Demand Side Policies

In Macroeconomics, Demand Side Policies are attempts to increase or decrease aggregate demand in order to affect output, employment and inflation.Demand Side Policies can be classified into fiscal policy and monetary policy. In general, demand-side policies aim to change the aggregate demand in the economy. Aggregate Demand is made up of…
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Theory of Production: Cost Theory

In the Cost Theory, there are two types of costs associated with production - Fixed Costs and Variable Costs. In the short-run, at least one factor of production is fixed, so firms face both fixed and variable costs. The shape of the cost curves in the short run reflect the law of diminishing returns.Cost Theory - Types of CostsA.…
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Perfect Competition Short Run

Perfect Competition or Pure Competition (PC) is a type of market structure, which doesn't actually exist and is considered to be theoretical. We will look at Perfect Competition Short Run and then in the next post, the Perfect Competition in the long run.Characteristics of Perfect Competition1. Number of Firms There are very many…
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The Lorenz Curve and Gini Coefficient

The distribution of Income in an economy is represented by a Lorenz Curve and the degree of income inequality is measured through the Gini Coefficient. One of the five major and common macroeconomic goals of a government is the equitable (fair) distribution of income.  The Lorenz CurveThe Lorenz Curve (the actual distribution of…
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Free Market: Advantages & Disadvantages

A free market economy is a type of economy promotes the production and sale of goods and services, with little to no control or involvement from any central government agency. In a free market economy, firms and households act in self-interest to determine how resources get allocated, what goods get produced and who buys the goods. A free market…
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