The Phillips curve is an economic concept developed by A.W. Phillips in 1958, which shows the relationship between inflation and unemployment. Phillips studied the relationship between the changes in wage rate and unemployment rate of the British economy…
Price (P) ↓ = Deflation ⇒ Expected Loss ↑ ⇒ Investment ↓, Employment ↓, Income ↓, AD ↓, Investment ↓ < Recession ⇒ Ultimately depression Price (P) ↑ = Inflation ⇒ Expected Profit ↑ ⇒…
In the previous note, we discussed the different approaches to inflation. Now we explain the types of inflation based on the causes. Basically, there are three types of inflation. Demand Side or Demand Pull Inflation…
Inflation is defined as a continuous and substantial rise in the general price level. It is a situation in which the value of money or purchasing power is continuously declining, increasing the cost of living…
To avoid the conflict between the goals/targets of the fiscal and monetary policy. To develop private-sector confidence and boost investment in the economy. To maintain price stability and external sector stability. To promote growth and…
The effectiveness of the monetary policy should be assessed in terms of the achievement of its policy goals and targets. In the case of Nepal, the monetary policy and its effectiveness are found to be…
The global financial crisis of 2007/08 made a policymaker to rethink the traditional monetary policy instruments, where the interest rate is fully deregulated, and the provision of reserve requirement such as CRR and SLR, which…
Monetary policy is the macro policy formulated by the central bank to achieve pre-defined objectives primarily through the regulation of money supply and credit supply. So, monetary policy consists of the objectives or goals, targets,…
The terms structure theory shows the relationship between the terms to maturity period of the bond and its yields or interest rate. It means the maturity period of the bond is different, and depending on…