What's it: An aggregate demand curve is a graph showing the inverse relationship between aggregate demand and the price level. Aggregate demand represents the total demand from four macroeconomic sectors: household, business,
Economic Context
Supply-Side Policy: Growth Without Inflation (Tools, Pros & Cons)
What's it? Supply-side policy is a type of economic policy that focuses on aggregate supply. It seeks to increase an economy's productivity, efficiency, and potential capacity. Supply-side policies can involve government spending on education and
Sovereign Debt: Understanding National Borrowing – Indicators, Impacts, Pros, Cons
What's it? Sovereign debt is debt issued or guaranteed by a country's government. In other words, it is debt securities issued by the national government. This is different from municipal debt, where the issuer is the local government.Like other
Free Market: Meaning, Characteristics, Pros and Cons
What's it: A free market is an economic system in which the forces of demand and supply drive all economic activity. In a pure system (laissez-faire), the role of government in the economy is zero. In this economic system, companies and property
Unemployment Rate: Explained (Causes, Effects, Solutions)
What's is: The unemployment rate is the percentage of the labor force that is currently unemployed. Economists define the labor force as the share of the working-age population currently employed plus unemployed workers who are actively looking
Trade Deficit: Exploring Causes & Impacts + Pros, Cons
What's is: A trade deficit occurs when the value of a country's exports is less than its imports. To finance the deficit, the country has to borrow from foreigners or sell assets (through investment inflows in the capital market, for example).
Household Consumption: The Engine of Aggregate Demand (Determinants and Impacts)
What's is: Household consumption refers to the final household expenditure on goods and services. Items can be classified as durable goods, nondurable goods, and services.Household consumption is a key indicator for analyzing economic
Dutch Disease: Boom or Bust? Avoiding the Trap + Examples, Causes, Solutions
What's is: Dutch Disease is a term that describes an economic phenomenon when the exploitation of natural resources triggers weakness in other sectors, especially manufacturing. An increase in income from the exploitation of natural resources
Neoclassical Economics: Key Ideas, Assumptions, Models, Limitations
Neoclassical economics is a powerful theory that shapes our understanding of how markets function. At its core lies the dynamic interplay between supply and demand. This theory explains how these forces determine the prices of goods and services, how
Deflation Explained: Dangers Beyond Falling Prices – Causes, Impacts, Solutions
What's it? Deflation is the state of the economy when the aggregate price level falls. It is the opposite of inflation, which we also call negative inflation.Deflation is different from disinflation. Disinflation refers to a slower rate of
Economic Collapse: Warning Signs and Triggers
Economic collapse – a sudden and dramatic downturn in a nation's economy – can be a frightening prospect. While economic downturns are a normal part of the business cycle, an economic collapse goes far beyond a typical recession. It's a severe and
Beyond GDP: Gross National Income (GNI) and its Role in a Nation’s Economic Health
Gross National Income (GNI) paints a more comprehensive picture of a nation's economic health compared to Gross Domestic Product (GDP). While GDP focuses on economic activity within a country's borders, GNI encompasses the total income earned by a