What is fiscal policy?
Fiscal policy is the government’s use of spending and taxation to influence the economy. Fiscal policy differs from monetary policy. Monetary policy refers to the management of money supply and interest rate and is the demand side economic policy used by the monetary authority of a country, typically the central bank (in India RBI) or…
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What is the meaning of Public debts?
A government requires money for its spending which includes normal government expenditures, capital expenditures on public works, relief expenditures, and subsidies of various types, transfer payments and social security benefits etc. Imposing tax on public for the above spending is major source of its revenue. Beside Taxation, government collects money through fiscal surplus of previous…
Read article What is a contractionary Monetary Policy?
The contractionary monetary policy is the opposite of the expansionary monetary policy. It is used to fight inflation which involves decreasing the money supply to increase the cost of borrowing which in turn decreases GDP and dampens inflation. Once the Central Bank of the country (In India RBI) puts too much liquidity into the banking…
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How to measure Gross Domestic Product (GDP)?
The most well-known and frequently tracked metric used for measuring the economic growth of a country is the gross domestic product (GDP). The Gross Domestic Product measures the value of goods and services produced by a nation both for domestic sale and exports. However, GDP does not include imports for measurement, as imports are not…
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What is the meaning of economic growth?
Economic growth is an increase in the production of economic goods and services per head of the population over a specific period. It can be measured in nominal or real (adjusted for inflation) terms to be more accurate. Economists and statisticians use different methods such as Gross national product (GNP) and Gross Domestic Product (GDP)…
How do we measure the rate of inflation?
The inflation rate of an economy can be easily calculated by using the following formula: [CPI(c)-CPI (p) ÷ CPI (p)]×100 Where; CPI(c) is the consumer price index of the current year CPI (p) is the consumer price index of the previous year or initial consumer index For example, the CPI of the previous year was…
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