- Industry: Economy; Printing & publishing
- Number of terms: 15233
- Number of blossaries: 1
- Company Profile:
There are lies, damned lies and statistics, said Benjamin Disraeli, a British prime minister. Certainly, even if the result of number crunching is statistically significant, it does not actually mean it is true. But it does mean it is much more likely to be true than false. Statistical significance means that the probability of getting that result by chance is low. The most commonly used measure of statistical significance is that there must be a 95% chance that the result is right and only a 1 in 20 chance of the result occurring randomly.
Industry:Economy
When a government or central bank buys or sells some of its reserves of foreign currency this can affect the country’s money supply. Selling reserves decreases the supply of the domestic currency; buying reserves increases the domestic money supply. Governments or central banks can sterilize (that is, cancel out) this effect of foreign exchange intervention on the money supply by buying or selling an equivalent amount of securities. For example, if the government increases reserves by buying foreign currency the domestic money supply will increase, unless it sells securities such as treasury bills to mop up the extra demand.
Industry:Economy
Petrol-pump prices do not change every time the oil price changes, and holiday prices and standard hotel rates are fixed for months. Sticky prices are slow to change in response to changes in supply or demand. As a result there is, at least temporarily, disequilibrium in the market. The causes of stickiness include menu costs, inadequate information, consumers’ dislike of frequent price changes and long-term contracts with fixed prices. Prices change only when the cost of leaving them unchanged exceeds the expense of adjusting them. In financial markets, prices move all the time because the cost of quoting the wrong price can be huge. In other industries, the penalty may be much less severe. Small disequilibria in, say, the pricing of hotel rooms will not make much difference. So hotel prices are often sticky.
Industry:Economy
A process that exhibits random behavior. For instance, Brownian motion, which is often used to describe changes in share prices in an efficient market (the random walk), is a stochastic process.
Industry:Economy
Another term for shares. What are called ordinary shares in the UK are known as common stock in the United States. It is also another word for inventories of goods held by a firm to meet future demand.
Industry:Economy
A process for exploring how a portfolio of assets and/or liabilities would fare in extreme adverse conditions. A useful tool in risk management.
Industry:Economy
A program of policies designed to change the structure of an economy. Usually, the term refers to adjustment towards a market economy, under a program approved by the IMF and/or World Bank, which often supply structural adjustment funds to ease the pain of transition. Such policies are much criticized in the developing world, sometimes with good reason.
Industry:Economy
The hardest sort of unemployment to cure because it is caused by the structure of an economy rather than by changes in the economic cycle. Contrast with cyclical unemployment, which can, in theory if not always in practice, be cut without sparking inflation by stimulating faster economic growth. Structural unemployment can be reduced only by changing the economic structures causing it, for instance, by removing rules that limit labor market flexibility.
Industry:Economy
Money paid, usually by government, to keep prices below what they would be in a free market, or to keep alive businesses that would otherwise go bust, or to make activities happen that otherwise would not take place. Subsidies can be a form of protectionism by making domestic goods and services artificially competitive against imports. By distorting markets, they can impose large economic costs.
Industry:Economy
Goods for which an increase (or fall) in demand for one leads to a fall (or increase) in demand for the other – Coca-Cola and Pepsi, perhaps.
Industry:Economy
