Business Jargons

Definition: Inflation refers to the appreciable and persistent rise in the general price level. The economists do believe that the inflation beyond the moderate rate is bad and can be disastrous. Therefore, the inflation must be kept under control. What is a Moderate Rate of Inflation? There is no specific answer to this question. But, however, on the basis of the past … [Read more...] about Measures to Control Inflation

Definition: The Cost-Push Inflation occurs when the price rise due to the increase in the price of factors of production, Viz. Labor, raw materials, and other inputs which are essential for the final production of a product. As a result, the aggregate supply decreases, demand remaining the same, an increase in the price of commodities leads to an overall increase in the general … [Read more...] about Cost-push Inflation

Definition: The Demand-pull Inflation occurs when, for a given level of aggregate supply, the aggregate demand increases substantially. In other words, demand-pull inflation exists when the aggregate demand increases rapidly than the aggregate supply. The increase in aggregate demand may be due to: Monetary Factors, i.e., an increase in the supply of money Real … [Read more...] about Demand-pull Inflation

Definition: The Modern Theories of Inflation follows the theory of price determination. This means the general price level can be determined by aggregate demand and aggregate supply of goods and services. The variations in the general price level are caused by a shift in the aggregate demand and aggregate supply curves. The modern theories of inflation are in fact the blend … [Read more...] about Modern Theories of Inflation

Definition: The Monetarist Theory of Inflation asserts that the general price level rises only due to the increase in the supply of money, but not proportionally. The monetarist theory of inflation relates to the work of Milton Friedman, who tried to revive the classical monetary theory (price level rises with a proportionate change in the supply of money) in a modified … [Read more...] about Monetarist Theory of Inflation

Definition: Inflation refers to a situation that advocates a persistent rise in the general price level of goods and services over a period of time. Theories of Inflation The theories of inflation try to explain the causes of inflation and can be studied from the perspective of: Monetarist Theory of Inflation Modern Theories of Inflation The history of inflation … [Read more...] about Theories of Inflation

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