What is a Double Column Tariff? A Double Column Tariff is a tariff system which has two different duty rates for a particular product. Here, the import tax on the product depends on the country of its origin. The rate is assessed by the importing country's trade relationship with the exporting country. Depending on that relationship the tariff may b...

What is a Stepwise Regression? Stepwise regression is a statistical method of building a model in which an automatic selection of independent variables occur. This form of regression uses repetitive steps, in each step, there is a forward or backward selection of variables which is otherwise known as addition or removal of independent variables. The...

What is an Arbitrage Bond? An Arbitrage bond is a bond issued by a municipality to refinance an existing higher-rate bond with a lower-rate bond prior to the call date of the former. Arbitrage bonds are issued by municipalities when they want to take advantage of the difference in the price of lower-rate security and higher rate security. Proceeds t...

What is a Defective Title? A defective title describes a property that has a constraint, hindrance or drawback placed on it, which could be a mortgage, lien or judgement. Any property or assets whose real ownership cannot be proven by legal documents as a result of publicly-recorded defect or encumbrances that is placed on it is a defective title. W...

What is a Narrow Basis? A narrow basis describes the proximity or convergence between the spot price of a commodity and the price of that same commodity in a futures contract. In a futures contract, the price for a commodity is set at a future date. The present price of a commodity is its spot price. When the spot price is close to the price in the ...

What is Inductive Reasoning? Inductive reasoning concerns drawing or reaching a generalized conclusion based upon observation or awareness of specific instances. It necessarily involves assumptions concerning facts or behavior based upon the probabilities derived from observation. For example, I eat pastrami sandwiches at several delis. They all are...

What is an Opportunity Set?  An opportunity set is a group of potential options.  In economics, the budget constraint model demonstrates the opportunity set, which includes the possible combinations of goods that can be purchased within the consumer’s budget.  Budget Constraint Radner Equilibrium Opportunity Cost Opportunity Set Marginal Analysis Ut...

What is Circular Trading? Circular trading refers to a fraudulent trade scheme. The process involves a broker entering orders, while fully aware of the number of shares, price, and the time the orders will be entered. In other words, the process is usually intentional for the purpose of boosting the shares price in the market. Note that circular tra...

How to Convert GDP to a Common Currency? Converting GDP of two countries using different currencies requires the use of exchange rates.  Exchange rates are expressed either as the units of country A’s currency that need to be traded for a single unit of country B’s currency Using the exchange rate to convert GDP from one currency to another is as fo...

How Does the Business Cycle Affect Trade Balances? In the short run, whether an economy is in a recession or on the upswing can affect trade imbalances. A recession tends to make a trade deficit smaller, or a trade surplus larger, while a period of strong economic growth tends to make a trade deficit larger, or a trade surplus smaller. When the trad...