- Industry: Economy; Printing & publishing
- Number of terms: 15233
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Doing as you are done by. A grants B certain privileges on the condition that B grants the same privileges to A. Most international economic agreements, for example, on trade, include binding reciprocity requirements.
Industry:Economy
The price at which one currency can be converted into another. Over the years, economists and politicians have often changed their minds about whether it is a good idea to try to hold a country’s exchange rate steady, rather than let it be decided by market forces. For two decades after the second world war, many of the major currencies were fixed under the Bretton Woods agreement. During the following two decades, the number of currencies allowed to float increased, although in the late 1990s a number of European currencies were permanently fixed under economic and monetary union and some other countries established a currency board. When capital can flow easily around the world, countries cannot fix their exchange rate and at the same time maintain an independent monetary policy. They must choose between the confidence and stability provided by a fixed exchange rate and the control over interest rate policy offered by a floating exchange rate. On the face of it, in a world of capital mobility a more flexible exchange rate seems the best bet. A floating currency will force firms and investors to hedge against fluctuations, not lull them into a false sense of stability. It should make foreign banks more circumspect about lending. At the same time it gives policymakers the option of devising their own monetary policy. But floating exchange rates have a big drawback: when moving from one equilibrium to another, currencies can overshoot and become highly unstable, especially if large amounts of capital flow in or out of a country. This instability has real economic costs. To get the best of both worlds, many emerging economies have tried a hybrid approach, loosely tying their exchange rate either to a single foreign currency, such as the dollar, or to a basket of currencies. But the currency crises of the late 1990s, and the failure of Argentina's currency board, led many economists to conclude that, if not a currency union such as the Euro, the best policy may be to have a freely floating exchange rate.
Industry:Economy
A policy intended to boost economic activity in a specific geographical area that is not an entire country and, typically, is in worse economic shape than nearby areas. It can include offering firms incentives to provide jobs in the region, such as soft loans, grants, lower taxes, cheap land and buildings, subsidized labor and worker training. Is it necessary? A region's problems should be somewhat self-correcting. After all, simple theories of supply and demand would suggest that firms will move to areas of low wages and high unemployment to take advantage of cheaper labor and surplus workers, or that workers will move away from such areas to where more and better-paid jobs exist. But some economic theories suggest that rather than moving to areas where wages are lowest, firms often cluster together with other successful businesses. Regional policy may need to be extremely generous to tempt firms to give up the advantages of being in a cluster.
Industry:Economy
A tax that takes a smaller proportion of income as the taxpayer’s income rises, for example, a fixed-rate vehicle tax that eats up a much larger slice of a poor person’s income than a rich person’s income. This goes against the principle of vertical equity, which many people think should be at the heart of any fair tax system.
Industry:Economy
Rules governing the activities of private-sector enterprises. Regulation is often imposed by government, either directly or through an appointed regulator. However, some industries and professions impose rules on their members through self-regulation. Regulation is often introduced to tackle market failure. Externalities such as pollution have inspired rules limiting factory emissions. Regulations on the selling of financial products to individuals have been introduced as protection against unscrupulous financial firms with better information than their customers. Rate of return regulation and price regulation have been used to combat natural monopoly, sometimes instead of nationalization. Some regulation has been motivated by politics rather than economics, for instance, restrictions on the number of hours people can work or the circumstances in which an employer can dismiss employees. Even when introduced for sound economic reasons, regulation can generate more costs than benefits. Regulated firms or individuals may face substantial compliance costs. Firms may devote substantial resources to regulatory arbitrage, which would leave consumers no better off. Regulation may lead to moral hazard if people believe that the government is keeping an eye on the behavior of the regulated business and so do less monitoring of their own. Regulation may be badly designed and thus lock an industry into an inefficient equilibrium. Rigid regulation may hold back innovation. There is also the danger of regulatory capture. In short, then, regulatory failure may be even worse for an economy than market failure.
Industry:Economy
Regulations governing the minimum amount of reserves that a bank must hold against deposits.
Industry:Economy
Money in the hand, available to be used to meet planned future payments or if some other need arises. Firms may put their reserves in a bank, as a deposit. For a bank, reserves are those deposits it retains rather than lending them out.
Industry:Economy
When you buy an asset you become exposed to a bundle of different risks. Many of these risks are not unique to the asset you own but reflect broader possibilities, such as that the stock market average will rise or fall, that interest rates will be cut or increased, or that the growth rate will change in an entire economy or industry. Residual risk, also known as alpha, is what is left after you take out all the other shared risk exposures. Exposure to this risk can be reduced by diversification. Contrast with systematic risk.
Industry:Economy
Wenn Sie einen Computer kaufen, müssen Sie auch die Software kaufen. Computer Hard-und Software sind daher komplementäre Güter: zwei Produkte, bei denen ein Anstieg (oder Rückgang) der Nachfrage nach einem führt zu einem Anstieg (Rückgang) der Nachfrage nach dem anderen. Ergänzungen sind das Gegenteil von Ersatzware. Zum Beispiel sind Microsoft Windows-basierten PCs und Apple Macs ersetzt.
Industry:Economy
Government policies intended to smooth the economic cycle, expanding demand when unemployment is high and reducing it when inflation threatens to increase. Doing this by fine tuning has mostly proved harder than Keynesian policymakers expected, and it has become unfashionable. However, the use of automatic stabilizers remains widespread. For instance, social handouts from the state usually increase during tough times, and taxes increase (fiscal drag), boosting government revenue, when the economy is growing.
Industry:Economy
