If Businessman move out from China then what will be next country?

In 2019 China exported a whopping $2.5 trillion worth of goods. It took an economy of $14.4 trillion and 220 million workers to be able to produce so many goods (note China’s total workforce is around 807 million people). Now look at the table below of the top 10 economies of the world. Only the […]

Paradox of Thrift (Saving is a vice not virtue)

The classical economists considered saving to be a great virtue. They encouraged hard-work, maximum earning and minimum spending on consumption. They advised people to accumulate for future by maximizing earning and minimizing expenditure on consumption. Thinking aggregate savings as simply and aggregation of savings by individual members of the Community, they come to the conclusion […]

Importance or Uses of Multiplier

            The introduction of multiplier analysis in income theory is regarded as one of path-breaking contributions of Keynes to the economic theory. It is not merely theoretical concept, but also important instrument of economic policy. The importance of multiplier can be explained as follows: (1)  Importance in Investment:             The concept of multiplier established the […]

Measures to Raise the Propensity to Consume

In the short period due to psychological and institutional factors, it is very difficult to stimulate consumption function which possible in long-run measures to raise propensity to consume in long run are as follows: Income Redistribution: Propensity to consume of poor people is higher than propensity to consume of rich people. Therefore, redistribution of income […]

Say’s Law of Market

Jean Baptiste Say was on early 19th century French economist who wrote the book political economy and propounded law of market with famous proposition “supply creates its own demand.” It is pivot of classical theory. According to Say- “It is production which creates markets for goods. A product is no sooner created than it, from […]

Equilibrium of industry and firm in the long period

In the long run, time is long enough to adjust the supply with the changing demand. Firms can expand or contract their size and new ones can also sprung up. In the long run, the firm may vary its output not only by varying the rate of use of its existing plant but also by […]

Compact Glossary of Elasticities of Demand

PRICE ELASTICITIES A relationship is described as Perfectly elastic or infinitely elastic     When the elasticity value is Infinity Which means that The smallest possible increase (decrease) in price causes an infinitely large decrease (increase) in the quantity demanded. Elastic Less than infinity but greater than 1 The percentage decrease (increase) in the quantity […]

Price Elasticity of Demand

  The measure of relative responsiveness of quantity demanded to price along a given demand curve is known as price elasticity of demand. According to R.G. Lipsey, “The Elasticity demanded to a percentage change in price.” Albert L. Meyers has defined elasticity demand in these words. “The elasticity of demand is a measure of relative […]

Macro dynamics

  All the economic factors are changeable. With the pace of time, the factors like population, capital, technology, production method, forms of business organization, nature and desire of people etc change that affect to the aggregate demand and aggregate supply. In this macro dynamics, we discuss the process of change from one equilibrium level to […]

Comparative macro statics

  In real world, the economy is changeable. With the pace of time, macroeconomics variables change and that affect to the static equilibrium. Comparative macrostatics explain movable equilibrium. It makes the comparative study of different equilibriums attained by the economy in the economic activities. It deals with the old and new equilibrium. Like comparative microstatics […]