What is a Horizontal Market? A Horizontal Market is a market that is present in a wide range of industries. A business operating in a horizontal market will have consumers and purchasers across different sectors of the economy. So, a business that sells to multiple industries is in a horizontal market. The Office Supplies market…
What is Supplier Power? In Porter’s Five Forces, supplier power is the degree of control a provider of goods or services can exert on its buyers. Supplier power is linked to the ability of suppliers to increase prices, decrease quality, or limit the number of products they will sell. Usually, the number of suppliers of…
What is Inflation? Inflation is an economic concept that refers to an increase in the price level of goods over a specified period. The rise in the price level signifies that the currency in a given economy loses purchasing power (i.e., less can be bought with the same amount of money). The causes of inflation…
What is Stagflation? Stagflation is an economic event in which the inflation rate is high, economic growth rate slows, and unemployment remains steadily high. Such an unfavorable combination is feared and can be a dilemma for governments since most actions designed to lower inflation may raise unemployment levels, and policies designed to decrease unemployment may…
The Great Depression The Great Depression was a worldwide economic depression that took place from the late 1920s through the 1930s. For decades, debates went on about what caused the economic catastrophe, and economists remain split over a number of different schools of thought. In broad terms, the event was most likely caused by overly…
What is Economic Exposure? Economic exposure, also sometimes called operating exposure, is a measure of the change in the future cash flows of a company as a result of unexpected changes in foreign exchange rates (FX). Economic exposure cannot be easily mitigated because it is caused by the unpredictable volatility of currency exchange rates. Increasing…
What is Deflation? Deflation is a decrease in the general price level of goods and services. Put another way, deflation is negative inflation. When it occurs, the value of currency grows over time. Thus, more goods and services can be purchased for the same amount of money. Deflation is widely regarded as an economic “problem”…
What is Absolute Advantage? In economics, absolute advantage refers to the capacity of any economic agent, either an individual or a group, to produce a larger quantity of a product than its competitors. Introduced by Scottish economist, Adam Smith, in his 1776 work, “An Inquiry into the Nature and Causes of the Wealth of Nations,”…
What is Roll Yield? Roll yield is a type of return in commodity futures investing. It is driven by the difference in the price of shorter-dated, closer to maturity commodity contracts and their longer-dated counterparts. A futures contract is a promise to either buy or sell a commodity in the future but at a pre-determined…
What are Hard vs Soft Commodities? Before we discuss hard vs soft commodities, let us discuss what a commodity is. The term commodity is an umbrella term for economic goods that are fungible, i.e., can be freely brought and sold. The commodities produced by a country include the raw materials and/or primary agricultural products mined,…
