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Economics & Finance
General Economics Articles
Page 10 of 10
Managed Floating Exchange Rate
A managed floating exchange rate is a hybrid system where a country's currency value is primarily determined by market forces (supply and demand), but the government and central bank intervene when necessary to stabilize the rate. India adopted this system in 1991, and over 40% of countries worldwide follow it. Understanding Exchange Rates An exchange rate is the value of one currency expressed in terms of another (usually USD). The Central Bank (RBI in India's case) manages this rate under the chosen exchange rate regime. Depreciation Appreciation Currency value decreases against a foreign ...
Read MoreNew Profit Sharing Ratio
The profit-sharing ratio is the proportion in which partners of a partnership firm divide the profits earned from business operations. When a new partner joins, an existing partner retires, or responsibilities change, the ratio must be revised − this revised ratio is called the new profit-sharing ratio. Formula $$\mathrm{New\:Ratio = Old\:Ratio - Sacrificing\:Ratio}$$ $$\mathrm{Sacrificing\:Ratio = Old\:Ratio - New\:Ratio}$$ For retirement or death of a partner − $$\mathrm{New\:Ratio = Old\:Ratio + Gaining\:Ratio}$$ $$\mathrm{Gaining\:Ratio = \frac{Retired\:Partner's\:Share \times Individual\:Acquisition\:Ratio}{Total\:Acquisition\:Ratio}}$$ Example Calculation Case 1: New Partner Joins A, B, and C are partners sharing profits ...
Read MoreNet National Product
Net National Product (NNP) is the total market value of all finished goods and services produced by a nation's citizens (both domestic and overseas) minus depreciation. It is a key indicator of economic growth because it accounts for the wear and tear of assets used in production. Formula $$\mathrm{NNP = GNP - Depreciation}$$ Or equivalently − $$\mathrm{NNP = MVFG + MVFS - Depreciation}$$ Where MVFG = market value of finished goods, MVFS = market value of finished services, and Depreciation = capital consumption allowance (CCA). Example Calculation If Country X produces $2 trillion ...
Read MoreMarginal Product Formula
The marginal product formula measures the change in total output when one additional unit of a production factor (labor, machinery, capital) is added. It helps businesses predict whether adding resources will increase production efficiently. Formula $$\mathrm{Marginal\:Product = \frac{Q^{n} - Q^{n-1}}{L^{n} - L^{n-1}}}$$ Where − Qn − Current total production output Qn-1 − Previous production output (before the change) Ln − Current number of production units (workers, machines) Ln-1 − Previous number of production units Step-by-Step Calculation Consider an ice cream manufacturer that produces 10, 000 cones/day with 3 employees. After hiring 2 ...
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