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Understanding the difference between Moral Hazard and Abverse Selection

Moral hazard and adverse selection are utilized to describe economics the management of risk and insurance to explain situations in which one party is placed at disadvantage because of the actions of another.   Moral danger is when there’s an imbalance of data among two people, and an alteration in the behaviour of one of them occurs when an agreement …

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What is Money?

The world revolves around. The economies are based upon the trading of cash to purchase goods and services. The economists define the definition of money, its origins from and the value it has. These are the many facets of money. Medium of Exchange Before the advent of the exchange medium–that is, money–people used to trade for the items and …

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Performativity

What is Performativity in Economics? The theory of performativity suggests that financial or economic models instead of objectively assessing the reality of a certain aspect rather, help shape the reality of that particular aspect to what the model portrays. In other words, it is the idea that economic theory doesn’t just define what the universe is, …

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Efficiency Wages

What are the The Wages for Efficiency? In the field of labor economics efficiency wages are an amount of money which are paid to employees above that of the the minimum wage in order to keep the most skilled and productive workforce. The theory of efficiency wage states that an employer should pay its employees at a high …

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The Bullwhip Effect

What is What is Bullwhip Effect? The bullwhip effect describes an instance wherein tiny fluctuations of consumption in the retailer end distribution chain get amplified when moving through into the supply chain, from end of the retail chain up to manufacturing. This occurs when a retailer alters the amount of the product it purchases through wholesalers depending on a slight shift in the …

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What Effects Does Education and Training Affect the Economy

Both can bring benefits and assist in eliminating inequities What does a country’s educational system affect the economic growth of its country? Why do people with degrees from college earn much more than those with no degrees? Understanding the way that education and training interact along with economy could help to explain why certain businesses, workers and economies prosper …

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