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Home > QFINANCE Dictionary > Definition of ratchet effect

Definition of

ratchet effect

Economics

adjusting more easily to income increases than decreases the result when households adjust more easily to rising incomes than to falling incomes, as, for example, when their consumption drops by less than their income in a recession

Definitions of ’ratchet effect’ and meaning of ’ratchet effect’ are from the book publication, QFINANCE – The Ultimate Resource, © 2009 Bloomsbury Information Ltd. Find definitions for ’ratchet effect’ and other financial terms with our online QFINANCE Financial Dictionary.

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