Philips Curve The Phillips curve represents the relationship between the rate of inflation and the unemployment rate. Phillips found a consistent inverse relationship: when unemployment was high, wages increased slowly; when unemployment was low, wages rose rapidly. Phillips conjectured that the lower the unemployment rate, the tighter the labor market […]
General Studies
Consumer Price Index The consumer price index (CPI) is a measure that examines the weighted average of prices of a basket of consumer goods and services, such as transportation, food and medical care. The CPI is calculated by taking price changes for each item in the predetermined basket of goods […]
Inflation indices(CPI, WPI, PPI, Core)
Inflation occurs when there is a sustained increase in the general price level. Traditionally high inflation rates are considered to be damaging to an economy. High inflation creates uncertainty and can wipe away the value of savings. However, most Central Banks target an inflation rate of 2%, suggesting that low […]
Is inflation good or bad?
Types of Inflation Inflation depending on its rate of price rise is categorized as follows. Creeping Inflation Price rise at a very slow rate like that of a snail or a creeper is called creeping inflation. This amount of inflation is necessary for economic growth i.e., to keep the economic […]
Types of Inflation
What's Inflation? Inflation means that the same amount of money won’t buy as much today as itcould a day or a year before (Value of money erodes with time). Inflation means a sustained increase in the aggregate or general price level in an economy. Inflation means there is an increase […]
Inflation, Deflation and Disinflation
Austerity Austerity measures are attempts to significantly curtail government spending in an effort to control public-sector debt, particularly when a nation is in jeopardy of defaulting on its bonds. The global economic downturn that began in 2008 left many governments with reduced tax revenues and exposed what some believed were […]
Austerity and Stimulus(Economics)
Public Debt in India Public debt is the debt owed by the central government. Among the non-tax sources, the major source of government revenues is public debt. What's included in Public debt? Central Government’s public debt comprises Internal debt, External debt, and Other liabilities. Internal Debt: The internal debt is classified […]
Public debt in India
Fiscal Neutrality Fiscal neutrality occurs when taxes and government spending are neutral, with neither having an effect on demand. Fiscal neutrality creates a condition where demand is neither stimulated nor diminished by taxation and government spending. A balanced budget is an example of fiscal neutrality, where government spending is covered […]
What is Fiscal Neutrality?
Fiscal Drag Fiscal drag is a concept where inflation and earnings growth may push more tax payers into higher tax brackets. Therefore fiscal drag has the effect of raising government tax revenue without explicitly raising tax rates. This fiscal drag has the effect of reducing Aggregate Demand and becomes an […]
What is Fiscal Drag?
Crowding out The crowding out effect is an economic theory stipulating that rises in public sector spending drive down or even eliminate private sector spending. In simple terms, if the government borrows too much from the market, the money left for lending for others is less. Which means the supply […]