Market-based supply-side policy is an economic tool designed to stimulate growth by promoting private-sector participation and reducing government intervention. This approach aims to unleash the power of competition and market forces to drive
Macroeconomics
Contractionary Fiscal Policy: A Tool for Price Stability and Economic Health
Contractionary fiscal policy is a set of government actions designed to slow down economic growth and combat inflation. Imagine an overly heated economy like a car speeding out of control. Contractionary measures act as the brakes, aiming to bring
Expansionary Fiscal Policy: Boosting the Economy – Tools, Impacts
Expansionary fiscal policy is a powerful tool wielded by governments to stimulate economic activity and combat economic slowdowns or recessions. It's essentially a strategy to jumpstart the economy by putting more money into the hands of consumers
How Money and Credit Controls Work to Achieve Macroeconomic Goals
Central banks wield powerful tools like money and credit controls to target key macroeconomic goals like stable prices, economic growth, and low unemployment. This guide dives into the world of monetary policy, explaining how central banks use
PCE Price Index: Fed’s Favorite Inflation Gauge
The PCE Price Index, often overshadowed by its consumer-focused counterpart, the CPI, plays a critical role in gauging inflation. It tracks changes in the prices of goods and services that people in the United States buy, offering valuable insights
Core Inflation: Unveiling the Underlying Price Trend [Causes, Impacts]
Core inflation might sound like a complex economic term, but understanding it can be surprisingly useful. It goes beyond the headline inflation rate you see in the news, offering a clearer picture of the long-term price trends within an economy.
How Monetary Policy and Fiscal Policy Work to Achieve Macroeconomic Goals
Monetary policy and fiscal policy are the two main tools governments, and central banks use to influence economic activity and achieve macroeconomic goals. These goals, which include stable economic growth, low unemployment, and stable prices, are
Economic Bubble: Understanding Asset Price Inflations [Examples, Causes + Impacts]
Economic bubbles are a recurring phenomenon in finance. They are characterized by rapid and often irrational inflation of asset prices to levels far exceeding their intrinsic value. Understanding the dynamics of economic bubbles can be
Stagflation: Understanding the Trifecta of Economic Woes
Stagflation throws a wrench into the normal economic cycle. Imagine an economy where growth stalls, unemployment remains high, and prices keep rising – that's the unsettling reality of stagflation. This unusual phenomenon poses significant
Understanding the Inflationary Gap: Impact on Economy and Investments
The inflationary gap refers to the difference between the actual inflation rate experienced in an economy and the ideal inflation rate. Understanding this gap is crucial for economics students, investors, and anyone interested in economic trends. It
Is the Economy Booming or Busting? Output Gap Explains
The output gap acts as a hidden gauge within an economy, much like a car's gas gauge tells you fuel level but not engine efficiency. Gross Domestic Product (GDP) tracks the total value of produced goods and services, but it doesn't reveal if the
How Disposable Income and Spending Habits Affect Consumption Spending
Disposable income and spending habits – these two factors hold immense power over how much we spend and how the economy functions. Disposable income, the money left after taxes are deducted from your paycheck, directly influences your consumption