9 Feb 2012

What is Elasticity of Demand & Elasticity of Supply?

Elasticity Degree of responsiveness of Demand or Supply to unit change in Prices Or Technically: Price elasticity of demand (PED or Ed) Measure used in economics to show the responsiveness, or elasticity, of the quantity demanded of a good or service to a change in its price. Holding constant all the other determinants of demand, such as income

Bounded Rationality

Bounded Rationality Bounded rationality is the idea that in decision-making, rationality of individuals is limited by the information they have, the cognitive limitations of their minds, and the finite amount of time they have to make a decision. Behavioural Economists say that the idea of completely rational consumer behaviour is bunk

What is The Invisible Hand

The Invisible Hand Given by Adam Smith All Individuals looking after their interests, market will regulate itself “Laissez Faire”

What is Budget Deficit

Budget Deficit Budget Deficit is the Excess of Spending of a Govt to its revenues Deficit Financed through:- External Borrowing or Printing of Currency IMF supports reducing Budget Deficit Avoiding the Debt Crisis Keynesian Economics says a Govt should spend itself out of Recession India’s Budget Deficit targeted at around 5%

Stagflation

Stagflation Stagnation and Inflation GDP growth zero, however inflation increases Money loses its value Austria, Afghanistan, Zimbabwe

Real GDP & Nominal GDP

Real & Nominal GDP GDP adjusted for Rate of Inflation Value of Goods and Services produced in the economy at Base Year Prices Nominal GDP is not adjusted for Prices India Gross Domestic Product is worth 1729 billion dollars or 2.79% of the world economy

Demographic Dividend

Demographic Dividend When the Population of a country ages, its productivity per person increases There are more people in the working population However, doesnot last forever Population stabilises

Natural Monopoly A type of monopoly that exists as a result of the high fixed or start-up costs of operating a business in a particular industry. Because it is economically sensible to have certain natural monopolies, governments often regulate those in operation, ensuring that consumers get a fair deal

G20

What is G20? G20 is a group of 20 major economies 19 countries plus the European Union Collectively, the G-20 economies account for more than 80 percent of the global  (GNP) 80 percent of world trade (including EU intra-trade) Two-thirds of the world population Self Appointed Group In operation since 2008 Followup to G8

G20 Members Argentina Australia Brazil Canada China France Germany India Indonesia Italy Japan Mexico Russia Saudi Arabia South Africa Korea Turkey United Kingdom United States European Union*

Sources www.investopedia.com http://www.economist.com/economics-a-to-z Micro Economic Theory (Ferguson & Gould) Macro Economic Theory (Dornbusch & Fisher)

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