Define the Following Terms and Explain Their Importance to the Study

question 54

Essay

Define the following terms and explain their importance to the study of macroeconomics.
a. velocity
b. equation of exchange
c. monetarism
d. automatic stabilizer

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Definitions:

Comparative Advantage

Total output is greatest when each product is made by the country that has the lowest opportunity cost.

Free Trade

The absence of artificial (government) barriers to trade among individuals and firms in different nations.

Economic Inefficiency

A situation where resources are not allocated optimally, leading to waste or loss in the potential value of output.

Hollow Corporation

A business model where a company outsources most of its production processes, keeping only core functions such as design, marketing, and branding in-house.