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Economy

How Young Investors Can Benefit from a Down Market

You may not think there’s a silver lining to a market correction. But for young investors, there’s a counter intuitive potential upside and a simple investing technique that allows beginners to take full advantage of it. I have no intention of casting a shadow on today’s bull market, but with steady gains for the last eight years, we’re deep into the second ...

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What Are Economies Of Scale?

When more units of a good or a service can be produced on a larger scale, yet with (on average) fewer input costs, economies of scale are said to be achieved. Alternatively, this means that as a company grows and production units increase, a company will have a better chance to decrease its costs. According to this theory, economic growth may be ...

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4 Factors That Shape Market Trends

Trends are what allow traders and investors to capture profits. Whether on a short- or long-term time frame, in an overall trending market or a range of environment, the flow from one price to another is what creates profits and losses. There are four major factors that cause both long-term trends and short-term fluctuations. These factors are government, international transactions, speculation and expectation, and supply and demand. Major ...

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How Education and Training Affect the Economy

Why do most workers with college degrees earn so much more than those without? How does a nation’s education system relate to its economic performance? Knowing how education and training interact with the economy can help you better understand why some workers, businesses and economies flourish, while others falter. As the labor supply increases, more pressure is placed on the wage ...

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9 Common Effects of Inflation

If you believe the headlines, inflation is back after a long post-crisis stint of disinflation and, in some instances, outright deflation. Since investors haven’t seen significant price rises in years, it’s worth brushing up on the most common effects of inflation. 1. Erodes Purchasing Power This first effect of inflation is really just a different way of stating what it is. Inflation is a ...

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The Taylor Rule: An Economic Model for Monetary Policy

The Taylor rule is an interest rate forecasting model invented and perfected by famed economist John Taylor in 1992 and outlined in his landmark 1993 study, “Discretion Vs. Policy Rules in Practice.” Taylor operated in the early 1990s with credible assumptions that the Federal Reserve determined future interest rates based on the rational expectations theory of macroeconomics. This is a backward-looking model that assumes if workers, consumers ...

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Does High GDP Mean Economic Prosperity?

Economists traditionally use gross domestic product (GDP) to measure economic progress. If GDP is rising, the economy is in good shape, and the nation is moving forward. If GDP is falling, the economy is in trouble, and the nation is losing ground. What Is GDP? GDP is equal to the total monetary value of all final goods and services that have been ...

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5 Economic Effects Of Country Liberalization

When a nation becomes liberalized, the economic effects can be profound for the country and for investors. Economic liberalization refers to a country “opening up” to the rest of the world with regards to trade, regulations, taxation and other areas that generally affect business in the country. As a general rule, you can determine to what degree a country is ...

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