Economics Principles

When you are studying economics, you'll need to know a few principles. These include the Real/nominal principle, the Division of labor, and Imperfect competition. These economics principles are important to understand because they affect how we make decisions in the world. Understanding these principles will help you understand what makes a business successful. Real/nominal principle The Real/Nominal Principle is one of the most fundamental ideas in economics. The term real value refers to the actual amount of goods and services that a given amount of money can buy. The idea is very important when you are considering exchange rates, inflation, and other factors. There are two main ways to calculate the real/nominal interest rate. One method is based on the Consumer Price Index. The CPI measures inflation and shows the real value of a given quantity. The real value of a given quantity is equal to the nominal value plus the rate of change. Cost vs benefit The cost-benefit principle ...