Monetary Policy involves the country’s central bank controlling the interest rate and money supply. Monetary policy affects Aggregate Demand (AD), and an expansionary monetary policy increases AD, while a contractionary monetary policy decreases AD.
Market Failures occur when there is a misallocation of resources, which results in distortions in the market. This distortion creates an inefficiency in the market.
Financial Instruments are tradeable assets (claim) for people who hold them and liabilities (obligation) for the issuer. Securities such as bonds, stocks, bank loans are examples of financial instruments.
Economic profit is different from the general business term ‘profit’. The general assumption is that firms are producing goods to maximize profits.
Banks involved in commercial lending provide a wide range of financing packages for international trade, commonly called trade finance. Trade finance not only assists the buyer in financing its purchase but also provides immediate cash to the seller for the sale.
The Natural Rate of Unemployment (NRU) is the rate of unemployment after the labor market is in equilibrium, when real wages have found their free-market level and when the aggregate supply of labor balanced with the aggregate demand for labor.