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Category: Economics
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Job Separation vs Job Finding
This article will cover the economics of job separation and job finding and how to calculate them. If job finding is instant then f = 1, and the natural rate of unemployment would be near zero, if f < 1, it is because of job search and wage rigidity. Firstly,…
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Currency Devaluation: Exports > Imports
Currency devaluation means a reduced value of currency with respect to foreign currencies and its reduced purchasing power to foreign goods, which result from monetary policy. In a small open economy, as such the assumptions of the Mundell-Fleming model, currency devaluation can result from expansionary monetary policy, referring to the…
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IS-LM Model – Theories of Short-Run Fluctuations
The IS-LM model basically, is made up of two components: IS & LM curves. The IS curve represents a “[negative] relationship between the interest rate and the level of income that arises in the market for goods and services.” (Mankiw, 2010) IS stands for investment and saving. IS curve represents…
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CPI vs GDP Deflator
In this article the Consumer Price Index and GDP deflator will both be covered, leading on from introducing them in the article on Macroeconomics – Theory & Data. The increase in the overall price level is called inflation, therefore, economists use the GDP deflator and CPI to measure Inflation. “The…
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What is Macroeconomics?
A textbook definition of macroeconomics says that “[it] is the study of the economy as a whole, including growth in incomes, changes in prices, and the rate of unemployment.” (Mankiw, 2010) Extending over global, regional and national economies. Economists advise on policies for the government regarding important economic indicators. Macroeconomics…