Category: Macroeconomic Aspects

Inflation In economics, inflation means rise in the general level of prices of goods and services over a period of time in an economy. Inflation may affect the economy either in positive way or negative way. Causes of Inflation The causes of inflation are as follows − Inflation is also caused by decrease in supplies,…

Business cycles are the rhythmic fluctuations in the aggregate level of economic activity of a nation. Business cycle comprises of following phases − Business cycles occur because of reasons such as good or bad climatic conditions, under consumption or over consumption, strikes, war, floods, draughts, etc Theories of Business Cycles Schumpeters Theory of Innovation According…

Definition of Economic Growth Economic growth refers to an increase in the goods and services produced by an economy over a particular period of time. It is measured as a percentage increase in real gross domestic product which is GDP adjusted to inflation. GDP is the market value for all the final goods and services…

Factors Determining the National Income According to Keynes there are two major factors that determine the national income of an economy − Aggregate Supply Aggregate supply comprises of consumer goods as well as producer goods. It is defined as total value of goods and services produced and supplied at a particular point of time. When…

Definition of National Income The total net value of all goods and services produced within a nation over a specified period of time, representing the sum of wages, profits, rents, interest, and pension payments to residents of the nation. Measures of National Income For the purpose of measurement and analysis, national income can be viewed…

Circular flow model is the basic economic model and it describes the flow of money and products throughout the economy in a very simplified manner. This model divides the market into two categories − The circular flow diagram displays the relationship of resources and money between firms and households. Every adult individual understands its basic…

Macroeconomics is a part of economic study which analyzes the economy as a whole. It is the average of the entire economy and does not study any individual unit or a firm. It studies the national income, total employment, aggregate demand and supply etc. Nature of Macroeconomics Macroeconomics is basically known as theory of income.…