth. The focus of monetary policy may be on cash, ledgers, credit, mortgage, bonds, loans, cheques, etc. These policies are aimed to control the economy and are helpful in situations of inflation and deflation. Monetary policy is overseen by a board of members consisting of top-level managers of the central bank and government representatives. The monetary policy is regulated because without regulation it may head toward inflation or deflation. To regulate the money supply and thereby regulate the ... Read More