The money supply is the entire stock of currency and other liquid instruments circulating in a country’s economy at a specific time. The circulating money involves the currency, printed notes, money in the deposit accounts, and the form of other liquid assets. In India, the Reserve Bank of India follows M0, M1, M2, M3, and…
Repo suggests the rate at which liquidity is injected into the banking system whereas Reverse Repo is the rate at which RBI absorbs liquidity from the banks. RBI controls the money supply in the country by effecting the changes in repo rate & reverse repo rate. Therefore repo and SDF (reverse repo rate) are known…
A money market is said to be in equilibrium if the quantity of money demanded is equal to the quantity of money supplied at a particular rate of interest. A shift in money demand or supply in an economy will lead to a change in the equilibrium interest rate. The money market involves of money…
Interest rate in an economy is determined by the forces of demand and supply of money in a free market. The supply of funds is influenced by the willingness of consumers, businesses, and governments to save. The demand for funds reflects the desires of businesses, households, and governments to spend more than they take in…
The demand curve for money shows the quantity of money demanded at each interest rate. Its downward slope expresses the negative relationship between the amount of money demanded and the interest rate. Its downward slope expresses the negative relationship between the quantity of money demanded and the interest rate. The relationship between interest rates and…
The two main indicators of inflation in India are the wholesale price index (WPI) and the consumer price index (CPI). The WPI measures prices received by producers of goods, while the CPI measures prices facing consumers at the retail level. The WPI is calculated using the Laspeyres formula, which measures the change in the cost…
Supply is defined as the specific product available to the market for consumption. Demand is the amount of a specific product a consumer can purchase at each price. The supply and demand are deeply correlated. These two concepts of supply and demand are tangled to create market equilibrium which defines the availability of goods in…
The demand may be defined as the amount of some product a consumer is willing and able to purchase at each price where; The price is what a buyer pays for a specific good or service per unit. The willingness to purchase suggests a desire, based on what economists call tastes and preferences. Being able…
Some recent international economic issues include: Financial conditions: Financial conditions are tightening in most regions. War: The war between Russia and Ukraine has triggered an energy and food crisis. COVID-19 pandemic: The COVID-19 pandemic has hurt the global economy, especially low-income households. Inflation: Inflation has increased significantly in several countries across the world. Between…
The primary, secondary, tertiary, quaternary, and quinary sectors represent various business types and the goods they procure and sell in an economic setup. They differ in the following ways:The primary sector comprises the basic industries for providing basic materials to other industries. This sector encompasses the extraction of raw materials from the environment, such as…