Cross Elasticity of Demand is defined as the change in the quantity demand of X when the price of Y increases and decreases. Cross Elasticity of Demand lets us know the relationship between two products…
Income Elasticity of Demand (EI): उपभोक्ताको आयमा आएको परिवर्तनले मागमा आउने परिवर्तनको मात्रा It is the change in the quantity demanded due to the change in the income level of the consumer. Or, EI =…
Price elasticity of Demand (Ep) Price elasticity of demand (PED) measures how sensitive the quantity demanded of a good is to a change in its price. It is calculated as the percentage change in quantity…
1. Wagner’s Theory of Government Expenditure Developed by Adolf Wagner in 1880. This theory was developed by Adolf Wagner using the empirical studies on the relationship between government expenditure and national income. This theory posits…
The government’s role in the economy is always there, but it depends on some ideological perspective to define the nature and extent of the government’s role in the economy. It is the philosophical and ideological…
The effectiveness of the macro policies, such as fiscal policy and monetary policy, depends on the slope or shape of the IS and LM curves. It means the same fiscal and monetary policy may have…
#Effect of change in the government expenditure (ΔG): If there is a change in government expenditure, it affects the economy’s equilibrium income and interest rate. For example, an increase in government expenditure increases AD and…
If Aggregate Demand < Aggregate Supply = Price fall Recession/Depression If Aggregate Demand > Aggregate Supply = Price rises = Hyperinflation If AD = AS, then optimim price level is constant to full employment equilibrium.…
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…