What is IS-LM Model? IS & LM Curves. Characteristics. Limitations. Why is IS curve downward sloping? The IS curve is downward sloping because it represents the relationship between interest rates and output. When interest rates are high, businesses are less likely to invest and consumers are less likely to borrow, leading to lower output. IS … Read more
Income per capita is a measure of the average income earned by each person in a particular group, usually a country. It is often used as a measure of economic progress or standard of living. However, it has some limitations as a measure of economic well-being, and should be considered alongside other measures such as … Read more
In macroeconomics, contraction refers to a period of negative economic growth, characterized by a decrease in gross domestic product (GDP), typically accompanied by a rise in unemployment. A contraction is typically considered to be a recession, although there is no officially recognized definition of a recession in most countries. Are we in a contractionary period? … Read more
The supply-side theory is an economic theory that argues that increasing the supply of goods and services will lead to economic growth. The theory is based on the idea that businesses will invest more if they are able to sell more, and that this increased investment will lead to more jobs and higher wages. The … Read more
An open market is a marketplace where buyers and sellers are able to freely negotiate prices without any artificial restrictions. An open market typically exists within a country’s borders, but it can also exist between different countries. There are several benefits to having an open market. First, it allows for a more efficient allocation of … Read more
The average propensity to save (APS) is the percentage of income that is saved. It is calculated as total saving divided by total income. The APS is a key Macroeconomic indicator because it helps to determine the level of economic activity. A high APS indicates that a greater portion of income is being saved, which … Read more
Pigou effect is an economic theory that suggests that when a good or service becomes more expensive, people will consume less of it. The effect is named after British economist Arthur Pigou, who first articulated the theory. The theory is based on the idea of marginal utility, which is the additional satisfaction that a person … Read more
What is Nominal GDP? Nominal GDP is a measure of the total value of all goods and services produced in an economy, regardless of prices. To calculate Nominal GDP, you simply add up all the values of the goods and services produced in a period of time. What is meant by nominal GDP gross domestic … Read more
The Bretton Woods agreement was an international monetary agreement that was reached in 1944. The agreement was between the United States, the United Kingdom, and a number of other countries. The agreement regulated the international monetary and financial system after World War II. It resulted in the creation of the International Monetary Fund (IMF) and … Read more
. Cross Price Elasticity: Definition, Formula, Example What are some examples of elasticity? Elasticity is a measure of how responsive an economic variable is to a change in another economic variable. In other words, it measures how much one variable changes when another variable changes. Elasticity can be used to measure the responsiveness of demand … Read more
