What is Inflation? Inflation refers to a persistent and appreciable rise in the general price level. It is a situation of continuously rising prices of commodities and factors of production resulting from the excess money supply. Different economists defined it in different ways. Some economists like Crowther, Gardner Ackley, and Harry Johnson regarded inflation as … Read more
What is Investment Multiplier? The concept of the multiplier is a component of the Keynesian theory of employment. It is a business, cycle analysis. The concept of the multiplier as a form of ’employment multiplier’ was first developed by F.A. Kahn in his article “The Relation of Home Investment to Unemployment” in the Economic Journal … Read more
What is the Classical Theory of Employment? The classical theory of employment states that there is always full employment in a free capitalist closed economy in the long run. The Classical Theory of Employment was developed by the combined contribution of classical economists, such as Adam Smith, J.S. Mill, A.C. Pigou, Ricardo, etc. The theory … Read more
What is Unemployment? Unemployment is a complex phenomenon. It is easy to notice but different to define. In ordinary or common sense, the term unemployment denotes a situation when a person is not gainfully employed in productive activity and thereby does not work. It can be both voluntary and involuntary. Voluntary unemployment refers to those … Read more
Difficulties in Measurement of National Income Estimating national income is quite a complicated task. It is beset with difficulties of various kinds. These difficulties in the measurement of national income can be broadly classified into two categories: (a) conceptual difficulties, and (b) practical difficulties. While conceptual problems are of general nature and appear in almost … Read more
Expenditure Method (or Spending Approach) The expenditure method measures GDP as the aggregate of all the final expenditure on the gross domestic product at market price in an economy during an accounting year. Final expenditure means expenditure on final products. The total income generated in the economy can be spent either on consumer goods or … Read more
Difference Between Microeconomics and Macroeconomics Microeconomics and Macroeconomics differ as follows: Nature of the Study of Economic Units Microeconomics studies the individual or small economic variables of the economy such as individual consumers’ savings, investment, and income. Whereas macroeconomics deals with wholes like national income, full employment and price level, etc. The Objective of the … Read more
Issues in Macroeconomics The main issues in macroeconomics are: The main issues in macroeconomics are discussed below: 1. Employment and Unemployment The major issue in macroeconomics is to explain what determines the level of employment and national income in an economy. Unemployment refers to the involuntary idleness of resources including labor. If this problem exists … Read more
What is Macroeconomics? Macroeconomics is concerned with the nature, relationship, and behavior of such aggregate quantities and averages such as national income, total consumption, saving, investment, total employment, general price level, aggregate expenditure, and the aggregate supply of goods and services. In other words, it studies economic elements as a whole. The subject matters of … Read more