Economics effects Economics effects The accelerator effect in economics refers to a positive effect on private fixed investment of the growth of the market economy (measured e.g. by Gross Domestic Product). Rising GDP (an economic boom or prosperity) implies that businesses in general see rising profits, increased sales and cash flow, and greater use of existing capacity. This usually implies that profit expectations and business confidence rise, encouraging businesses to build more factories and other buildings and to install more machinery. (This expenditure is called fixed investment.) This may lead to further growth of the economy through the stimulation of consumer incomes and purchases, i.e., via the multiplier effect. ...more on Wikipedia about "Accelerator effect"
In macroeconomics automatic stabilisers work as a tool to dampen fluctuations in real GDP without any explicit policy action by the government. ...more on Wikipedia about "Automatic stabiliser"
The Balassa-Samuelson effect is either of two related things: ...more on Wikipedia about "Balassa-Samuelson effect"
The bandwagon effect is the observation that people often do (or believe) things because many other people do (or believe) the same. The effect is often pejoratively referred to as herd instinct, particularly as applied to adolescents. Without examining the merits of the particular thing, people tend to "follow the crowd." The bandwagon effect is the reason for the bandwagon fallacy's success. ...more on Wikipedia about "Bandwagon effect"
The catch-up effect, also called the theory of convergence, states that poorer economies tend to grow faster than richer economies. Therefore, all economies will eventually converge in terms of per capita income. ...more on Wikipedia about "Catch-up effect"
The Keynes effect is a term used in economics to describe a situation where a change in interest rates affects expenditure more than it affects savings. As prices fall, a given nominal amount of money will become a larger real amount. As a result the interest rate will fall and investment demanded rise. This Keynes effect does not occur in the liquidity trap. ...more on Wikipedia about "Keynes effect"
In economics, a multiplier effect – or, more completely, the spending/income multiplier effect – occurs when a change in spending causes a disproportionate change in aggregate demand. It is particularly associated with Keynesian economics; some other schools of economic thought reject or downplay the importance of multiplier effects, particularly in the long run. ...more on Wikipedia about "Multiplier (economics)" www.shortopedia.com never sleeps.
The network effect causes a good or service to have a value to a potential customer dependent on the number of customers already owning that good or using that service. Metcalfe's law states that the total value of a good or service that possesses a network effect is roughly proportional to the square of the number of customers already owning that good or using that service. ...more on Wikipedia about "Network effect"
The Penn effect is the economic finding that real income ratios between high and low income countries are systematically exaggerated by GDP conversion at market exchange rates. It has been a consistent econometric result for at least fifty years. ...more on Wikipedia about "Penn effect"
The Pigou effect is an economics term that refers to the stimulation of output & employment caused by increasing consumption due to a rise in real balances of wealth, particularly during deflation ...more on Wikipedia about "Pigou effect"
The sow's ear effect is a term used in economics to describe when a country is unable to raise its productivity or per capita gross domestic product relative to other countries of similar development despite adjustments in macroeconomic policy, such as the exchange rate or the interest rate. This is due to deficiencies in on the supply side of the economy. This could be for reasons such as a poorly skilled labour force. ...more on Wikipedia about "Sow's ear effect"
In economics the trickle-down effect is believed to be central to conservative economic theory, despite the fact that, according to laissez-faire economist Thomas Sowell, no conservative economist has ever advocated such a theory ** . Of course, the validity of this belief depends on one's definition of both "trickle-down" and "conservatism". ...more on Wikipedia about "Trickle down effect"
Wealth elasticity of demand in microeconomics is the proportional change in the consumption of a good caused by unanticipated net wealth changes (as opposed to changes in personnel income). Measuring and accounting for the variability in this elasticity is a continuing problem in Behavioral finance and Consumer theory. ...more on Wikipedia about "Wealth elasticity of demand"
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