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Effect of Inflation in the Economy

Price (P) ↓ = Deflation ⇒ Expected Loss ↑ ⇒ Investment ↓, Employment ↓, Income ↓, AD ↓, Investment ↓ […]

In the previous note, we discussed the different approaches to inflation. Now we explain the types of inflation based on

Inflation is defined as a continuous and substantial rise in the general price level. It is a situation in which

To avoid the conflict between the goals/targets of the fiscal and monetary policy. To develop private-sector confidence and boost investment

The effectiveness of the monetary policy should be assessed in terms of the achievement of its policy goals and targets.

The global financial crisis of 2007/08 made a policymaker to rethink the traditional monetary policy instruments, where the interest rate

Monetary policy is the macro policy formulated by the central bank to achieve pre-defined objectives primarily through the regulation of

The terms structure theory shows the relationship between the terms to maturity period of the bond and its yields or

It was proposed by economist John B. Taylor in 1993. Taylor’s Rule is a monetary policy guideline that suggests how

It is also called the Neo-classical theory of interest Rate Determination. Developed by economists like Knut Wicksell and Dennis Robertson. Interest

What is Cost Curve? The cost curve is the graphical representation of the relationship between cost and output. So, cost

The Cobb–Douglas form was developed and tested against statistical evidence by Charles Cobb and Paul Douglas between 1927 and 1947. It is the