Availability Bias

Availability bias describes the way in which human beings are biased toward judging events’ likelihood/frequency based on how easily their minds can conjure up examples of the event occurring in the past. For this reason, if we’re trying to judge whether something is likely to happen (to make a risk assessment), if a similar event has occurred…
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Trade Barriers

No country however rich or large can make everything it needs or has all the resources it requires for its manufacturing industries. Yes, some countries are against free trade. They believe that free trade is bad for their economies and hurts growth and employment. So, what are the arguments used to impose trade barriers? International trade…
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Economic Growth And Development

What is the difference between Economic Growth and Development? We will start by defining Economic growth and development. Having economic growth without economic development is possible. Economic growth in an economy is demonstrated by an outward shift in its Production Possibility Curve (PPC). Another way to define growth is the increase in a…
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Say’s Law

Say’s Law is short for “Say’s Law of Markets,” which states that the production of goods produces its own demand. In other words, supply creates its own demand. People are paid to create goods and/or services, and can then spend that money on other goods/services. And there’s no point in holding onto money for long periods without spending it,…
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Determinants of Demand

The determinants of demand are factors that cause fluctuations in the economic demand for a product or a service. A shift in the demand curve occurs when the curve moves from D to D₁, which can lead to a change in the quantity demanded and the price. There are six determinants of demand. These six factors are not the same as a movement along the…
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Components of Aggregate Demand

There are four components of Aggregate Demand (AD); Consumption (C), Investment (I), Government Spending (G) and Net Exports (X-M). Aggregate Demand shows the relationship between Real GNP and the Price Level. Four Components of Aggregate Demand Any increase in any of the four components of aggregate demand leads to an increase or shift in…
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