Economics
Cost-push and Demand-pull Inflation
Cost-push Inflation Aggregate supply is the total amount of goods and services produced by an economy at a given price level. Cost-push inflation is attributed to a reduction in the aggregate supply caused by a rise in the cost of…
Construction of Indices Used to Measure Inflation
[vsw id=”Zl_eRBczasU” source=”youtube” width=”611″ height=”344″ autoplay=”no”] Since inflation is impactful on the general price level of an economy, it is tantamount to measure inflation using a price index. As such, it is important to understand how a price index is…
Inflation, Hyperinflation, Disinflation and Deflation
Inflation Inflation is the persistent increase in the general price level of goods and services in an economy over a given period of time. Fewer goods and services are bought when price levels rise hence the reduction in purchasing power….
Measures and Types of Unemployment
Unemployment happens when individuals who are capable and willing to work at the current wage rates cannot acquire jobs. Similarly, when there are few available jobs in an economy, and yet the labor force of that economy is growing, then…
Theories of the Business Cycle
Various economists have formulated several theories in a bid to try and demystify the concept of business cycle. 1. Models With Money Inflation is often considered a consequence of the business cycle. When monetary policy becomes encouraging, the economy grows…
Activity Variation With Business Cycle
Business Activity Business cycle indicators such as inventories are crucial. Companies need to maintain an adequate supply of inventory to meet demand, but they do not want to tie up too much capital in inventory. In many industries, the inventory…
Credit Cycles
The term “credit cycle” refers to cyclical fluctuations in interest rates and credit availability. During an improving economy, lenders are more willing to extend credit at favorable terms. In contrast, lenders tighten their lending standards in a weak economy by…
Business Cycle and Its Phases
A business or economic cycle is defined as the persistent fluctuation in the gross domestic product of a given economy within a specified period. A business cycle can be described by periods of expansion and recessions. During a recession, the…
Input Growth and Growth of Total Factor Productivity as Components of Economic Growth
Input Growth Already, we are well aware that the productive capacity and potential GDP of an economy increase due to the following two reasons: the accumulation of inputs such as capital, raw materials, and labor used in the production process;…
