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The sentence contains offensive content. Cancel Submit. Your feedback will be reviewed. You can also find related words, phrases, and synonyms in the topics: Stock markets. There is no doubt that spread betting is a more expensive way to play the market than dealing through a broker.
The financial spread betting market is booming. FINANCE a form of gambling in which you try to win money by saying what the result of events such as sports games will be:. With spread betting , the more right you are, the more you can win. But if you are wrong , you can lose more than your stake. Examples of spread betting.
If its status is changed, the bookmakers may challenge this monopoly, particularly in the light of the spread of betting as an industry, and spread betting. From the Hansard archive. Example from the Hansard archive. Contains Parliamentary information licensed under the Open Parliament Licence v3. Alternatively, will the board go into what is now generally accepted to be the thinking man's type of betting—that is, spread betting on sporting events and others of that kind?
These examples are from corpora and from sources on the web. Any opinions in the examples do not represent the opinion of the Cambridge Dictionary editors or of Cambridge University Press or its licensors. Online it offers sports betting, online poker, online bingo, online casino games, and spread betting.
From Wikipedia. Spread betting can carry a high level of risk, with potential losses or gains far in excess of the original money wagered. He decided to set up his own company with the intention of making spread betting more accessible. Translations of spread betting in Chinese Traditional. Need a translator? Translator tool.
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|Super bowl public betting trends||For example, the UK FSA rules for CFD providers include that they must assess the suitability of CFDs for each new client based on their experience and must provide a risk warning espace forme betting sites to all new clients, based on a general template devised by the FSA. Within Europe, any provider based in any member country can offer the products to all member countries under MiFID and many of the European financial regulators responded with new rules on CFDs after the warning. The advance of cryptos. Examples of spread betting. Hidden categories: Articles lacking sources from June All articles lacking sources Articles with topics of unclear notability from June All articles with topics of unclear notability. FINANCE a form of gambling in which you try to win money by saying what the result of events such as sports games will be:. This section possibly contains original research.|
|Hull moving average binary options||Elizabeth Uviebinene. CFDs costs tend to be lower for short periods and have a much wider range of underlying products. Back to the top. When a harvest is too small to satisfy consumption at its normal rate, speculators come in, hoping to profit from the scarcity by buying. Within Europe, any provider based in any member country can offer the products to all member countries under MiFID and many of the European financial regulators responded with new rules on CFDs after the warning. It is this very risk that drives the use of CFDs, either to speculate on movements in financial markets or to hedge existing positions in other products.|
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Generally, the more popular the security traded, the tighter the spread, lowering the entry cost. In addition to the absence of commissions and taxes, the other major benefit of spread betting is that the required capital outlay is dramatically lower. The use of leverage works both ways, of course, and herein lies the danger of spread betting.
While you can quickly make a large amount of money on a relatively small deposit, you can lose it just as fast. If the price of Vodaphone fell in the above example, the bettor may eventually have been asked to increase the deposit or even have had the position closed out automatically. In such a situation, stock market traders have the advantage of being able to wait out a down move in the market, if they still believe the price is eventually heading higher. Despite the risk that comes with the use of high leverage, spread betting offers effective tools to limit losses.
Risk can also be mitigated by the use of arbitrage, betting two ways simultaneously. Arbitrage opportunities arise when the prices of identical financial instruments vary in different markets or among different companies. As a result, the financial instrument can be bought low and sold high simultaneously. An arbitrage transaction takes advantage of these market inefficiencies to gain risk-free returns. Due to widespread access to information and increased communication, opportunities for arbitrage in spread betting and other financial instruments have been limited.
However, spread betting arbitrage can still occur when two companies take separate stances on the market while setting their own spreads. At the expense of the market maker, an arbitrageur bets on spreads from two different companies. Simply put, the trader buys low from one company and sells high in another. Whether the market increases or decreases does not dictate the amount of return. Failure to complete transactions smoothly can lead to significant losses for the arbitrageur.
Continually developing in sophistication with the advent of electronic markets, spread betting has successfully lowered the barriers to entry and created a vast and varied alternative marketplace. Arbitrage, in particular, lets investors exploit the difference in prices between two markets, specifically when two companies offer different spreads on identical assets.
The temptation and perils of being overleveraged continue to be a major pitfall in spread betting. However, the low capital outlay necessary, risk management tools available, and tax benefits make spread betting a compelling opportunity for speculators.
Trading Instruments. Your Money. Personal Finance. Your Practice. Popular Courses. Table of Contents Expand. Origins of Spread Betting. Stock Market Trade vs Spread Bet. Spread Betting Arbitrage. The Bottom Line. Key Takeaways Spread betting allows traders to bet on the direction of a financial market without actually owning the underlying security. Spread betting is sometimes promoted as a tax-free, commission-free activity that allows investors to speculate in both bull and bear markets, but this remains banned in the U.
Like stock trades, spread bet risks can be mitigated using stop loss and take profit orders. Despite its American roots, spread betting is illegal in the United States. At the same time, the decisions choices made by the same actors, while they are pursuing their own interest, determine the level of output production , consumption, savings, and investment, in an economy, as well as the remuneration distribution paid to the owners of labour in the form of wages , capital in the form of profits and land in the form of rent.
Because of the autonomous actions of rational interacting agents, the economy is a complex adaptive system. Keynesian economics derives from John Maynard Keynes , in particular his book The General Theory of Employment, Interest and Money , which ushered in contemporary macroeconomics as a distinct field.
Keynes attempted to explain in broad theoretical detail why high labour-market unemployment might not be self-correcting due to low " effective demand " and why even price flexibility and monetary policy might be unavailing. The term "revolutionary" has been applied to the book in its impact on economic analysis. Keynesian economics has two successors. Post-Keynesian economics also concentrates on macroeconomic rigidities and adjustment processes.
Research on micro foundations for their models is represented as based on real-life practices rather than simple optimizing models. It is generally associated with the University of Cambridge and the work of Joan Robinson. New-Keynesian economics is also associated with developments in the Keynesian fashion. Within this group researchers tend to share with other economists the emphasis on models employing micro foundations and optimizing behaviour but with a narrower focus on standard Keynesian themes such as price and wage rigidity.
These are usually made to be endogenous features of the models, rather than simply assumed as in older Keynesian-style ones. The Chicago School of economics is best known for its free market advocacy and monetarist ideas. According to Milton Friedman and monetarists, market economies are inherently stable if the money supply does not greatly expand or contract. Ben Bernanke , former Chairman of the Federal Reserve, is among the economists today generally accepting Friedman's analysis of the causes of the Great Depression.
Milton Friedman effectively took many of the basic principles set forth by Adam Smith and the classical economists and modernized them. One example of this is his article in the 13 September issue of The New York Times Magazine , in which he claims that the social responsibility of business should be "to use its resources and engage in activities designed to increase its profits Other well-known schools or trends of thought referring to a particular style of economics practised at and disseminated from well-defined groups of academicians that have become known worldwide, include the Austrian School , the Freiburg School , the School of Lausanne , post-Keynesian economics and the Stockholm school.
Contemporary mainstream economics is sometimes separated [ by whom? Within macroeconomics there is, in general order of their historical appearance in the literature; classical economics , neoclassical economics, Keynesian economics , the neoclassical synthesis, monetarism , new classical economics , New Keynesian economics  and the new neoclassical synthesis. Economic systems is the branch of economics that studies the methods and institutions by which societies determine the ownership, direction, and allocation of economic resources.
An economic system of a society is the unit of analysis. Among contemporary systems at different ends of the organizational spectrum are socialist systems and capitalist systems , in which most production occurs in respectively state-run and private enterprises. In between are mixed economies. A common element is the interaction of economic and political influences, broadly described as political economy. Comparative economic systems studies the relative performance and behaviour of different economies or systems.
The U. Export-Import Bank defines a Marxist—Leninist state as having a centrally planned economy. Mainstream economic theory relies upon a priori quantitative economic models , which employ a variety of concepts. Theory typically proceeds with an assumption of ceteris paribus , which means holding constant explanatory variables other than the one under consideration.
When creating theories, the objective is to find ones which are at least as simple in information requirements, more precise in predictions, and more fruitful in generating additional research than prior theories. In microeconomics , principal concepts include supply and demand , marginalism , rational choice theory , opportunity cost , budget constraints , utility , and the theory of the firm. In development economics , slower growth in developed nations has been sometimes predicted because of the declining marginal returns of investment and capital, and this has been observed in the Four Asian Tigers.
Sometimes an economic hypothesis is only qualitative , not quantitative. Expositions of economic reasoning often use two-dimensional graphs to illustrate theoretical relationships. At a higher level of generality, Paul Samuelson 's treatise Foundations of Economic Analysis used mathematical methods beyond graphs to represent the theory, particularly as to maximizing behavioural relations of agents reaching equilibrium. The book focused on examining the class of statements called operationally meaningful theorems in economics, which are theorems that can conceivably be refuted by empirical data.
Microeconomics examines how entities, forming a market structure , interact within a market to create a market system. These entities include private and public players with various classifications, typically operating under scarcity of tradable units and light government regulation. In theory, in a free market the aggregates sum of of quantity demanded by buyers and quantity supplied by sellers may reach economic equilibrium over time in reaction to price changes; in practice, various issues may prevent equilibrium, and any equilibrium reached may not necessarily be morally equitable.
For example, if the supply of healthcare services is limited by external factors , the equilibrium price may be unaffordable for many who desire it but cannot pay for it. Various market structures exist. In perfectly competitive markets , no participants are large enough to have the market power to set the price of a homogeneous product. In other words, every participant is a "price taker" as no participant influences the price of a product. In the real world, markets often experience imperfect competition.
Forms include monopoly in which there is only one seller of a good , duopoly in which there are only two sellers of a good , oligopoly in which there are few sellers of a good , monopolistic competition in which there are many sellers producing highly differentiated goods , monopsony in which there is only one buyer of a good , and oligopsony in which there are few buyers of a good. Unlike perfect competition, imperfect competition invariably means market power is unequally distributed. Firms under imperfect competition have the potential to be "price makers", which means that, by holding a disproportionately high share of market power, they can influence the prices of their products.
Microeconomics studies individual markets by simplifying the economic system by assuming that activity in the market being analysed does not affect other markets. This method of analysis is known as partial-equilibrium analysis supply and demand. This method aggregates the sum of all activity in only one market.
General-equilibrium theory studies various markets and their behaviour. It aggregates the sum of all activity across all markets. This method studies both changes in markets and their interactions leading towards equilibrium. In microeconomics, production is the conversion of inputs into outputs. It is an economic process that uses inputs to create a commodity or a service for exchange or direct use.
Production is a flow and thus a rate of output per period of time. Distinctions include such production alternatives as for consumption food, haircuts, etc. Opportunity cost is the economic cost of production: the value of the next best opportunity foregone. Choices must be made between desirable yet mutually exclusive actions.
It has been described as expressing "the basic relationship between scarcity and choice ". Part of the cost of making pretzels is that neither the flour nor the morning are available any longer, for use in some other way.
The opportunity cost of an activity is an element in ensuring that scarce resources are used efficiently, such that the cost is weighed against the value of that activity in deciding on more or less of it. Opportunity costs are not restricted to monetary or financial costs but could be measured by the real cost of output forgone , leisure , or anything else that provides the alternative benefit utility.
Inputs used in the production process include such primary factors of production as labour services , capital durable produced goods used in production, such as an existing factory , and land including natural resources. Other inputs may include intermediate goods used in production of final goods, such as the steel in a new car. Economic efficiency measures how well a system generates desired output with a given set of inputs and available technology.
Efficiency is improved if more output is generated without changing inputs, or in other words, the amount of "waste" is reduced. A widely accepted general standard is Pareto efficiency , which is reached when no further change can make someone better off without making someone else worse off. The production—possibility frontier PPF is an expository figure for representing scarcity, cost, and efficiency. In the simplest case an economy can produce just two goods say "guns" and "butter".
The PPF is a table or graph as at the right showing the different quantity combinations of the two goods producible with a given technology and total factor inputs, which limit feasible total output. Each point on the curve shows potential total output for the economy, which is the maximum feasible output of one good, given a feasible output quantity of the other good. Scarcity is represented in the figure by people being willing but unable in the aggregate to consume beyond the PPF such as at X and by the negative slope of the curve.
This is because increasing output of one good requires transferring inputs to it from production of the other good, decreasing the latter. The slope of the curve at a point on it gives the trade-off between the two goods. It measures what an additional unit of one good costs in units forgone of the other good, an example of a real opportunity cost.
Thus, if one more Gun costs units of butter, the opportunity cost of one Gun is Butter. Along the PPF , scarcity implies that choosing more of one good in the aggregate entails doing with less of the other good. Still, in a market economy , movement along the curve may indicate that the choice of the increased output is anticipated to be worth the cost to the agents. By construction, each point on the curve shows productive efficiency in maximizing output for given total inputs.
A point inside the curve as at A , is feasible but represents production inefficiency wasteful use of inputs , in that output of one or both goods could increase by moving in a northeast direction to a point on the curve. Examples cited of such inefficiency include high unemployment during a business-cycle recession or economic organization of a country that discourages full use of resources.
Being on the curve might still not fully satisfy allocative efficiency also called Pareto efficiency if it does not produce a mix of goods that consumers prefer over other points. Much applied economics in public policy is concerned with determining how the efficiency of an economy can be improved. Recognizing the reality of scarcity and then figuring out how to organize society for the most efficient use of resources has been described as the "essence of economics", where the subject "makes its unique contribution.
Specialization is considered key to economic efficiency based on theoretical and empirical considerations. According to theory, this may give a comparative advantage in production of goods that make more intensive use of the relatively more abundant, thus relatively cheaper, input. Even if one region has an absolute advantage as to the ratio of its outputs to inputs in every type of output, it may still specialize in the output in which it has a comparative advantage and thereby gain from trading with a region that lacks any absolute advantage but has a comparative advantage in producing something else.
It has been observed that a high volume of trade occurs among regions even with access to a similar technology and mix of factor inputs, including high-income countries. This has led to investigation of economies of scale and agglomeration to explain specialization in similar but differentiated product lines, to the overall benefit of respective trading parties or regions. The general theory of specialization applies to trade among individuals, farms, manufacturers, service providers, and economies.
Among each of these production systems, there may be a corresponding division of labour with different work groups specializing, or correspondingly different types of capital equipment and differentiated land uses. An example that combines features above is a country that specializes in the production of high-tech knowledge products, as developed countries do, and trades with developing nations for goods produced in factories where labour is relatively cheap and plentiful, resulting in different in opportunity costs of production.
More total output and utility thereby results from specializing in production and trading than if each country produced its own high-tech and low-tech products. Theory and observation set out the conditions such that market prices of outputs and productive inputs select an allocation of factor inputs by comparative advantage, so that relatively low-cost inputs go to producing low-cost outputs.
In the process, aggregate output may increase as a by-product or by design. A measure of gains from trade is the increased income levels that trade may facilitate. Prices and quantities have been described as the most directly observable attributes of goods produced and exchanged in a market economy.
In microeconomics , it applies to price and output determination for a market with perfect competition , which includes the condition of no buyers or sellers large enough to have price-setting power. For a given market of a commodity , demand is the relation of the quantity that all buyers would be prepared to purchase at each unit price of the good. Demand is often represented by a table or a graph showing price and quantity demanded as in the figure.
Demand theory describes individual consumers as rationally choosing the most preferred quantity of each good, given income, prices, tastes, etc. A term for this is "constrained utility maximization" with income and wealth as the constraints on demand. Here, utility refers to the hypothesized relation of each individual consumer for ranking different commodity bundles as more or less preferred.
The law of demand states that, in general, price and quantity demanded in a given market are inversely related. That is, the higher the price of a product, the less of it people would be prepared to buy other things unchanged. As the price of a commodity falls, consumers move toward it from relatively more expensive goods the substitution effect. In addition, purchasing power from the price decline increases ability to buy the income effect. Other factors can change demand; for example an increase in income will shift the demand curve for a normal good outward relative to the origin, as in the figure.
All determinants are predominantly taken as constant factors of demand and supply. Supply is the relation between the price of a good and the quantity available for sale at that price. It may be represented as a table or graph relating price and quantity supplied. Producers, for example business firms, are hypothesized to be profit maximizers , meaning that they attempt to produce and supply the amount of goods that will bring them the highest profit.
Supply is typically represented as a function relating price and quantity, if other factors are unchanged. That is, the higher the price at which the good can be sold, the more of it producers will supply, as in the figure. The higher price makes it profitable to increase production. Just as on the demand side, the position of the supply can shift, say from a change in the price of a productive input or a technical improvement. The "Law of Supply" states that, in general, a rise in price leads to an expansion in supply and a fall in price leads to a contraction in supply.
Here as well, the determinants of supply, such as price of substitutes, cost of production, technology applied and various factors inputs of production are all taken to be constant for a specific time period of evaluation of supply. Market equilibrium occurs where quantity supplied equals quantity demanded, the intersection of the supply and demand curves in the figure above.
At a price below equilibrium, there is a shortage of quantity supplied compared to quantity demanded. This is posited to bid the price up. At a price above equilibrium, there is a surplus of quantity supplied compared to quantity demanded. This pushes the price down. The model of supply and demand predicts that for given supply and demand curves, price and quantity will stabilize at the price that makes quantity supplied equal to quantity demanded. Similarly, demand-and-supply theory predicts a new price-quantity combination from a shift in demand as to the figure , or in supply.
People frequently do not trade directly on markets. Instead, on the supply side, they may work in and produce through firms. The most obvious kinds of firms are corporations , partnerships and trusts. According to Ronald Coase , people begin to organize their production in firms when the costs of doing business becomes lower than doing it on the market.
In perfectly competitive markets studied in the theory of supply and demand, there are many producers, none of which significantly influence price. Industrial organization generalizes from that special case to study the strategic behaviour of firms that do have significant control of price. It considers the structure of such markets and their interactions. Common market structures studied besides perfect competition include monopolistic competition, various forms of oligopoly, and monopoly.
Managerial economics applies microeconomic analysis to specific decisions in business firms or other management units. It draws heavily from quantitative methods such as operations research and programming and from statistical methods such as regression analysis in the absence of certainty and perfect knowledge. A unifying theme is the attempt to optimize business decisions, including unit-cost minimization and profit maximization, given the firm's objectives and constraints imposed by technology and market conditions.
Uncertainty in economics is an unknown prospect of gain or loss, whether quantifiable as risk or not. Without it, household behaviour would be unaffected by uncertain employment and income prospects, financial and capital markets would reduce to exchange of a single instrument in each market period, and there would be no communications industry.
Game theory is a branch of applied mathematics that considers strategic interactions between agents, one kind of uncertainty. It provides a mathematical foundation of industrial organization , discussed above, to model different types of firm behaviour, for example in a solipsistic industry few sellers , but equally applicable to wage negotiations, bargaining , contract design , and any situation where individual agents are few enough to have perceptible effects on each other.
In behavioural economics , it has been used to model the strategies agents choose when interacting with others whose interests are at least partially adverse to their own. In this, it generalizes maximization approaches developed to analyse market actors such as in the supply and demand model and allows for incomplete information of actors.
It has significant applications seemingly outside of economics in such diverse subjects as formulation of nuclear strategies , ethics , political science , and evolutionary biology. Risk aversion may stimulate activity that in well-functioning markets smooths out risk and communicates information about risk, as in markets for insurance , commodity futures contracts , and financial instruments.
Financial economics or simply finance describes the allocation of financial resources. It also analyses the pricing of financial instruments, the financial structure of companies, the efficiency and fragility of financial markets ,  financial crises , and related government policy or regulation. Some market organizations may give rise to inefficiencies associated with uncertainty. Based on George Akerlof 's " Market for Lemons " article, the paradigm example is of a dodgy second-hand car market.
Customers without knowledge of whether a car is a "lemon" depress its price below what a quality second-hand car would be. Related problems in insurance are adverse selection , such that those at most risk are most likely to insure say reckless drivers , and moral hazard , such that insurance results in riskier behaviour say more reckless driving.
Both problems may raise insurance costs and reduce efficiency by driving otherwise willing transactors from the market " incomplete markets ". Moreover, attempting to reduce one problem, say adverse selection by mandating insurance, may add to another, say moral hazard. Information economics , which studies such problems, has relevance in subjects such as insurance, contract law , mechanism design , monetary economics , and health care.
The term " market failure " encompasses several problems which may undermine standard economic assumptions. Although economists categorize market failures differently, the following categories emerge in the main texts. Information asymmetries and incomplete markets may result in economic inefficiency but also a possibility of improving efficiency through market, legal, and regulatory remedies, as discussed above. Natural monopoly , or the overlapping concepts of "practical" and "technical" monopoly, is an extreme case of failure of competition as a restraint on producers.
Extreme economies of scale are one possible cause. Public goods are goods which are under-supplied in a typical market. The defining features are that people can consume public goods without having to pay for them and that more than one person can consume the good at the same time. Externalities occur where there are significant social costs or benefits from production or consumption that are not reflected in market prices.
For example, air pollution may generate a negative externality, and education may generate a positive externality less crime, etc. Governments often tax and otherwise restrict the sale of goods that have negative externalities and subsidize or otherwise promote the purchase of goods that have positive externalities in an effort to correct the price distortions caused by these externalities.
In many areas, some form of price stickiness is postulated to account for quantities, rather than prices, adjusting in the short run to changes on the demand side or the supply side. This includes standard analysis of the business cycle in macroeconomics. Analysis often revolves around causes of such price stickiness and their implications for reaching a hypothesized long-run equilibrium. Examples of such price stickiness in particular markets include wage rates in labour markets and posted prices in markets deviating from perfect competition.
Some specialized fields of economics deal in market failure more than others. The economics of the public sector is one example. Much environmental economics concerns externalities or " public bads ". Policy options include regulations that reflect cost-benefit analysis or market solutions that change incentives, such as emission fees or redefinition of property rights.
Public finance is the field of economics that deals with budgeting the revenues and expenditures of a public sector entity, usually government. The subject addresses such matters as tax incidence who really pays a particular tax , cost-benefit analysis of government programmes, effects on economic efficiency and income distribution of different kinds of spending and taxes, and fiscal politics.
The latter, an aspect of public choice theory , models public-sector behaviour analogously to microeconomics, involving interactions of self-interested voters, politicians, and bureaucrats. Much of economics is positive , seeking to describe and predict economic phenomena. Normative economics seeks to identify what economies ought to be like. Welfare economics is a normative branch of economics that uses microeconomic techniques to simultaneously determine the allocative efficiency within an economy and the income distribution associated with it.
It attempts to measure social welfare by examining the economic activities of the individuals that comprise society. Macroeconomics examines the economy as a whole to explain broad aggregates and their interactions "top down", that is, using a simplified form of general-equilibrium theory. It also studies effects of monetary policy and fiscal policy. Since at least the s, macroeconomics has been characterized by further integration as to micro-based modelling of sectors, including rationality of players, efficient use of market information, and imperfect competition.
Macroeconomic analysis also considers factors affecting the long-term level and growth of national income. Such factors include capital accumulation, technological change and labour force growth. The same factors are used to explain differences in the level of output per capita between countries, in particular why some countries grow faster than others, and whether countries converge at the same rates of growth.
Much-studied factors include the rate of investment , population growth , and technological change. These are represented in theoretical and empirical forms as in the neoclassical and endogenous growth models and in growth accounting. The economics of a depression were the spur for the creation of "macroeconomics" as a separate discipline. Keynes contended that aggregate demand for goods might be insufficient during economic downturns, leading to unnecessarily high unemployment and losses of potential output.
He therefore advocated active policy responses by the public sector , including monetary policy actions by the central bank and fiscal policy actions by the government to stabilize output over the business cycle.
Over the years, understanding of the business cycle has branched into various research programmes , mostly related to or distinct from Keynesianism. The neoclassical synthesis refers to the reconciliation of Keynesian economics with neoclassical economics , stating that Keynesianism is correct in the short run but qualified by neoclassical-like considerations in the intermediate and long run.
New classical macroeconomics , as distinct from the Keynesian view of the business cycle, posits market clearing with imperfect information. It includes Friedman's permanent income hypothesis on consumption and " rational expectations " theory,  led by Robert Lucas , and real business cycle theory. In contrast, the new Keynesian approach retains the rational expectations assumption, however it assumes a variety of market failures.
In particular, New Keynesians assume prices and wages are " sticky ", which means they do not adjust instantaneously to changes in economic conditions. Thus, the new classicals assume that prices and wages adjust automatically to attain full employment, whereas the new Keynesians see full employment as being automatically achieved only in the long run, and hence government and central-bank policies are needed because the "long run" may be very long. The amount of unemployment in an economy is measured by the unemployment rate, the percentage of workers without jobs in the labour force.
The labour force only includes workers actively looking for jobs. People who are retired, pursuing education, or discouraged from seeking work by a lack of job prospects are excluded from the labour force. Unemployment can be generally broken down into several types that are related to different causes. Classical models of unemployment occurs when wages are too high for employers to be willing to hire more workers. Consistent with classical unemployment, frictional unemployment occurs when appropriate job vacancies exist for a worker, but the length of time needed to search for and find the job leads to a period of unemployment.
Structural unemployment covers a variety of possible causes of unemployment including a mismatch between workers' skills and the skills required for open jobs. Structural unemployment is similar to frictional unemployment since both reflect the problem of matching workers with job vacancies, but structural unemployment covers the time needed to acquire new skills not just the short term search process. While some types of unemployment may occur regardless of the condition of the economy, cyclical unemployment occurs when growth stagnates.
Okun's law represents the empirical relationship between unemployment and economic growth. Money is a means of final payment for goods in most price system economies, and is the unit of account in which prices are typically stated. Money has general acceptability, relative consistency in value, divisibility, durability, portability, elasticity in supply, and longevity with mass public confidence.
It includes currency held by the nonbank public and checkable deposits. It has been described as a social convention, like language, useful to one largely because it is useful to others. In the words of Francis Amasa Walker , a well-known 19th-century economist, "Money is what money does" "Money is that money does" in the original.
As a medium of exchange , money facilitates trade. It is essentially a measure of value and more importantly, a store of value being a basis for credit creation. Its economic function can be contrasted with barter non-monetary exchange.
Given a diverse array of produced goods and specialized producers, barter may entail a hard-to-locate double coincidence of wants as to what is exchanged, say apples and a book. Money can reduce the transaction cost of exchange because of its ready acceptability.
Then it is less costly for the seller to accept money in exchange, rather than what the buyer produces. At the level of an economy , theory and evidence are consistent with a positive relationship running from the total money supply to the nominal value of total output and to the general price level.
For this reason, management of the money supply is a key aspect of monetary policy. Governments implement fiscal policy to influence macroeconomic conditions by adjusting spending and taxation policies to alter aggregate demand. When aggregate demand falls below the potential output of the economy, there is an output gap where some productive capacity is left unemployed.
Governments increase spending and cut taxes to boost aggregate demand. Resources that have been idled can be used by the government. For example, unemployed home builders can be hired to expand highways.
Tax cuts allow consumers to increase their spending, which boosts aggregate demand. Both tax cuts and spending have multiplier effects where the initial increase in demand from the policy percolates through the economy and generates additional economic activity. The effects of fiscal policy can be limited by crowding out. When there is no output gap, the economy is producing at full capacity and there are no excess productive resources.
If the government increases spending in this situation, the government uses resources that otherwise would have been used by the private sector, so there is no increase in overall output. Some economists think that crowding out is always an issue while others do not think it is a major issue when output is depressed. Sceptics of fiscal policy also make the argument of Ricardian equivalence. They argue that an increase in debt will have to be paid for with future tax increases, which will cause people to reduce their consumption and save money to pay for the future tax increase.
Under Ricardian equivalence, any boost in demand from tax cuts will be offset by the increased saving intended to pay for future higher taxes. International trade studies determinants of goods-and-services flows across international boundaries. It also concerns the size and distribution of gains from trade.
Policy applications include estimating the effects of changing tariff rates and trade quotas. International finance is a macroeconomic field which examines the flow of capital across international borders, and the effects of these movements on exchange rates. Increased trade in goods, services and capital between countries is a major effect of contemporary globalization.
Development economics examines economic aspects of the economic development process in relatively low-income countries focusing on structural change , poverty , and economic growth. Approaches in development economics frequently incorporate social and political factors. Labor economics seeks to understand the functioning and dynamics of the markets for wage labor. Labor markets function through the interaction of workers and employers.
Labor economics looks at the suppliers of labor services workers , the demands of labor services employers , and attempts to understand the resulting pattern of wages, employment, and income. In economics, labor is a measure of the work done by human beings. It is conventionally contrasted with such other factors of production as land and capital.
There are theories which have developed a concept called human capital referring to the skills that workers possess, not necessarily their actual work , although there are also counter posing macro-economic system theories that think human capital is a contradiction in terms. Welfare economics uses microeconomics techniques to evaluate well-being from allocation of productive factors as to desirability and economic efficiency within an economy , often relative to competitive general equilibrium.
Accordingly, individuals, with associated economic activities, are the basic units for aggregating to social welfare, whether of a group, a community, or a society, and there is no "social welfare" apart from the "welfare" associated with its individual units. According to various random and anonymous surveys of members of the American Economic Association , economists have agreement about the following propositions by percentage:     .
It is often stated that Carlyle gave economics the nickname "the dismal science" as a response to the late 18th century writings of The Reverend Thomas Robert Malthus, who grimly predicted that starvation would result, as projected population growth exceeded the rate of increase in the food supply. However, the actual phrase was coined by Carlyle in the context of a debate with John Stuart Mill on slavery , in which Carlyle argued for slavery, while Mill opposed it.
In The Wealth of Nations , Adam Smith addressed many issues that are currently also the subject of debate and dispute. Smith repeatedly attacks groups of politically aligned individuals who attempt to use their collective influence to manipulate a government into doing their bidding. In Smith's day, these were referred to as factions , but are now more commonly called special interests , a term which can comprise international bankers, corporate conglomerations, outright oligopolies, monopolies, trade unions and other groups.
Economics per se , as a social science, is independent of the political acts of any government or other decision-making organization; however, many policymakers or individuals holding highly ranked positions that can influence other people's lives are known for arbitrarily using a plethora of economic concepts and rhetoric as vehicles to legitimize agendas and value systems , and do not limit their remarks to matters relevant to their responsibilities.
Notwithstanding, economics legitimately has a role in informing government policy. It is, indeed, in some ways an outgrowth of the older field of political economy. Some academic economic journals have increased their efforts to gauge the consensus of economists regarding certain policy issues in hopes of effecting a more informed political environment.
Often there exists a low approval rate from professional economists regarding many public policies. Policy issues featured in one survey of American Economic Association economists include trade restrictions, social insurance for those put out of work by international competition, genetically modified foods, curbside recycling, health insurance several questions , medical malpractice, barriers to entering the medical profession, organ donations, unhealthy foods, mortgage deductions, taxing internet sales, Wal-Mart, casinos, ethanol subsidies, and inflation targeting.
Issues like central bank independence, central bank policies and rhetoric in central bank governors discourse or the premises of macroeconomic policies  monetary and fiscal policy of the state , are focus of contention and criticism.
Deirdre McCloskey has argued that many empirical economic studies are poorly reported, and she and Stephen Ziliak argue that although her critique has been well-received, practice has not improved. Economics has historically been subject to criticism that it relies on unrealistic, unverifiable, or highly simplified assumptions, in some cases because these assumptions simplify the proofs of desired conclusions.
Examples of such assumptions include perfect information , profit maximization and rational choices , axioms of neoclassical economics. Prominent historical mainstream economists such as Keynes  and Joskow observed that much of the economics of their time was conceptual rather than quantitative, and difficult to model and formalize quantitatively.
In a discussion on oligopoly research, Paul Joskow pointed out in that in practice, serious students of actual economies tended to use "informal models" based upon qualitative factors specific to particular industries. Joskow had a strong feeling that the important work in oligopoly was done through informal observations while formal models were "trotted out ex post ". He argued that formal models were largely not important in the empirical work, either, and that the fundamental factor behind the theory of the firm, behaviour, was neglected.
In the s, feminist critiques of neoclassical economic models gained prominence, leading to the formation of feminist economics. Primary criticisms focus on alleged failures to account for: the selfish nature of actors homo economicus ; exogenous tastes; the impossibility of utility comparisons; the exclusion of unpaid work ; and the exclusion of class and gender considerations.
Economics is one social science among several and has fields bordering on other areas, including economic geography , economic history , public choice , energy economics , cultural economics , family economics and institutional economics. Law and economics, or economic analysis of law, is an approach to legal theory that applies methods of economics to law. It includes the use of economic concepts to explain the effects of legal rules, to assess which legal rules are economically efficient , and to predict what the legal rules will be.
Political economy is the interdisciplinary study that combines economics, law, and political science in explaining how political institutions, the political environment, and the economic system capitalist, socialist , mixed influence each other. It studies questions such as how monopoly, rent-seeking behaviour, and externalities should impact government policy. Energy economics is a broad scientific subject area which includes topics related to energy supply and energy demand.
Georgescu-Roegen reintroduced the concept of entropy in relation to economics and energy from thermodynamics , as distinguished from what he viewed as the mechanistic foundation of neoclassical economics drawn from Newtonian physics. His work contributed significantly to thermoeconomics and to ecological economics. He also did foundational work which later developed into evolutionary economics.
More recently, the works of Mark Granovetter , Peter Hedstrom and Richard Swedberg have been influential in this field. Contemporary economics uses mathematics. Economists draw on the tools of calculus , linear algebra , statistics , game theory , and computer science. Economic theories are frequently tested empirically , largely through the use of econometrics using economic data. However, the field of experimental economics is growing, and increasing use is being made of natural experiments.
Statistical methods such as regression analysis are common. Practitioners use such methods to estimate the size, economic significance, and statistical significance "signal strength" of the hypothesized relation s and to adjust for noise from other variables. By such means, a hypothesis may gain acceptance, although in a probabilistic, rather than certain, sense. Acceptance is dependent upon the falsifiable hypothesis surviving tests.
Use of commonly accepted methods need not produce a final conclusion or even a consensus on a particular question, given different tests, data sets , and prior beliefs. Criticisms based on professional standards and non- replicability of results serve as further checks against bias, errors, and over-generalization,   although much economic research has been accused of being non-replicable, and prestigious journals have been accused of not facilitating replication through the provision of the code and data.
In applied economics, input-output models employing linear programming methods are quite common. Large amounts of data are run through computer programs to analyse the impact of certain policies; IMPLAN is one well-known example.
Experimental economics has promoted the use of scientifically controlled experiments. This has reduced the long-noted distinction of economics from natural sciences because it allows direct tests of what were previously taken as axioms. In behavioural economics , psychologist Daniel Kahneman won the Nobel Prize in economics in for his and Amos Tversky 's empirical discovery of several cognitive biases and heuristics.
Similar empirical testing occurs in neuroeconomics. Another example is the assumption of narrowly selfish preferences versus a model that tests for selfish, altruistic, and cooperative preferences. The professionalization of economics, reflected in the growth of graduate programmes on the subject, has been described as "the main change in economics since around ". See Bachelor of Economics and Master of Economics.
In the private sector, professional economists are employed as consultants and in industry, including banking and finance. Economists also work for various government departments and agencies, for example, the national treasury , central bank or bureau of statistics. There are dozens of prizes awarded to economists each year for outstanding intellectual contributions to the field, the most prominent of which is the Nobel Memorial Prize in Economic Sciences , though it is not a Nobel Prize.
From Wikipedia, the free encyclopedia. Redirected from Economic activity. This article is about the social science. For other uses, see Economics disambiguation.
With spread betting , the more right you are, the more you can win. But if you are wrong , you can lose more than your stake. Examples of spread betting. If its status is changed, the bookmakers may challenge this monopoly, particularly in the light of the spread of betting as an industry, and spread betting. From the Hansard archive. Example from the Hansard archive. Contains Parliamentary information licensed under the Open Parliament Licence v3. Alternatively, will the board go into what is now generally accepted to be the thinking man's type of betting—that is, spread betting on sporting events and others of that kind?
These examples are from corpora and from sources on the web. Any opinions in the examples do not represent the opinion of the Cambridge Dictionary editors or of Cambridge University Press or its licensors. Online it offers sports betting, online poker, online bingo, online casino games, and spread betting.
From Wikipedia. Spread betting can carry a high level of risk, with potential losses or gains far in excess of the original money wagered. He decided to set up his own company with the intention of making spread betting more accessible. Translations of spread betting in Chinese Traditional. Need a translator?
Translator tool. What is the pronunciation of spread betting? Browse sprayer. Test your vocabulary with our fun image quizzes. Image credits. Word of the Day astronomer. Blog Blood is thicker than water. Read More. New Words anthropause. February 08, To top. English Business Examples Translations.
CFDs were initially used by hedge funds and institutional traders to cost-effectively gain an exposure to stocks on the London Stock Exchange , partly because they required only a small margin but also, since no physical shares changed hands, it also avoided stamp duty in the United Kingdom. It remains common for hedge funds and other asset managers to use CFDs as an alternative to physical holdings or physical short selling for UK listed equities, with similar risk and leverage profiles.
A hedge fund's prime broker will act as the counterparty to CFD, and will often hedge its own risk under the CFD or its net risk under all CFDs held by its clients, long and short by trading physical shares on the exchange. Trades by the prime broker for its own account, for hedging purposes, will be exempt from UK stamp duty. In the late s, CFDs were introduced to retail traders. They were popularized by a number of UK companies, characterized by innovative online trading platforms that made it easy to see live prices and trade in real time.
In the UK, the CFD market mirrors the financial spread betting market and the products are in many ways the same. However, unlike CFDs, which have been exported to a number of different countries, spread betting, inasmuch as it relies on a country-specific tax advantage, has remained primarily a UK and Irish phenomenon. They are not permitted in a number of other countries — most notably the United States, where, due to rules about over the counter products, CFDs cannot be traded by retail investors unless on a registered exchange and there are no exchanges in the US that offer CFDs.
As a result, a small percentage of CFDs were traded through the Australian exchange during this period. The advantages and disadvantages of having an exchange traded CFD were similar for most financial products and meant reducing counterparty risk and increasing transparency but costs were higher.
In October , LCH. Within Europe, any provider based in any member country can offer the products to all member countries under MiFID and many of the European financial regulators responded with new rules on CFDs after the warning.
The majority of providers are based in either Cyprus or the UK and both countries' financial regulators were first to respond. CySEC the Cyprus financial regulator, where many of the firms are registered, increased the regulations on CFDs by limiting the maximum leverage to as well prohibiting the paying of bonuses as sales incentives in November To support new low carbon electricity generation in the United Kingdom, both nuclear and renewable , Contracts for Difference CfD were introduced by the Energy Act , progressively replacing the previous Renewables Obligation scheme.
A House of Commons Library report explained the scheme as: . Contracts for Difference CfD are a system of reverse auctions intended to give investors the confidence and certainty they need to invest in low carbon electricity generation. CfDs have also been agreed on a bilateral basis, such as the agreement struck for the Hinkley Point C nuclear plant.
CfDs work by fixing the prices received by low carbon generation, reducing the risks they face, and ensuring that eligible technology receives a price for generated power that supports investment. CfDs also reduce costs by fixing the price consumers pay for low carbon electricity. This requires generators to pay money back when wholesale electricity prices are higher than the strike price, and provides financial support when the wholesale electricity prices are lower.
The main risk is market risk , as contract for difference trading is designed to pay the difference between the opening price and the closing price of the underlying asset. CFDs are traded on margin, and the leveraging effect of this increases the risk significantly. It is this very risk that drives the use of CFDs, either to speculate on movements in financial markets or to hedge existing positions in other products.
Users typically deposit an amount of money with the CFD provider to cover the margin and can lose much more than this deposit if the market moves against them. In the professional asset management industry, an investment vehicle's portfolio will usually contain elements that offset the leverage inherent in CFDs when looking at leverage of the overall portfolio.
The use of CFDs in this context therefore does not necessarily imply an increased market exposure and where there is an increased market exposure, it will generally be less than the headline leverage of the CFD. If prices move against an open CFD position, additional variation margin is required to maintain the margin level. The CFD providers may call upon the party to deposit additional sums to cover this, in what is known as a margin call. In fast moving markets, margin calls may be at short notice.
Counterparty risk is associated with the financial stability or solvency of the counterparty to a contract. In the context of CFD contracts, if the counterparty to a contract fails to meet their financial obligations, the CFD may have little or no value regardless of the underlying instrument.
This means that a CFD trader could potentially incur severe losses, even if the underlying instrument moves in the desired direction. OTC CFD providers are required to segregate client funds protecting client balances in event of company default, but cases such as that of MF Global remind us that guarantees can be broken. Exchange-traded contracts traded through a clearing house are generally believed to have less counterparty risk.
Ultimately, the degree of counterparty risk is defined by the credit risk of the counterparty, including the clearing house if applicable. This risk is heightened due to the fact that custody is linked to the company or bank supplying the trading. There are a number of different financial instruments that have been used in the past to speculate on financial markets.
These range from trading in physical shares either directly or via margin lending, to using derivatives such as futures, options or covered warrants. A number of brokers have been actively promoting CFDs as alternatives to all of these products. The CFD market most resembles the futures and options market, the major differences being:  . Professionals prefer future contracts for indices and interest rate trading over CFDs as they are a mature product and are exchange traded.
The main advantages of CFDs, compared to futures, is that contract sizes are smaller making it more accessible for small traders and pricing is more transparent. Futures contracts tend to only converge to the price of the underlying instrument near the expiry date, while the CFD never expires and simply mirrors the underlying instrument.
Futures are often used by the CFD providers to hedge their own positions and many CFDs are written over futures as futures prices are easily obtainable. The industry practice is for the CFD provider to ' roll ' the CFD position to the next future period when the liquidity starts to dry in the last few days before expiry, thus creating a rolling CFD contract.
Options , like futures, are established products that are exchange traded, centrally cleared and used by professionals. Options, like futures, can be used to hedge risk or to take on risk to speculate. CFDs are only comparable in the latter case. An important disadvantage is that a CFD cannot be allowed to lapse, unlike an option.
This means that the downside risk of a CFD is unlimited, whereas the most that can be lost on an option by a buyer is the price of the option itself. In addition, no margin calls are made on options if the market moves against the trader. Compared to CFDs, option pricing is complex and has price decay when nearing expiry while CFDs prices simply mirror the underlying instrument. CFDs cannot be used to reduce risk in the way that options can. Similar to options, covered warrants have become popular in recent years as a way of speculating cheaply on market movements.
CFDs costs tend to be lower for short periods and have a much wider range of underlying products. In markets such as Singapore, some brokers have been heavily promoting CFDs as alternatives to covered warrants, and may have been partially responsible for the decline in volume of covered warrant. This is the traditional way to trade financial markets, this requires a relationship with a broker in each country, require paying broker fees and commissions and dealing with settlement process for that product.
With the advent of discount brokers, this has become easier and cheaper, but can still be challenging for retail traders particularly if trading in overseas markets. Without leverage this is capital intensive as all positions have to be fully funded. CFDs make it much easier to access global markets for much lower costs and much easier to move in and out of a position quickly. All forms of margin trading involve financing costs, in effect the cost of borrowing the money for the whole position.
Margin lending , also known as margin buying or leveraged equities , have all the same attributes as physical shares discussed earlier, but with the addition of leverage, which means like CFDs, futures, and options much less capital is required, but risks are increased. The main benefits of CFD versus margin lending are that there are more underlying products, the margin rates are lower, and it is easy to go short.
Even with the recent bans on short selling, CFD providers who have been able to hedge their book in other ways have allowed clients to continue to short sell those stocks.