Whois & Analysis for economyandmarkets.com

Purchasing power (sometimes retroactively called adjusted for inflation) is the number of goods or services that can be purchased with a unit of currency.

For example, if one had taken one unit of currency to a store in the 1950s, it is probable that it would have been possible to buy a greater number of items than would today, indicating that one would have had a greater purchasing power in the 1950s.

Currency can be either a commodity money, like gold or silver, or fiat money emitted by government sanctioned agencies.

Traditionally, the purchasing power of money depended heavily upon the local value of gold and silver, but was also made subject to the availability and demand of certain goods on the market.

Most modern fiat currencies like US dollars are traded against each other and commodity money in the secondary market for the purpose of international transfer of payment for goods and services.

As Adam Smith noted, having money gives one the ability to "command" others' labor, so purchasing power to some extent is power over other people, to the extent that they are willing to trade their labor or goods for money or currency.

A market is one of the many varieties of systems, institutions, procedures, social relations and infrastructures whereby parties engage in exchange.

While parties may exchange goods and services by barter, most markets rely on sellers offering their goods or services (including labor) in exchange for money from buyers.

It can be said that a market is the process by which the prices of goods and services are established.

Markets facilitate trade and enable the distribution and allocation of resources in a society.

Markets allow any trade-able item to be evaluated and priced.

A market emerges more or less spontaneously or may be constructed deliberately by human interaction in order to enable the exchange of rights (cf.

ownership) of services and goods.

Markets generally supplant gift economies and are often held in place through rules and customs, such as a booth fee, competitive pricing, source of goods for sale (local produce or stock registration), and the threat of military or police force if these rules are broken.

An economy (From Greek οίκος – "household" and νęμoμαι – "manage") is an area of the production, distribution, or trade, and consumption of goods and services by different agents in a given geographical location.

Understood in its broadest sense, 'The economy is defined as a social domain that emphasizes the practices, discourses, and material expressions associated with the production, use, and management of resources'.

Economic agents can be individuals, businesses, organizations, or governments.

Economic transactions occur when two parties agree to the value or price of the transacted good or service, commonly expressed in a certain currency.

Monetary transactions only account for a small part of the economic domain.

To invest is to allocate money (or sometimes another resource, such as time) in the expectation of some benefit in the future.

Profit or normal profit is a component of (implicit) costs and not a component of business profit at all.

It represents the opportunity cost, as the time that the owner spends running the firm could be spent on running a different firm.

The enterprise component of normal profit is thus the profit that a business owner considers necessary to make running the business worth his or her while, i.e., it is comparable to the next-best amount the entrepreneur could earn doing another job.

Particularly if enterprise is not included as a factor of production, it can also be viewed a return to capital for investors including the entrepreneur, equivalent to the return the capital owner could have expected (in a safe investment), plus compensation for risk.

In other words, the cost of normal profit varies both within and across industries; it is commensurate with the riskiness associated with each type of investment, per the risk-return spectrum.