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Gross domestic product

Gross domestic product
Gross domestic product (GDP) is defined by the Organisation for Economic Co-operation and Development (OECD) as "an aggregate measure of production equal to the sum of the gross values added of all resident, institutional units engaged in production (plus any taxes, and minus any subsidies, on products not included in the value of their outputs)."[2] GDP estimates are commonly used to measure the economic performance of a whole country or region, but can also measure the relative contribution of an industry sector. The more familiar use of GDP estimates is to calculate the growth of the economy from year to year (and recently from quarter to quarter). History[edit] The concept of GDP was first developed by Simon Kuznets for a US Congress report in 1934.[4] In this report, Kuznets warned against its use as a measure of welfare (see below under limitations and criticisms). The history of the concept of GDP should be distinguished from the history of changes in ways of estimating it. Related:  EconomicsWikipedia Topics

Exchange rate In finance, an exchange rate (also known as a foreign-exchange rate, forex rate, FX rate or Agio) between two currencies is the rate at which one currency will be exchanged for another. It is also regarded as the value of one country’s currency in terms of another currency.[1] For example, an interbank exchange rate of 119 Japanese yen (JPY, ¥) to the United States dollar (US$) means that ¥119 will be exchanged for each US$1 or that US$1 will be exchanged for each ¥119. In this case it is said that the price of a dollar in terms of yen is ¥119, or equivalently that the price of a yen in terms of dollars is $1/119. Exchange rates are determined in the foreign exchange market,[2] which is open to a wide range of different types of buyers and sellers where currency trading is continuous: 24 hours a day except weekends, i.e. trading from 20:15 GMT on Sunday until 22:00 GMT Friday. The spot exchange rate refers to the current exchange rate. Retail exchange market[edit] Quotations[edit]

Factors of production Historical schools and factors[edit] In the interpretation of the currently dominant view of classical economic theory developed by neoclassical economists, the term "factors" did not exist until after the classical period and is not to be found in any of the literature of that time.[5] Differences are most stark when it comes to deciding which factor is the most important. Physiocracy[edit] In French Physiocracy, the main European school of economics before Adam Smith, the productive process is explained as the interaction between participating classes of the population. The farmer labors on land (sometimes using "crafts") to produce goods.The landlord is only a consumer of food and crafts and produces nothing at all.The merchant labors to export food in exchange for foreign imports. Classical[edit] An advertisement for labour from Sabah and Sarawak, seen in Jalan Petaling, Kuala Lumpur. Marxism[edit] Marx considered the "elementary factors of the labor-process" or "productive forces" to be:

Gross national product Gross national product (GNP) is the market value of all the products and services produced in one year by labor and property supplied by the citizens of a country. Unlike Gross Domestic Product (GDP), which defines production based on the geographical location of production, GNP allocates production based on ownership. GNP does not distinguish between qualitative improvements in the state of the technical arts (e.g., increasing computer processing speeds), and quantitative increases in goods (e.g., number of computers produced), and considers both to be forms of "economic growth".[1] Basically, GNP is the total value of all final goods and services produced within a country in a particular year, plus income earned by its citizens (including income of those located abroad)(no need to minus income of non resident as income includes of only its citizen). GNP measures the value of goods and services that the country's citizens produced regardless of their location. Use[edit] GNP Growth[edit]

Mixed economy In general the mixed economy is characterised by the private ownership of the means of production, the dominance of markets for economic coordination, with profit-seeking enterprise and the accumulation of capital remaining the fundamental driving force behind economic activity. But unlike a free-market economy, the government would wield indirect macroeconomic influence over the economy through fiscal and monetary policies designed to counteract economic downturns and capitalism's tendency toward financial crises and unemployment, along with playing a role in interventions that promote social welfare.[2] Subsequently, some mixed economies have expanded in scope to include a role for indicative economic planning and/or large public enterprise sectors. As an economic ideal, mixed economies are supported by people of various political persuasions, typically centre-left and centre-right, such as social democrats[7] or Christian democrats. Etymology[edit] Philosophy[edit] History[edit]

Interest rate An interest rate is the rate at which interest is paid by borrowers (debtors) for the use of money that they borrow from lenders (creditors). Specifically, the interest rate is a percentage of principal paid a certain number of times per period for all periods during the total term of the loan or credit. Interest rates are normally expressed as a percentage of the principal for a period of one year, sometimes they are expressed for different periods like for a month or a day. Different interest rates exist parallelly for the same or comparable time periods, depending on the default probability of the borrower, the residual term, the payback currency, and many more determinants of a loan or credit. Interest-rate targets are a vital tool of monetary policy and are taken into account when dealing with variables like investment, inflation, and unemployment. Interest rate notations[edit] Historical interest rates[edit] Interest rates in the United States[edit] is widely used. where: Risk[edit] so

Planned economy Planned economies are usually categorized as a particular variant of socialism, and have historically been supported by and implemented by Marxist-Leninist socialist states. Analysts argue that Soviet-type central planning did not actually constitute a planned economy in that a comprehensive and binding plan did not guide production and investment; therefore the term administrative command economy emerged as a more accurate designation for the economic system that existed in the former Soviet Union and Eastern bloc, highlighting the role of centralized hierarchical administrative decision-making in the absence of popular and democratic local market-based oversight as the essential coordinating feature of these economies.[3] Although most economies today are market-based mixed economies (which are partially planned), fully planned economies of the Soviet-type continue to exist (as of 2013) in Cuba, North Korea and Laos.[10][needs update] Economic planning versus command economies[edit]

Inflation In economics, inflation is a sustained increase in the general price level of goods and services in an economy over a period of time.[1] When the price level rises, each unit of currency buys fewer goods and services. Consequently, inflation reflects a reduction in the purchasing power per unit of money – a loss of real value in the medium of exchange and unit of account within the economy.[2][3] A chief measure of price inflation is the inflation rate, the annualized percentage change in a general price index (normally the consumer price index) over time.[4] The opposite of inflation is deflation. History[edit] Annual inflation rates in the United States from 1666 to 2004. Historically, infusions of gold or silver into an economy also led to inflation. The adoption of fiat currency by many countries, from the 18th century onwards, made much larger variations in the supply of money possible. Related definitions[edit] Measures[edit] Other common measures of inflation are: Effects[edit] where

Market economy Market economies can range from hypothetical laissez-faire and free market variants to regulated markets and interventionist variants. In reality market economies do not exist in pure form, since societies and governments regulate them to varying degrees.[4][5] Most existing market economies include a degree of economic planning or state-directed activity, and are thus classified as mixed economies. The term free-market economy is sometimes used synonymously with market economy, but it may also refer to laissez-faire or Free-market anarchism.[6] Capitalism[edit] Capitalism generally refers to economic system where the means of production are largely or entirely privately owned and operated for a profit, structured on the process of capital accumulation. There are different variations of capitalism with different relationships to markets. Capitalism has been dominant in the Western world since the end of feudalism, but most feel[who?] Anglo-Saxon model[edit] East Asian model[edit] "(...)

Government debt Government debt (also known as public debt, national debt and sovereign debt)[1][2] is the debt owed by a central government. (In federal states, "government debt" may also refer to the debt of a state or provincial, municipal or local government.) By contrast, the annual "government deficit" refers to the difference between government receipts and spending in a single year, that is, the increase of debt over a particular year. Government debt is one method of financing government operations, but it is not the only method. Governments can also create money to monetize their debts, thereby removing the need to pay interest. As the government draws its income from much of the population, government debt is an indirect debt of the taxpayers. History[edit] The sealing of the Bank of England Charter (1694) During the Early Modern era, European monarchs would often default on their loans or arbitrarily refuse to pay them back. Government and sovereign bonds[edit] By country[edit] Risk[edit] U.S.

Economy In the past, economic activity was theorized to be bounded by natural resources, labor, and capital. This view ignores the value of technology (automation, accelerator of process, reduction of cost functions), and innovation (new products, services, processes, new markets, expands markets, diversification of markets, niche markets, increases revenue functions), especially that which produces intellectual property. A given economy is the result of a set of processes that involves its culture, values, education, technological evolution, history, social organization, political structure and legal systems, as well as its geography, natural resource endowment, and ecology, as main factors. These factors give context, content, and set the conditions and parameters in which an economy functions. The largest national economy in the Americas is the United States,[1] Germany in Europe,[2] Nigeria in Africa[3] and China in Asia.[4] Range[edit] Etymology[edit] History[edit] Ancient times[edit] GDP[edit]

Unemployment Unemployment occurs when people are without work and actively seeking work.[1] The unemployment rate is a measure of the prevalence of unemployment and it is calculated as a percentage by dividing the number of unemployed individuals by all individuals currently in the labor force. During periods of recession, an economy usually experiences a relatively high unemployment rate.[2] According to International Labour Organization report, more than 197 million people globally or 6% of the world's workforce were without a job in 2012.[3] There remains considerable theoretical debate regarding the causes, consequences and solutions for unemployment. In addition to these comprehensive theories of unemployment, there are a few categorizations of unemployment that are used to more precisely model the effects of unemployment within the economic system. Definitions, types, and theories[edit] Classical unemployment[edit] Cyclical unemployment[edit] Marxian theory of unemployment[edit] Measurement[edit]

Opportunity cost History[edit] The term was first used in 1914 by Austrian economist Friedrich von Wieser in his book Theorie der gesellschaftlichen Wirtschaft [4] (Theory of Social Economy). The idea had been anticipated by previous writers including Benjamin Franklin and Frédéric Bastiat. Franklin coined the phrase "Time is Money", and spelt out the associated opportunity cost reasoning in his “Advice to a Young Tradesman” (1746): “Remember that Time is Money. He that can earn Ten Shillings a Day by his Labour, and goes abroad, or sits idle one half of that Day, tho’ he spends but Sixpence during his Diversion or Idleness, ought not to reckon That the only Expence; he has really spent or rather thrown away Five Shillings besides.” Bastiat's 1848 essay "What Is Seen and What Is Not Seen" used opportunity cost reasoning in his critique of the broken window fallacy, and of what he saw as spurious arguments for public expenditure. Opportunity costs in production[edit] Explicit costs[edit] Implicit costs[edit]

Balance of trade The commercial balance or net exports (sometimes symbolized as NX), is the difference between the monetary value of exports and imports of output in an economy over a certain period, measured in the currency of that economy. It is the relationship between a nation's imports and exports.[1] A positive balance is known as a trade surplus if it consists of exporting more than is imported; a negative balance is referred to as a trade deficit or, informally, a trade gap. The balance of trade is sometimes divided into a goods and a services balance. Understand- Balance of Trade[edit] Trade, in general connotation, means the purchase and sales of commodities. Policies of early modern Europe are grouped under the heading mercantilism. Definition[edit] The balance of trade forms part of the current account, which includes other transactions such as income from the net international investment position as well as international aid. Factors that can affect the balance of trade include:

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