Browsing Category

Macroeconomics

The Accelerator Effect

In Economics, the Accelerator Effect, a Keynesian concept, is used to explain the level of investment in an economy. The accelerator effect refers to a positive effect on private fixed investment of the growth of the market economy. Investment is a function of changes in National Income, especially consumption. Investment is a key component of…
Read More...

Bimetallism

Bimetallism is a monetary standard in which the value of the monetary unit is equivalent to a certain quantity of gold and to a certain quantity of silver. Such a system establishes a fixed rate of exchange between the two metals.Characteristics of BimetallismBoth gold and silver money are legal tender in unlimited amounts.…
Read More...

Monetary Policy

In Economics, Monetary Policy involves the country's central bank controlling the interest rate and money supply. Monetary policy affects Aggregate Demand (AD), and an expansionary monetary policy increases AD, while a contractionary monetary policy decreases AD.The goals of monetary policy are to promote employment, stabilize prices and…
Read More...

Gross Domestic Product (GDP)

The Gross Domestic Product (GDP) of a country is the total value of all final goods and services produced within a country over a period of time. GDP estimates are used to determine the economic performance of a whole country, and to make international comparisons Businesses can also use GDP as a guide to decide how best to expand or contract…
Read More...

The Circular Flow of Income

The Circular Flow of Income shows how different units in an economy interact, how household consumption is a firm's income, which pays for labor and other factors of production, and who provides households with income. The Circular Flow of Income shows how Economists calculate national income or Gross Domestic Product.Important…
Read More...

The Natural Rate of Unemployment

The Natural Rate of Unemployment (NRU) is the rate of unemployment after the labor market is in equilibrium, when real wages have found their free-market level and when the aggregate supply of labor balanced with the aggregate demand for labor. The Natural Rate of Unemployment represents the rate of unemployment to which the economy naturally…
Read More...