romeconomics.com

Theories and Basics


Articles explaining and demystifying every key term and theory in economics.


Moral Hazard Explained

Quick Definition: Moral hazard is a situation when an individual in an economic transaction is willing to take more risks because the costs that could occur from their actions will not be felt by them. What is moral hazard? Moral hazard is…

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Mixed Economy Explained

What is a mixed economy? A mixed economy is an economic system in which economic activity is directed by a mixture of private firms and the government. In a mixed economy, some parts of the economy – known as the private sector…

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Recession Explained

Recession explained

Quick Definition: A recession is a period of time in which a country’s economic activity declines causing unemployment to rise and incomes to fall. What is a recession? A recession is often defined as two successive quarters of falling GDP (gross domestic…

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The McDonald’s Peace Theory

McDonald's peace theory

The McDonald’s restaurant chain is spreading across the world like wildfire with new stores opening every day in various different countries. One person has managed to highlight a link between the ‘Golden Arches’ of McDonald’s and the likelihood that a country will…

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The Harrod-Domar Model Explained

harrod domar

Quick Definition: The Harrod-Domar model is a growth model used in development economics that states an economy’s growth rate is dependent on the level of saving and the capital output ratio. What is the Harrod-Domar model? The Harrod-Domar model was developed independently…

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Anti-Competitive Practices Explained

Anti-Competitive Practices.

Quick Definition: Anti-competitive practices are methods used by firms to reduce the competition in a market or industry. What are anti-competitive practices? Anti-competitive practices are sometimes known as restrictive practices. They are methods used by firms in a market to restrict the…

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Public Goods Explained

Public Goods

Quick Definition: Public goods are goods or services that are non-excludable (meaning you can’t prevent people from using it) and non-rival (meaning it doesn’t cost any more to supply an extra person) therefore they are provided by the government. What are public…

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Consumer Sovereignty Explained

Quick Definition: Consumer sovereignty is a term used to describe how consumers have ultimate control over what is produced in an economy. What is consumer sovereignty? In his 1936 book, Economists and the Public, an economist called William Harold Hutt mentions the…

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