What is Net National Product (NNP)? To represent the difference between gross national product (GNP) and depreciation, a term that is often used is known as Net National Product (NNP). When discussed numerical terms, it can be denoted as the total market value of the goods and services, which are produced by a nation in a specific period with the depreciation subtracted from it. The tool most used by economists to report on the growth and the strength of a nation is NNP. As well as to evaluate a country’s growth against others. It is said to be a useful comparative measurement that can also provide indications of the country’s complete economic state. Regardless of less utilization in recent times, it still
Author: Rhys Austin, PhD
Income Effect, Price Effect and Substitution Effect – A comparison
What is the Income effect? The change in demand in regards to a service or good that is caused by a change in a consumer’s purchasing power, resulting from a change in real income is the income effect in microeconomics. Some reasons for this change in result can be a wage increase, etc. Adding to this, another reason might be the freeing up of existing income due to an increase, or where the money is spent there is an increase in the good’s price. For instance; In the case of higher meat prices, the consumers may be encouraged to switch to alternative food sources, like buying vegetables.Despite this, after buying the meat even after the high prices they will have reduced income
Monopolistic Competition
What is a monopolistic competition? Monopolistic competition is a business system mixing monopoly features with open markets. A competitive monopoly market is one with the freedom to enter and to quit. However, businesses should distinguish their goods. They have thus an inelastic curve of demand and can therefore set prices. Because of freedom of entry, however, supernormal profits will allow more businesses to enter the market, leading to normal long-term benefits. Monopolistic competition is an intermediate ground between monopoly and ideal (a strictly theoretical state) competition and blends both elements. In monopolistic competition, both enterprises have the same comparatively low degree of market control. Demand is, in the long run, very elastic, so it is pricing sensitive. The economic benefit is favorable
Indifference Curve
What is the Indifference Curve? The satisfaction level of an individual cannot be in the quantitative value. Although people will, and do, recognize the preferences that will offer them greater, or little, or the equivalent degree of pleasure, the indifference curve displays individual variations of products that have the same degree of benefit or contentment. For instance, Figure 1 illustrates three indifference curves that display Emma's choice for the exchange she encounters in her two fundamental comfort projects: consuming donuts and reading books. Each indifference curve (Ul, Um, and Uh) depicts one amount of benefit. Initially, we analyze the significance of the actual indifference curve, and afterward, we observe the correlation among them Emma will derive equivalent benefit from across all variations of books and
Behavioral Economics
What is Behavioral Economics? Behavioral economics is an analysis of the influence of psychological perceptions on an individual's economic decision-making process. The value of acknowledging behavioral economics for advertisers is immense, as it provides a more in-depth explanation of the human. In the rational world, individuals will often consider the best options to achieve maximum gain and pleasure. In economics, the theory of reasoned action claims that when people encounter alternative approaches under local conditions, they will prefer an option that significantly increases their content. This analysis implies that considering their expectations and limitations, and individuals can make sensible decisions by efficiently comparing the risks and consequences within each choice open to them. The ultimate verdict taken will be the most acceptable
Monetary Policy
The monetary policy was made by central banks to achieve many macroeconomic goals such as controlling inflation, consumption, etc. It manages the supply and demand for money by using the interest rate as a tool. It is used by the central bank of a country to achieve macroeconomic goals. Monetary authorities work on them to control the payable interest rate. Central banks used the key concepts of monetary policy to expand the economy such as they reduce the discount rate, decrease the reserve ratio, and purchase government security. Main objective of Monetary Policy The main objective of this policy is to attain the stability of prices. The goal is achieved when the domestic economy has the lowest possible and sustainable prices. GDP
Fiscal Policy
What is Fiscal Policy? The usage of Government expenditures and taxation to control the economy is fiscal policy. In an attempt to pursue the strategic objectives of stable prices, economic growth, and infrastructure prosperity, fiscal policy is used to control the level of domestic final demand in the economy. There are two major factors of Government when it comes to fiscal policy. 1. Alter the amount and organization of taxation and/or amendment the rate of taxation 2. Changing the quantity of investments in various financial sectors. To control budget and tax levels and economy of the Government, it uses the mechanism of fiscal policy. It is a sister monetary policy tactic through which a federal reserve impacts the amount of money in circulation. Governments can
Unemployment and Inflation – The Philip Curve
The relationship between unemployment and inflation, which is known as Philip Curve, has its critical value in the macroeconomic policies of the country. In this article we are going to discuss this relationship in detail. Mathematical Derivation The typical Phillips curve tale begins with a wage Phillips curve, as Phillips himself explains it. The rate of increase in money wages is represented (gW). Operator g here and below is the "the percentage rate of growth of" of the following vector. gW=gWT-f(U) This narrative was updated during the 1970s when employees struggled to keep up with inflation (as late Abba Lerner indicated in the 1940s). The equation has modified since the 1970s to incorporate the function of inflationary expectations (or the expected inflation rate,
What is Macroeconomics?
The questions asked by the students that what is macroeconomics? so the macroeconomic is defined as one of the major branches of economics which focuses on the aggregate behavior of the economy. In simple words, it presents the birds-eye view of the economy. It gives more focus to major or aggregate issues of time economy like growth rate, gross domestic product, gross national product, inflation, and unemployment, etc. Macroeconomic deals with the behavior, structure, decision making, and performance of the whole economy. For example, using government spending, money supply, taxes, and interest rate regulate economic stability and growth. The global, national, and regional economies are also its subject. Microeconomics and macroeconomics are two major and are general fields of economics. The United
P-Value Calculator
Here we have defined the p-value calculator to help you out to measure one side as well as two-sided p-values from the following distributions, normal distribution (z-Stat), t-student, chi-squared, and F stat. P-values are commonly used in science but some people find this concept intimidating. In this article, we are going to make this concept easy for everyone. We are not only going to define p-values but also teach you how to interpret the results quickly. Further, we have created the p-value calculator to make calculations easy for you. What is the p-value? If the H0 (null hypothesis) of a study question is valid, the P-value is the probability of finding the observed, or more extreme, results. The term 'extreme' and its concept