IIP (Index of Industrial Production)
IIP is a short term indicator of industrial growth till the results from Annual Survey of Industries (ASI) and National Accounts Statistics (Eg: GDP) are available. The base year of the index is given a value of 100. So, if the current IIP reads 180, it means that there has been 80% industrial growth compared to the […]
Measuring Inflation in India (CPI/WPI)
Rate of inflation It is the rate of change of general price level which is measured as follows: Rate of inflation(year X)= price level(year X)- price level(year X-1)/ PL(year X-1)* 100 It is measured on the basis of price indices WPI CPI GDP deflator A price index is a weighted average of the prices of […]
Concept of Business cycle
Business cycle For the Quality of Life to improve, a conscious public policy which spends in areas like food, nutrition, health, education, shelter, social security, etc is required. But for such expenditures and investments, the economy needs equitable level of income, too! The income enhancement and development is dependent on growth prospects I.e real GNP. […]
Effects of Inflation
On creditors and debtors Redistributes wealth from creditors to debtors Lenders suffer and borrowers benefit Opposite happens when inflation falls(deflation) On lending Institutions feel the pressure of higher lending as real interest rate is less than nominal rate. On aggregate demand Indicates comparatively lower supply and aggregate demand rises Higher purchasing power Suggests producers […]
Inflation related concepts
Full Employment Level: Full employment is an economic situation in which all the available resources of the economy are fully utilised, and there exists no further scope of improvement in the economy. The Full employment level represents that economy is operating at its maximum potential. The level of unemployment is minimum, the prices in the economy […]
Protected: Inflation, its causes, measures, and its types
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Non Competitive Markets
Monopoly market Monopoly is that type of market where there is a single seller and large number of buyers. There is absence of close substitutes to the products. Features of Monopoly market:- (a) Single seller and large number of buyers. (b) Restrictions on the entry of new firms. (c) Absence of close substitutes. (d) Full control […]
Market Equilibrium
Wage Determination in Perfect Competitive Labour Market – Equilibrium of demand and supply of labour determines the wage rate. Marginal product of labour plays an important role in determining the demand for labour. Marginal Revenue Product of Labour: – The marginal revenue product of labour (MRPL) is the change in revenue that results from employing an additional […]
The Theory of the Firm under Perfect Competition
Minimum Price Ceiling: It means that producer are not allowed to sell, the goods below the price fixed by Government, When government finds that equilibrium price is too low for the produce, then Govt. fixes a price ceiling higher than equilibrium price to prevent the possible loss to the producers. The price is also called floor price or […]
Production and Costs
Production: – It is mainly transformation of resources into commodities. Production Function: Physical inputs. Production function of a firm describes the relationship between the output and the factors of production which are being used in the production process. It shows the required number of inputs needed to produce the maximum level of final output Marginal product refers to the change in […]