Economics

What exactly is a market? How does an economic market regulate itself given there’s no central authority overseeing its inner workings? A market is essentially a collection of billions of separate transactions that form a complex economy in which people can earn and spend money to fund their lives. A capitalist market functions cohesively, not because a centralized authority tells it what to do, but because each transaction works together efficiently. The paradox of the market is that while individuals use the market to increase their own individual well-being, in the process, they increase everyone else’s well-being also. In this

What exactly is an exchange rate? How do countries determine their exchange rates? In simple terms, the exchange rate is the price at which you can purchase one currency using another currency. There are several ways that a country can determine the value of its currency and its exchange rate. Learn about the economics of exchange rates, explained in simple terms. We’ll discuss the gold standard way of determining the exchange rates, and the difference between floating and fixed exchange rates.

How do currencies work? How do economists determine the value of a country’s currency? A physical piece of currency is just a piece of paper or a coin, but it represents an amount of purchasing power that can be used for goods and services. To evaluate a currency’s purchasing power, economists determine how many goods and services it can purchase from a hypothetical “basket of goods” that includes a broad range of things for sale in any given country.  In this article, we’ll examine currencies and how the international market uses them to function.

What reflects the health of an economy? What markers do economists use to measure the strength of a country’s economy? Sometimes, an economy functions well: It grows at a healthy rate that allows many people to earn a good living. But sometimes, it suffers a period of stagnation or contraction, when people find it harder to survive or to thrive within the market. There are several markers of economic health including GDP (gross domestic product), unemployment rates, Gini coefficient, etc. In this article, we’ll explore how economists measure the health of an economy, what causes an economy to fall into

What do economists mean when they talk about “asymmetric information”? What role does the asymmetricity of information about products/services play in the functioning of an economy? In economics, asymmetric information refers to the situation where one party has more information about the product/service than the other. Information, and who has access to it, have an outsized influence on how smoothly an economy runs. A free flow of information allows for easy and smart transactions. In this article, we’ll explain asymmetric information and discuss its implications for individuals, firms, and economic policy.

What exactly is human capital? What is the role of human capital in economic development? Human capital is the sum of what makes an individual valuable and marketable (e.g. intelligence, athletic ability, education, and work experience, etc). Economies with higher levels of human capital are stronger than those with lower levels for a number of reasons: 1) it increases wealth; 2) it controls population growth, 3) it drives productivity, and 4) it explains inequality. We’ll explore each of these below.