Macroeconomics is the study of the economy as a whole, focusing on broad trends and overall performance. It looks at how factors like inflation, unemployment, interest rates, and economic growth affect the entire country. For beginners, it's
Macroeconomics
Possible Conflicts Between Macroeconomic Goals
Conflicts between macroeconomic goals occur because governments cannot pursue all goals at once. There is a trade-off between these goals. Choosing one goal requires the government to forego or not achieve other goals. Thus, the government must
Total Factor Productivity (TFP): Growth Engine Beyond Labor and Capital – Determinants
What's it: Total factor productivity quantifies the share of economic growth not explained by increases in labor and capital when both are used together in the production process. We also often refer to it as the residual Solow model or multifactor
Foreign Exchange Reserves: A Nation’s Economic Shield for Economic Stability
What's it: Foreign exchange reserves are liquid assets denominated in foreign currency held by the central bank or government for future use. This includes reserves in hard currency (such as dollars, euros, and yen), government securities
Capital Account: Beyond Current & Financial in the Balance of Payments (Components)
The capital account acts as a companion to the current account and financial account within a country's balance of payments (BoP). It meticulously tracks the flow of capital—not money used to buy goods and services but rather transactions involving
Kondratieff Cycle: Long Waves of Innovation and Economic Growth
The Kondratieff cycle, also known as the long wave theory, proposes a fascinating concept: the existence of long economic upswings and downswings lasting for decades. This theory, named after Russian economist Nikolai Kondratieff, suggests that these
Understanding Gross Investment vs. Net Investment
Gross investment encompasses the money businesses spend on both expanding their capabilities and simply keeping existing equipment running smoothly. This includes buying new factories, machinery, and other physical assets to increase output, but also
Gross Private Domestic Investment: Understanding Its Components and Impacts
Gross Private Domestic Investment (GPDI) represents private sector investment spending. It is one component of aggregate demand, along with household consumption, government spending, and net exports.Investment growth contributes to increasing
Understanding Consumption Expenditure: Types and Examples
Consumption expenditure refers to the money individuals spend on goods and services. In economics, we can also say it is the residual disposable income after saving. Economists assume individuals allocate their income for two purposes: consumption
Hyperinflation: The Devastating Effects of Out-of-Control Prices – Causes, Example, Impacts
Hyperinflation is a period when the inflation rate is exceptionally high, often exceeding 50% per month. In extreme cases, prices can double in a single day. This rapid price increase erodes the value of money at an alarming rate. Imagine your
Economic Boomlet? What’s It? Explanation and Causal Factors
What's it: An economic boomlet refers to a brief period of rapid growth in economic activity. Output increases as demand grows. In addition, households see their financial prospects strengthening due to increased employment and cheap