Comparative Advantage is the term used to describe how one person, business, or economy, is able to outproduce one product or service compared to another person, business, or economy.
Risk is one of the most important concepts in investing, economics, and personal finance, yet very few people really understand just how big a role risk plays in our everyday lives. Risk plays into insurance, investing, savings, and much more!
“Property Rights” usually refers to a set of fundamental rights giving citizens control over their own land, capital, and ideas. Property rights is the foundation of all free-enterprise economic systems. It is what allows people to profit from capital and ideas, without fear of seizure by the government or theft.
International Trade is the system under which businesses, individuals, and governments trade goods and services. This exchange from many different National economies is what makes up the Global economy. This is impacted not just by the supply and demand of goods, but the supply and demand of currenies, and the laws and policies of the different governments
“Inflation” means that the general prices of goods and services goes up from one year to another. There are a few ways to calculate inflation – from a simple “basket of goods” compared over time, to complicated economic models looking across thousands of factors
The way the government organizes taxes and their spending to influence the economy is called the Fiscal Policy. Fiscal policy is controlled by congress and the president, and boils down to how they adjust spending federal money to encourage economic growth
The Time Value of Money is a concept that a dollar in your pocket today is worth more than a dollar tomorrow – because you can use it right away. The time value of money is determined by interest rates and opportunity cost – what else could you be doing with that money?
“Labor” is how much a person works. It is the use of time an exertion of effort to produce something of value. Generally speaking, the more valuable a person’s labor is, the higher their wage.
“Unemployment” is a major economic indicator measuring how much of the working population is currently looking for a job. Just because someone is jobless doesn’t mean they are unemployed – they need to be looking for work!
“Price Controls” are artificial limits that are put on prices. If the limit is put in place to prevent prices from getting too high, they are called Ceilings. If they are in place to prevent the price from getting too low, they are called “Floors”.