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Purchasing power parity is an economic term for measuring prices at different locations. It is based on the law of one price, which says that, if there are no transaction costs nor trade barriers for a particular good, then the price for that good should be the same at every location. [1] Ideally, a computer in New York and in Hong Kong should ...
The Big Mac Index is a price index published since 1986 by The Economist as an informal way of measuring the purchasing power parity (PPP) between two currencies and providing a test of the extent to which market exchange rates result in goods costing the same in different countries. It "seeks to make exchange-rate theory a bit more digestible ...
Time value of money. The present value of $1,000, 100 years into the future. Curves represent constant discount rates of 2%, 3%, 5%, and 7%. The time value of money refers to the fact that there is normally a greater benefit to receiving a sum of money now rather than an identical sum later. It may be seen as an implication of the later ...
In monetary economics, the equation of exchange is the relation: where, for a given period, M {\displaystyle M\,} is the total money supply in circulation on average in an economy. V {\displaystyle V\,} is the velocity of money, that is the average frequency with which a unit of money is spent. P {\displaystyle P\,} is the price level.
The St. Petersburg paradox or St. Petersburg lottery[1] is a paradox involving the game of flipping a coin where the expected payoff of the lottery game is infinite but nevertheless seems to be worth only a very small amount to the participants. The St. Petersburg paradox is a situation where a naïve decision criterion that takes only the ...
Coupon collector's problem. In probability theory, the coupon collector's problem refers to mathematical analysis of "collect all coupons and win" contests. It asks the following question: if each box of a given product (e.g., breakfast cereals) contains a coupon, and there are n different types of coupons, what is the probability that more ...
The net present value (NPV) or net present worth (NPW) [1] is a way of measuring the value of an asset that has cashflow by adding up the present value of all the future cash flows that asset will generate. The present value of a cash flow depends on the interval of time between now and the cash flow because of the Time value of money (which ...
The travelling purchaser problem, the vehicle routing problem and the ring star problem [1] are three generalizations of TSP. The decision version of the TSP (where given a length L, the task is to decide whether the graph has a tour whose length is at most L) belongs to the class of NP-complete problems.