- Branche: Economy; Printing & publishing
- Number of terms: 15233
- Number of blossaries: 1
- Company Profile:
A country’s exchange rate with the currencies of its trading partners weighted by the amount of trade done by the country in each currency.
Industry:Economy
A 19th-century amateur mathematician, William Forster Lloyd, modeled the fate of a common pasture shared among rational, utility-maximizing herdsmen. He showed that as the population increased the pasture would inevitably be destroyed. This tragedy may be the fate of all sorts of common resources, because no individual, firm or group has meaningful property rights that would make them think twice about using so much of it that it is destroyed. Once a resource is being used at a rate near its sustainable capacity, any additional use will reduce its value to its current users. Thus they will increase their usage to maintain the value of the resource to them, resulting in a further deterioration in its value, and so on, until no value remains. Contemporary examples include overfishing and the polluting of the atmosphere. (See public goods and externality. )
Industry:Economy
The costs incurred during the process of buying or selling, on top of the price of whatever is changing hands. If these costs can be reduced, the price mechanism will operate more efficiently.
Industry:Economy
The prices assumed, for the purposes of calculating tax liability, to have been charged by one unit of a multinational company when selling to another (foreign) unit of the same firm. Firms spend a fortune on advisers to help them set their transfer prices so that they minimize their total tax bill. For instance, by charging low transfer prices from a unit based in a high-tax country that is selling to a unit in a low-tax country, a firm can record a low profit in the first country and a high profit in the second. In theory, however, transfer prices are supposed to be set according to the arm’s-length principle: that they should be the same as would be charged if the sale was to a business unconnected in any way to the selling firm. But when there is no genuinely independent market with which to compare transfer prices, what an arm’s length price would be can be a matter of great debate and an opportunity for firms that want to lower their tax bill.
Industry:Economy
Payments that are made without any good or service being received in return. Much public spending goes on transfers, such as pensions and welfare benefits. Private-sector transfers include charitable donations and prizes to lottery winners.
Industry:Economy
Former communist economies that, with varying degrees of enthusiasm, have embraced capitalism.
Industry:Economy
The process by which changes in the money supply affect the level of total demand in an economy.
Industry:Economy
A buzz word for the idea that the more information is disclosed about an economic activity the better. Many regulators, private lenders, politicians and economists reckoned that the Asian economic crisis of the late 1990s would not have been so severe, or even have happened, had Asian governments, banks and other companies made available more and better data about their financial condition. Likewise, the collapse of Enron provoked demands for greater transparency, to help improve corporate governance in the United States and other industrialized countries. Some economists reckon that transparency is one of the most effective methods of regulation. Rather than risk regulatory capture, why not simply maximize disclosure and leave it to the market to decide whether what the information reveals is acceptable?
Industry:Economy
A form of short-term government debt. Treasury bills usually mature after three months. They are used for managing fluctuations in the government’s short-run cash needs. Most government borrowing takes the form of longer-term bonds.
Industry:Economy
