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Expenditures and the Effects of Fiscal Policy are stated as follows: Having finished the discussion on the tax policy and taxation, now let’s us focus on expenditures and the e
What is the total cost of producing output? The total cost of producing a specified quantity of output is the total of the fixed cost along with the variable cost of producing
Aggregate demand with inflation In previous versions of Keynesian model, Components of aggregate demand did not depend on P. In IS-LM and in AS-AD models, investments depended
Q. What do you mean by multiplier effect? Loans and deposits in banks give rise to a significant multiplier effect. We use a simple instance to explain this effect. Consider th
Subsidy programs are likely to have a number of secondary effects in addition to the direct effect on dairy prices. What impact do you suppose farm subsidies are likely to have on
Q. State the Marginal Productivity Theory. What are its features and assumption? Marginal Productivity Theory of distribution states that in a capitalist economy the demand for
Sustainability of Current Account Deficit: Theoretically speaking, a current account deficit can be sustained as long as the growth rate of national income exceeds the rate of
Define the Natural rate of unemployment Natural rate of unemployment is defined as the sum of rates of structural, frictional, and classical unemployment (excluding cyclical un
Statics and Dynamics Economic models deal with stock and flow variables. These variables can be in one of the two states - equilibrium or disequilibrium - at a particular poin
Determine the Problems evolved with Consumer Price Index To illustrate problems involved in calculating CPI we consider MP3 players. If you measure average price of MP3 players
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