The economic cycle, also known as a business cycle, refers to fluctuations of the economy between periods of expansion (growth) and contraction (recession). Factors such as gross domestic product (GDP), interest rates, total employment, and consumer spending can help to determine the current stage of the economic cycle. Understanding the economic cycle can help investors and businesses determine
What Is Economic Depreciation? Economic depreciation is a measure of the decrease in the market value of an asset over time from influential economic factors. This form of depreciation usually pertains to real estate, which can lose value for several reasons such as the addition of unfavorable construction in close proximity to a property, road closures, a decline in the quality of
What Is Economic Equilibrium? Economic equilibrium is a condition or state in which economic forces are balanced. In effect, economic variables remain unchanged from their equilibrium values in the absence of external influences. Economic equilibrium is also referred to as market equilibrium. Economic equilibrium is the combination of economic variables (usually price and quantity) toward
What Is Economic Exposure? Economic exposure is a type of foreign exchange exposure caused by the effect of unexpected currency fluctuations on a company’s future cash flows, foreign investments, and earnings. Economic exposure, also known as operating exposure, can have a substantial impact on a company’s market value since it has far-reaching effects and is
What Is Economic Forecasting? Economic forecasting is the process of attempting to predict the future condition of the economy using a combination of important and widely followed indicators. Economic forecasting involves the building of statistical models with inputs of several key variables, or indicators, typically in an attempt to come up with a future gross domestic
What Is Economic Growth? Economic growth is an increase in the production of economic goods and services in one period of time compared with a previous period. It can be measured in nominal or real (adjusted to remove inflation) terms. Traditionally, aggregate economic growth is measured in terms of gross national product (GNP) or gross domestic
What Is an Economic Growth Rate? An economic growth rate is the percentage change in the value of all of the goods and services produced in a nation during a specific period of time, as compared to an earlier period. The economic growth rate is used to measure the comparative health of an economy over
What Is Economic Integration? Economic integration is an arrangement among nations that typically includes the reduction or elimination of trade barriers and the coordination of monetary and fiscal policies. Economic integration aims to reduce costs for both consumers and producers and to increase trade between the countries involved in the agreement. Economic integration is sometimes referred to as
What Is Economic Justice? Economic justice is a component of social justice and welfare economics. It is a set of moral and ethical principles for building economic institutions, where the ultimate goal is to create an opportunity for each person to establish a sufficient material foundation upon which to have a dignified, productive, and creative life.
What Is an Economic Man? The term “economic man” (also referred to as “homo economicus”) refers to an idealized person who acts rationally, with perfect knowledge, and who seeks to maximize personal utility or satisfaction. The presence of an economic man is an assumption of many economic models. Key Takeaways The economic man is a
