Credit gives the word to pay either by repaying it or returning those resources later. In other words, this credit is the method of making the reciprocity formal, legally enforceable, and of course, extensible to a vast group of people who are not related.
However, the resources provided may be financial or have goods or services, like consumer credit. The credit covers any form of deferred payment. Credit generally gets extended by the creditor, the debtor or lender, and sometimes the borrower.
Ceteris Paribus is like assuming the deduction of social science into ‘hard’ science. It shows an imaginary path of conditions and rules that help economists to pursue some specific end. Further, it help economists to comprehend human nature in detail and get to know the problem of limited knowledge. When considering ceteris paribus for a given condition, it will imply that given all other factors remain constant, when there is a lower supply of milk-producing cows, there will be a rise in milk price.
The concept of ceteris paribus has extensive use to economists as many variables constantly change. You can understand it by the law of gravity as in economics, and everything keeps changing as nothing is constant. But ceteris paribus simplifies economics, allowing one to imagine a situation when only two variables change.
Economists use this concept of ceteris paribus to explain the law of demand and focus on independent variables, demand, and here, the dependent variable would be price. According to ceteris paribus, when demand drops, the price will also fall to meet the demand in the market. Likewise, sellers will lower the price of a thing when there is a reduction in demand and vice versa. This is how the demand and supply curve goes on in the market.
When there is a decrease in the mortgage rate of interest, ceteris paribus, more people will start buying homes. In the case of ceteris paribus, there should not be any change in real estate climate or home availability. This is how economists should consider the variable per the prevailing condition of the given time.
