Economics Questions and Answers

An economic situation in which the price of a product will have no effect on the supply. In a perfectly inelastic situation regardless of the amount of a product on the market, the price of the product remains the same. 

Income Redistribution is an economic practice which is aimed at leveling the distribution of wealth or income in a society through a direct or indirect transfer of income from the rich to the poor. Economists or Governments adopt economic policies and strategies like progressive taxation to implement this phenomenon. The tax is used to build public infrastructure.

When the central bank increases the bank rate, the banks and individuals are discouraged from borrowing money because of increase in interest rates. This is used as a monetary policy tool to reduce circulation of money in the economy.  People would rather invest their monies to be paid high interest rates than borrow from banks and pay the bank interest.

A capital market is a financial market in which long-term debt (over a year) or equity-backed securities are bought and sold. Capital markets channel the wealth of savers to those who can put it to long-term productive use, such as companies or governments making long-term investments.

This occurs when two people have goods they are both happy to swap in exchange. i.e. a perfect barter exchange. A requirement that must be met before a trade can be made. It specifies that a trader must find another trader who is willing to trade what the first trader wants and at the same time wants what the first trader has.