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Macroeconomics

The Multiplier Effect

The Multiplier Effect is defined as the change in income to the permanent change in the flow of expenditure that caused it. In other words, the multiplier effect refers to the increase in final income arising from any new injections.Injections are additions to the economy through government spending, money from exports, and investments made by…
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Money Multiplier

The money multiplier describes how an initial deposit leads to a greater final increase in the total money supply. Also known as “monetary multiplier,” it represents the largest degree to which the money supply is influenced by changes in the quantity of deposits. It identifies the ratio of decrease and/or increase in the money supply in relation…
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The Fisher Effect

The Fisher Effect demonstrates the connection between real interest rates, nominal interest rates, and the rate of inflation. According to the Fisher Effect, the real interest rate is equal to the nominal interest rate minus the expected rate of inflation (note that in this equation, all rates used should be compounded).The result, in practice,…
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Gross Domestic Product (GDP)

GDP stands for Gross Domestic Product, and the GDP of a country is the total value of all final goods and services produced within that 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…
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Duopoly Market Structure

A duopoly is a kind of oligopoly: a market dominated by a small number of firms. In the case of a duopoly, a particular market or industry is dominated by just two firms (this is in contrast to the more widely-known case of the monopoly when just one company dominates).In very rare cases, this means they are the only two firms in the entire…
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Business Cycle

The different phases that an economy goes through over time, such as periods of booms (expansions) and economic recessions (contractions), is known as the business cycle or the trade cycle. One entire business cycle is the completion of an expansion and a contraction sequentially.The line through the business cycle is known as the trend line.…
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