Business cycles can be defined as the regular fluctuations of national output or the aggregate economic activities of an economy. The business cycle affects not only the national output or the GDP but also all the macroeconomic sectors such as level of employment, general price level, sales, and international trade, etc. Business cycle consists of …
Aggregate demand and aggregate supply are two mainly important components to any economy. Aggregate demand Aggregate demand refers to the total amount of goods and services that will be purchased by all the sectors, consumers, firms, and the government, at all possible price levels. Since this is the total amount spent on the national output …
A country’s national income refers to the income earned by the people by contributing factors of production to the production process. This is one of the most important macroeconomic factors which is calculated annually. Macroeconomic studies are carried out annually to evaluate the performance of the economy. National income calculation is one of the criteria …
National Income and Growth – The ways to measure Read More »
Trade barriers have become one major reason that slows down economic growth. Almost all the countries in the world involve in international trade in different degrees. Goods are imported and exported due to different reasons and trade is interconnected. In international trade, there are different restrictions of which some are natural and the others are …
A financial system in an economy is a set of institutions such as banks, insurance companies, stock exchange, etc. that render a prominent role in an economy. The functioning of the financial system has multifaceted effects on the economy. The central bank of the country has the authority to shape, control and monitor the financial …
Microeconomics and macroeconomics are considered as the most important division of the broad range of economic concepts. Economists use different methods to analyses economic issues. The standard of modern economies is discussed as positive economics and normative economics. In positive economics, different economic issues are described based on the existing situation based on the facts, …
09 Differences between Microeconomics and Macroeconomics Read More »
Market failure is the situation the free-market fails in efficient distribution of goods and services. It is believed that in a free market economy, allocative efficiency is achieved through a price mechanism. In a situation of market failure, the consumer can have the desired quantity of goods and services at the price they wish. If …
The demand for a product is a variable that is influenced by different factors including the price of the product. The effect of influencing factors on demand including elasticity is numerically calculated in three different ways. Price elasticity of demand – The change in quantity demanded in response to the changes in the price of …
Economic systems are a complex network of individuals, organizations, and institutions and their social and legal interrelationships. The function economic system is to solve the basic economic problems. Based on the relative scarcity of economic resources all the economies face a common issue “Choice”. The choice is an issue of allocating available limited resources in …
The term “Inflation” refers to the continuous increase in the general price level in an economy over a considerable period of time. If the increase in price level is only for a short period of time it is not considered as inflation because it is not harmful to the economy. If the price level increases …
