A bond is a specific type of security that is sold by firms or governments. It is a way for the firm or government to borrow money at a certain interest rate. In return for buying the bond and investor gets a certain interest rate for the duration of the bond. As opposed to treasury …
This is the theory that there is only so much information that humans can be aware of. Therefore, when making decisions, we base them on a limited choice. They are rational given the limited choice and awareness of alternatives, but they rarely maximise total utility because people don’t want to take the time to fully …
Definition of the ‘Brain Drain’. The brain drain problem refers to the situation where a country loses its best workers. For example, skilled workers in developing countries such as India or Pakistan may be attracted by better rates of pay and working conditions in developed countries, such as the US and Western Europe. The brain …
Definition of Brand loyalty – This occurs when consumers have a strong preference for a particular type of good or brand. It means that the consumer will be willing to make repeat purchases and is much less likely to experiment with other goods. Examples of Brand Loyalty Brand loyalty occurs with goods that are heavily …
The break-even price is the price necessary to make normal profit. It is a price which includes all costs, including variable and fixed costs. At the break-even price, the firm neither makes a loss or profit. The break-even price occurs where AR = ATC The break-even price occurs where Total Revenue = Total Cost (TC) …
Bretton woods was a semi-fixed exchange rates set up in the post-war period. The Bretton Woods exchange rate system had a system of pegged exchange rates with currencies pegged to the dollar. The dollar was fixed to the price of gold ($35 an ounce) – giving the US Dollar a fixed value. The currencies in …
Broad money is the definition of the Money Supply which includes a wide scope for the definition of money – including both notes and coins, but also more illiquid forms of money – such as bank deposits, treasury bills, gilts. These are considered ‘near money’ because it can easily be changed to cash. Narrow money …
Definition of Budget constraints A budget constraint occurs when a consumer is limited in consumption patterns by a certain income. When looking at the demand schedule we often consider effective demand. Effective demand is what people are actually able to spend given their limitations of income. Temporary budget constraints can be overcome by borrowing, but …