Prabhat Patnaik January 5, 2020 The idea is an old one, but the Hungarian economist Janos Kornai clearly conceptualized it, by drawing a distinction between a “demand-constrained system” and a “resource-constrained system”. A demand-constrained system is one where employment and output in the system are what they...
Article Shared by (1). Direction and Inducement Planning: (i) Planning by Direction: Planning by direction is an integral part of a socialist society. It assumes complete absence of laissez faire. Therefore, it implies complete centralized planning with no features of a private economy. Under planning by direction, planning authority...
Article Shared by The upcoming discussion will update you about the difference between Marginal Efficiency of Capital (MEC) and Marginal Efficiency of Investment (MEI). Keynes used the term ‘marginal efficiency of capital’ to refer to the unique rate of discount which would make the present value of...
Article Shared by Simon Kuznets put forward the hypothesis that relationship between per capita national income and the degree of inequality in income distribution may be of the form of inverted-U. Due to limitations of data he used an inequality measure of the ratio of income...
C.P. Chandrasekhar Even while the effort to resolve the crisis resulting from non-performing assets in the banking sector was underway, India’s financial sector was overwhelmed by failures of large non-bank financial companies. In the discussion that followed the collapse of these NBFCs, the emphasis has been...
Article Shared by In this article we will discuss about the elasticity of substitution in a firm. Let us suppose that the firm’s production function is Q = f(L, K) [(8.122)] The convexity property of the isoquants (IQs) expresses the principle of diminishing marginal rate of technical substitution (MRTS)...
Article Shared by The theory of ‘big push’ first put forward by P.N. Rosenstein-Rodan is actually a stringent variant of the theory of ‘balanced growth’. The crux of this theory is that the obstacles of development are formidable and pervasive. The development process by its very...
Article Shared by According to Prof. Harvey Leibenstein the overpopulated and underdeveloped countries are characterized by the vicious circle of poverty. They have low per capita income. His ‘theory of critical minimum effort’ is an attempt to provide a solution to this economic problem. According to him, critical...
– Inferior, Normal, Luxury A list of different types of economic goods. Income elasticity of demand and types of goods Income elasticity of demand (YED) measures the responsiveness of demand to a change in income. Normal good A normal good means an increase in income causes an increase in demand. It...
Article Shared by In this article, we discuss some basic models of economic growth which lay the foundation for any comprehensive study of the process of economic development. The aggregate production function lies at the heart of every model of economic growth. It is also an...