Article Shared by Allocation of resources is one of the central problems faced by all economies. Establishing criteria for investment of a nation’s resources are crucially important for poor countries. One of the most traditional of the investment criteria uses the capital- output ratio as a key...
Tejvan Pettinger This is a theory which estimates the likely utility of an action – when there is uncertainty about the outcome. It suggests the rational choice is to choose an action with the highest expected utility. This theory notes that the utility of a money is...
James Tobin (1965) presented a simple model of monetary growth which follows the Solowian model (which Tobin had independently developed in a 1955 model) in all respects plus one: the existence of government debt (net "outside" wealth). For our purposes, let us assume there is only one...
Tejvan Pettinger Definition of adverse selection: Adverse selection occurs when buyers have better information than sellers, and this can distort the usual market process. It can lead to missing markets as firms do not find it profitable to sell a good. Adverse selection explained A company selling life insurance...
Definition of asymmetric information: This is a situation where there is imperfect knowledge. In particular, it occurs where one party has different information to another. A good example is when selling a car, the owner is likely to have full knowledge about its service history and...
C. P. Chandrasekhar The government has finally admitted that the Indian economy is on a steep downturn. For some time now, even the business community, which tends to shower all praise and disapprove any criticism of the reformist Modi dispensation, has expressed concern about deteriorating economic...
– Inferior, Normal, Luxury Tejvan Pettinge 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....
Sunanda Sen That the Indian economy is currently experiencing a slowdown is more than evident, both with the deliberations in different private circles and with official statements signalling a series of remedial measures , mostly focussed on the ailing financial sector! However, as we point out, the...
Tejvan Pettinger The broken window fallacy states that if money is spent on repairing the damage, it is a mistake to think this represents an increase in economic output and economic welfare. If money is spent on repairing a broken window, the opportunity cost is that...
C. P. Chandrasekhar September 25, 2019 In another instance of lack of clarity in economic decision making, the NDA government seems to be drifting into signing on to the Regional Comprehensive Economic Partnership (RCEP) Agreement potentially involving 16 Asia-Pacific partners. Under discussion for 7 years now, the...