What is a National Saving and Investment Identity? The national saving and   investment identity provides a useful way to understand the determinants of the trade and current account balance. In a nation’s financial capital market, the quantity of financial capital supplied at any given time must equal the quantity of financial capital demanded for ...

What is Wage and Price Stickiness?  Keynes also pointed out that although AD fluctuated, prices and wages did not immediately respond as economists often expected. Instead, prices and wages are “sticky,” making it difficult to restore the economy to full employment and potential GDP. What is Price Stickiness? The concept of stickiness refers to a si...

What is Validated Learning of Lean Startups? Validated Learning is a "rigorous method for demonstrating progress when one is embedded in the soil of extreme uncertainty in which startups grow. It is the process of demonstrating empirically that a team has discovered valuable truths about a startup's present and future business prospects" (Ries p. 38...

What is the Five Percent Rule? In investment, the five percent rule is a philosophy that says an investor should not allocate more than five percent of their portfolio funds into one security or investment. The rule also referred to as FINRA 5% policy, applies to transactions like riskless transactions and proceed sales. With this rule, investors ca...

What is an Exit Fee? An exit fee is a cost that investors incur at the time redeeming shares from a specific fund, usually open-ended mutual funds. At the time of exiting a mutual fund, an investor pays an exit fee followed by back-end sales load related to the class of shares. How Does an Exit Fee Work? Exit fees can be observed as a transactional ...

What is Abnormal Spoilage? An Abnormal spoilage refers to the excess amount of waste or destruction of inventory beyond the expected level....

What is a Settlement Statement? A settlement statement refers to a document given to borrowers disclosing all the fees and costs to do with a home purchase. The details may include original fees, interest paid, closing costs, and any other incurred during the loan transactions settlement process. Another term for settlement statements is the closing...

How to Overcome the Tendency of Employers to Show Bias in Searching for Fit when Hiring I teach a course on professionalism.  The course covers etiquette, personal motivation, career paths, networking, interviewing, and other things.  The most impactful topic that we cover, and one that appears throughout the course, is fit.  You can see our explana...

What is the Department Of Labor (DOL)? The Department of Labor is a cabinet-level department of the United States Federal government overseeing the matters related to labor and promoting healthy working condition for the workers. It is responsible for administering and enforcing the federal labor standards and laws related to occupational safety, wa...

What is a Behaviorist? A behaviorist refers to one who adheres to the behavioral economics theory. This theory holds that investors neither act rationally nor do they act in their best interests.  Investing decisions, like every human activity, are subject to a complex mix of environment, emotion, and bias. The failure of following pure reason resul...