GDP gap
"The economic cost of unemployment is measured by the GDP gap." Explain this statement. ?
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The GDP gap refers to the gap between current GDP and the GDP that corresponds to full employment level. The latter is also called the ‘potential GDP’. When there is unemployment the economy is unable to produce at potential level and the shortfall is the cost that the economy pays in economic terms. This is the cost in economic terms as it is the ’economy’s’ loss. There are other costs of unemployment, but they are personal and restricted to the unemployed person and his family.
Explain the main features of Harrod - Domar Growth model. How does the Harrod Domar model explain the occurrence of trade cycles?
Substitutes: The two goods for which a rise in the price of one good leads to a rise in the demand for another.
Determine the value of MPC whenever MPS is zero? Answer: Whenever MPS = 0, MPC = 1 – 0 = 1.
Fiscal deficit: Fiscal deficit is stated as the surplus of total expenditure over total receipts, apart from borrowings. Fiscal deficit = Total expenditure (Rev. Exp. + Cap. Exp.) – Total Receipts
Question: How will a fall in domestic investment affect the trade surplus and net capital outflows in the domestic economy, the trade deficit and capital inflows in the rest of the world, investment in both economi
As longer time periods are taken and a bigger range of adjustments (or substitutions) become obtainable, then demand curves tend to become: (1) flatter, as supply curves become steeper. (2) Steeper as supply curves become flatter. (3) Flatter, and therefore do supply
What stage of the business cycle is our economy experiencing at present time? proof your answer.
When cost of a foreign currency increases its supply too increases. Elucidate why?
The basic determinant of the transactions demand for money is the
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