Multiplier Effect Definition,Calculation and Types

Macroeconomics, Multiplier Effect

The multiplier effect shows by how much final national income increases following an initial injection of spending or investment into the economy. How Does the Multiplier Effect Work? When money is injected into an economy — say, through government spending — it does...

What is GDP Per Capita and how is it calculated ?

Gross Domestic Product (GDP)

What is GDP Per Capita? GDP per capita is one of the most widely used indicators of a country’s standard of living and economic performance. It tells us, on average, how much economic output each person in a country is responsible for producing — or...

Commodity Money vs Fiat Money

Macroeconomics, Money

There has been numerous stories about exchanges of goods as a form of money in different circumstances . Like there were Cigarettes used in WWII by the prisoner of War camps, beads used by north american Indians , cattle in south Africa, and small green scraps of...

Major problem with using GDP

Gross Domestic Product (GDP), Macroeconomics, Misc

GDP is considered to be the most simplest and common economic statistics that measures the economic activity of the economy that takes place within a year – that leads to the analysis and conditions of various factors such as investments, household consumption ,...

Difference between aggregate supply and market supply curve

Aggregate Demand and Supply, Macroeconomics

By definition, the Aggregate Supply curve shows the relationship between the Aggregate Quantity Supplied by all the businesses and firms of an economy and the over price level. The sum of the individual supply curve is not the aggregate supply curve. Why? To know more...

What is Money ?

Macroeconomics, Money

To explain it with a formal definition Money is : Anything that is accepted as a way of exchange to buy products and services The basics mechanics of the whole monetray system are invisible. Many individuals take money for granted when they are spending it. So when...

Shifts in Aggregate Demand Curve

Aggregate Demand and Supply, Macroeconomics

We just assumed that the Monetary and fiscal policy variable are kept constant when deriving the Aggregate Demand Curve. So any changes made in the following variable will shift the curve. Money Supply Consumption (household spending) Investment Government Expenditure...

Everything about GDP (Gross Domestic Product)

Gross Domestic Product (GDP), Macroeconomics

I have made an amalgamation of all the posts that I and my contributing writers have written about GDP Please leave a Message if you require further notes and lectures regarding the concept of GDP.  What is GDP ?  GDP growth rate and Calculation Types of GDP (Nominal...

Aggregate Demand : Summary

Aggregate Demand and Supply, Macroeconomics

 Aggregate Demand We know that when it comes to people demand for money – there are 3 elements that has the ability to change the decisions of the individuals in either spending more or less. And these elements are: Income (Output) Interest rate (I) Price Level (P) In...

Circular Flow of Income

Macroeconomics, Microeconomics

The Circular Flow of Income is a macroeconomic model showing how money, goods, and services flow continuously between households and firms — and how injections and leakages affect the size of the flow. The Basic Two-Sector Model In its simplest form, the circular flow...