What is the Natural Rate of Interest? The natural rate of interest is also called the neutral interest rate, neutral rate, r* (r-star), and the long-run equilibrium interest rate. This interest rate is the theoretical short-term interest rate that would support the economy at maximum output or full employment GDP while keeping inflation constant. The…
What is the Neutrality of Money? A staple in classical economics, the neutrality of money suggests that changes in the supply of money in an economy only affect nominal economic variables such as exchange rates, wages, and the prices of goods and services. According to the theory, changes in the money supply do not affect…
What is Full Employment GDP? Full employment GDP is a hypothetical GDP level which an economy would achieve if it reported full employment. That is, it’s the GDP level corresponding to zero unemployment in the economy. By definition, full employment GDP is Pareto efficient, i.e., the economy can’t increase aggregate output without increasing the level…
Loan Features Loans come with different features that can change the security of the loan, the payments on the loan, and the interest rate of the loan. The main features include secured versus unsecured loans, amortizing versus non-amortizing loans, and fixed-rate versus variable-rate (floating) loans. Secured vs. Unsecured Loans One loan feature looks at how…
What are the Types of Credit? The three main types of credit are revolving credit, installment, and open credit. Credit enables people to purchase goods or services using borrowed money. The lender expects to receive the payment back with extra money (called interest) after a certain amount of time. Revolving Credit A line of credit…
What is a Currency Crisis? A currency crisis can be broadly defined as any situation in the foreign exchange markets where a currency suddenly and/or unexpectedly loses substantial value relative to other currencies. In most cases, a currency crisis is not an isolated event and usually follows a financial or socio-political crisis. Although modern currency…
What is Customer Renewal Rate? Customer renewal rate, also known as customer retention rate or renewal rate, is the percentage rate at which a company’s customers extend their relationships with the company (such as a subscription or membership). It is an important indicator of a company’s growth prospects. This metric is a critical measure of…
What Is Pay-Per-Click (PPC)? Pay-per-click (PPC) is a digital advertising model where advertisers pay a publisher — typically a search engine or social media platform — every time a user clicks their ad. PPC is also called cost-per-click (CPC) advertising. This model allows businesses to “buy” visits to their website rather than earning them organically…
What is Customer Engagement Score (CES)? Customer engagement score (CES), also known as engagement score, is a single quantitative metric that evaluates the engagement of customers and free trial prospects. CES is one of the key metrics for online businesses, particularly companies operating on the software-as-a-service (SaaS) business model. Unlike “offline” businesses, their online counterparts…
