How does Monetary Policy affect Aggregate Demand? Monetary policy affects interest rates and the available quantity of loanable funds, which in turn affects several components of aggregate demand. Tight or contractionary monetary policy that leads to higher interest rates and a reduced quantity of loanable funds will reduce two components of aggrega...

Who Demands and Supplies Currency in a Foreign Exchange Market? In foreign exchange markets, demand and supply become closely interrelated, because a person or firm who demands one currency must at the same time supply another currency—and vice versa. To get a sense of this, it is useful to consider four groups of people or firms who participate in ...

What are Consumer Reporting Agencies? A credit reporting agency is any business that collects information about consumers for the purpose of disseminating that information in connection with credit applications, employment, or other evaluations of the individuals credit. The largest personal credit reporting agencies in the United States are Transun...

What is the Peter Principle? The Peter Principle refers to an observation that the likelihood in most organizational hierarchies, like that of a corporation, is for all employees to rise in hierarchy via promotion until they attain a level of respective incompetence.  Thus, the Peter Principle is based on the logical concept that qualified employees...

What is an Own-Occupation Policy? An own-occupation insurance policy is a type of policy that covers individuals who suffered a disability during the period of employment. When an individual becomes disabled and is unable to carry out the tasks he or she was trained to perform, the own-occupation insurance policy provides coverage. This type of insu...

What is a Certified Employee Benefit Specialist? A Certified Employee Benefit Specialist (CEBS) is a professional designation issued to specialists who have shown competence in handling benefits packages for companies. As part of handling employee benefits for companies, these specialists seek to properly plan and negotiate benefit packages in the c...

What is the National Average Wage Index? The Social Security Administration (SSA) of the United States uses the National Average Wage Index (NAWI) for computing a persons retirement benefits.  The SSA calculates the NAWI once a year to measure the wage trend in the U.S., and it is computed based on income subject to federal income taxes and contribu...

What is the Separation of Powers? The Constitution divides the US Government into the following three separate-but-equal branches. Legislative Branch (Article I) House of Representatives and Senate (collectively, Congress) Executive Branch (Article II) President Judicial Branch (Article III) US Supreme Court What are Checks and Balances? The governm...

What is a Cafeteria Plan? A cafeteria plans another name for Section 125 plan refers to a workplace benefits plan that allows employees to give way their taxable salary income that is for purchasing qualifying benefits through a company's plan. There is a list of options from which workers make their benefit plans' choices. There is a withholding of...

What is an Asset Protection Trust? An asset protection trust is a vehicle that protects a person's assets from creditors by holding them on his behalf. It provides a way for debtors and creditors to avoid costly litigations and encourages parties to settle on terms favorable to both of them. This trust is irrevocable and also has a spendthrift claus...