Types of Monetary Policy Monetary policy is a central bank’s actions to control the money supply and interest rates to achieve macroeconomic goals such as controlling inflation, maintaining employment, and achieving economic stability. The two main types of monetary policy are: 1. Contractionary policy 2. Expansionary policy 1. Contractionary policy It aims at reducing the […]
Promotional and Regulatory Role of Central Bank A central bank is a national financial institution that oversees the monetary policy of a country, regulates the banking sector, manages currency issuance, and aims to maintain financial stability. It acts as the principal authority in the financial and banking system of a country, ensuring economic stability […]
Measures of Money Supply In India, the Reserve Bank of India (RBI) tracks and publishes various measures of the money supply to monitor and manage the economy. The measures of money supply are broadly classified into four categories: M1, M2, M3, and M4. Each measure includes different components and represents varying degrees of liquidity. Here’s […]
Difference between Fiscal Deficit and Fiscal Financing Fiscal Deficit Vs. Deficit Financing While the terms “fiscal deficit” and “deficit financing” are related, they refer to different aspects of government financial management. Here’s a breakdown of the differences: Fiscal Deficit Definition: The fiscal deficit is the difference between the government’s total expenditures and its total […]
Fiscal Deficit Meaning, Calculation, Components, Implications, Causes, Measures and Importance of Fiscal Deficit Meaning Fiscal deficit denotes excess of government expenditure over government’s income (i.e. revenue). It is commonly expressed as a percentage of GDP. Although fiscal deficit invariably varies from one year to another, unsustainable or high rates of fiscal deficit poses complications […]
Fiscal Policy Meaning, Definition, Instruments and Objectives Meaning The ‘fiscal policy’ refers to the government policy of changing its taxation and public expenditure programmes intended to achieve certain predetermined objectives. An effective and good fiscal policy uses various fiscal tools like taxation, expenditure and public borrowing in a proper combination so as to achieve the […]
The Absolute , Relative and Permanent Income Hypothesis In macroeconomics, the Absolute Income Hypothesis, Relative Income Hypothesis, and Permanent Income Hypothesis provide different perspectives on how income influences consumption behavior, which in turn affects aggregate demand, savings, and overall economic stability. Here is a detailed look at each hypothesis in the context of macroeconomics. Let’s […]
Income- Consumption Relationship The relationship between income and consumption is a fundamental concept in economics that describes how changes in income affect consumer spending. This relationship is crucial for understanding consumer behavior, designing fiscal policies, and analyzing economic growth. Here are the key aspects of the income-consumption relationship: Key Concepts 1. Consumption Function The consumption […]
Boom and Recession Meaning, Features, Causes and Key Differences In economic terms, “boom” and “recession” represent opposite phases of the business cycle, reflecting the fluctuations in economic activity over time. Meaning of Boom In the context of the trade cycle, a “boom” refers to a phase of strong economic growth and expansion. Booms are characterized […]
Macroeconomics Equilibrium In the simplest terms, equilibrium is a state of balance or state where there is no change. The forces acting in the system may bring about a change in the economy. However, the net effect of the change is that the equilibrium position does not, in any way, get disturbed. On the other […]
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