The capital of a business is the money it has available to pay for its day-to-day operations and to finance its future growth.
The four main types of capital include working capital, debt capital, equity and trading capital. Trading capital is used by brokerage companies and other financial institutions.
Any borrowed capital is offset by a debt obligation on the balance sheet.
A company’s capital structure determines what combination of these types of capital it uses to finance its business.
Economists look at the capital of a family, business, or the entire economy to assess how efficiently it uses its resources.
An economist is an expert who studies the relationship between a society’s resources and its production or output, using a number of different indicators to predict future trends.
An absolute advantage is when a manufacturer can provide a greater quantity of a product or service for the same price or the same quantity at a lower price than its competitors.
Animal spirits come from the Latin spiritus animalis: “breath that awakens the human mind.” It was introduced by the British economist John Maynard Keynes in 1936.
Autarky refers to a state of self-sufficiency and is commonly used to describe countries or economies that seek to reduce their dependence on international trade.
Automatic Stabilizers is a permanent government policy that automatically adjusts tax rates and transfers payments in a way that stabilizes income, consumption, and business spending over the business cycle.
The balance of trade (BOT) is the difference between the value of a country’s imports and exports over a given period and is the largest component of a country’s balance of payments (BOP).
“Best Effort” is a legal term that represents the obligation of a party to a contract to take all possible steps to fulfill the terms of the agreement.