Economics

Definition: Inflation refers to the persistent rise in the general price level of goods and services. Types of Inflation   Types of Inflation: On the Basis of Rate Moderate Inflation: The moderate inflation, also called as Creeping Inflation refers to a single digit annual increase in the general price level. During the moderate period, the price increases … [Read more...] about Types of Inflation

Definition: Inflation refers to the sustained or considerable rise in the general price level of goods and services over a period of time. Inflation is characterized by low purchasing power as with an increase in the prices, few goods and services can be bought from each unit of the currency. There is no universally accepted definition of inflation; it kept changing with the … [Read more...] about Inflation

Definition: Hicksian Theory of Trade Cycle was proposed by Hicks, who considered Samuelson’s multiplier-accelerator interaction theory and Harrod-Domar growth model in combination to explain his theory of the trade cycle. According to him, the business cycles have historically occurred against the background of economic growth and hence the theory of the trade cycle should link … [Read more...] about Hicksian Theory of Trade Cycle

Definition: The Multiplier-Accelerator Interaction Theory came into existence when the theorist of the Keynesian tradition stresses on multiplier process in economic fluctuations while J.K. Clark emphasized on the role of acceleration in the business fluctuations. But however, Paul Samuelson, the post-Keynesian business cycle theorists asserted that neither the multiplier … [Read more...] about Multiplier-Accelerator Interaction Theory

Definition: Schumpeter’s Theory of Innovation is in line with the other investment theories of the business cycle, which asserts that the change in investment accompanied by monetary expansion are the major factors behind the business fluctuations, but however, Schumpeter’s Theory posits that innovation in business is the major reason for increased investments and business … [Read more...] about Schumpeter’s Theory of Innovation

Definition: The Monetary Over-Investment Theory posits that imbalance between the actual and desired investments, i.e. actual investments exceeding the desired investments, explain the fluctuations in the economic activities. The monetary over-investment theory was proposed by Hayek, who stresses that in order to maintain economy’s equilibrium the pattern of investments … [Read more...] about Monetary Over-Investment Theory

Definition: The Pure Monetary Theory was proposed by Hawtrey, according to him the changes in the money flows in the economy cause the fluctuations in the level of economic activities. Thus, this theory posits that the business cycle is caused due to the fluctuations in the monetary and credit markets. The fluctuations in the supply of money and the bank credit are the main … [Read more...] about Pure Monetary Theory

Definition: The Business Cycle refers to the periodic boom and slump in the economic activities reflected by the fluctuations in aggregate economic magnitudes which includes total production, employment, investment, bank credits, wages, prices, etc. Simply, the business cycle refers to the ups and downs explained in terms of expansion and depression that an economy experiences … [Read more...] about Theories of Business Cycle

Definition: The Business Cycle refers to the ups and downs in the economic activities that the economy experiences over a period of time. Generally, the business cycle is the upward and downward movement in the level of GDP reflected by the fluctuations in the aggregate economic magnitudes Viz. Total production, employment, investment, wages, etc. Phases of Business … [Read more...] about Phases of Business Cycle

Definition: The Business Cycle, also called as Economic Cycle or Boom-Bust Cycle refers to the periodic booms and slumps in the economic activities reflected by the fluctuations in the aggregate economic magnitudes, including employment, investment, total production, wages, bank credits, etc. In other words, the business cycle refers to the ups and downs defined in terms of … [Read more...] about Business Cycle