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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]

Externality In economics, an externality is the cost or benefit that affects a party who did not choose to incur that cost or benefit.[1] Implications[edit] External costs and benefits Voluntary exchange is considered mutually beneficial to both parties involved, because buyers or sellers would not trade if either thought it detrimental to themselves. However, a transaction can cause additional effects on third parties. A voluntary exchange may reduce societal welfare if external costs exist. On the other hand, a positive externality would increase the utility of third parties at no cost to them. There are a number of potential means of improving overall social utility when externalities are involved. Laissez-faire economists such as Friedrich Hayek and Milton Friedman sometimes refer to externalities as "neighborhood effects" or "spillovers", although externalities are not necessarily minor or localized. Examples[edit] Negative[edit] Barry Commoner commented on the costs of externalities:

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]

Globalization Globalisation (or globalization) is the process of international integration arising from the interchange of world views, products, ideas, and other aspects of culture.[1][2] Advances in transportation and telecommunications infrastructure, including the rise of the telegraph and its posterity the Internet, are major factors in globalization, generating further interdependence of economic and cultural activities.[3] Though scholars place the origins of globalization in modern times, others trace its history long before the European age of discovery and voyages to the New World. Some even trace the origins to the third millennium BCE.[4][5] In the late 19th century and early 20th century, the connectedness of the world's economies and cultures grew very quickly. Overview[edit] Humans have interacted over long distances for thousands of years. Airline personnel from the "Jet set" age, circa 1960. Etymology and usage[edit] Sociologists Martin Albrow and Elizabeth King define globalization as:

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

Gini coefficient Gini coefficient of national income distribution around the world. This is based on 1989 to 2009 data, estimated by the CIA. Some are pre-tax and transfer, others post-tax income. The Gini coefficient (also known as the Gini index or Gini ratio) (/dʒini/) is a measure of statistical dispersion intended to represent the income distribution of a nation's residents. It was developed by the Italian statistician and sociologist Corrado Gini and published in his 1912 paper "Variability and Mutability" (Italian: Variabilità e mutabilità).[1][2] The Gini coefficient measures the inequality among values of a frequency distribution (for example levels of income). There are some issues in interpreting a Gini coefficient. Definition[edit] Graphical representation of the Gini coefficient The graph shows that the Gini coefficient is equal to the area marked A divided by the sum of the areas marked A and B. that is, Gini = A / (A + B). Calculation[edit] This may be simplified to: where and , then , so that

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

Global governance Global governance or world governance is a social movement toward political integration of transnational actors aimed at solving problems that affect more than one state or region when there is no power of enforcing compliance. The modern question of world governance exists in the context of globalization. In response to the acceleration of interdependence on a worldwide scale, both between human societies and between humankind and the biosphere, the term "world governance" may also be used to designate laws, rules, or regulations intended for a global scale. Definition[edit] In a simple and broad-based definition of world governance, the term is used to designate all regulations intended for organization and centralization of human societies on a global scale.[1] Traditionally, government has been associated with "governing," or with political authority, institutions, and, ultimately, control. Usage[edit] Context[edit] Need[edit] Crisis of purpose[edit] World government[edit] Issues[edit]

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.

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