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Definition a priori: An a priori argument is one where certain basic principles are assumed to be true. Therefore, it is not necessary to use empirical evidence but rely on the axioms being true. A priori contrasts with A posteriori – which is arguments based on evidence and facts. An example of a priori in …
This is a policy of setting prices close to average cost. It is a way to maximise sales, whilst maintaining normal profits. It is sometimes known as sales maximisation. It will be used by firms who are seeking to increase market share and who don’t seek to maximise profits. Average cost pricing will occur in …
Black Thursday – October 24th 1929 signalled the start of the Wall Street Crash and the onset of the Great Depression which caused widespread economic turmoil and political upheaval. Black Thursday was the first large fall in share prices. But, was compounded by huge falls, a couple of days later on Monday 28th and Tuesday …
Black Wednesday refers to the date 16 September 1992, when the UK was forced out of the ERM. The Exchange rate mechanism was a key policy tool for the Conservative government. The logic of joining the ERM was that the chancellor Nigel Lawson believed that being in a fixed exchange rate Would help to reduce …
Building societies evolved in the 18th Century as a way for people to buy a house by pooling savings and mortgages. Many of the early building societies were temporary i.e. the aim was to pay off a mortgage and then close down the building society. However, permanent building societies emerged as more people wished to …
Definition of Cash Ratio – The ratio of cash to total liabilities a bank will hold. For example, suppose that a bank has deposit of £100 billion. If if has a cash ratio of 1%, it will need to hold £1billion on cash reserves. A cash ratio determines how much credit can be created from …
Banks play a key role in the financial system and wider economy. Therefore governments have been concerned about regulating banks to avoid banks defaulting on promises. If one bank gets into difficulties through reckless borrowing or illegal activities it can harm the whole banking system. The credit crunch of 2007-08 caused the Government to consider …