Objectives of Fiscal Policy As an instrument of macroeconomic policy, the goals of fiscal policy are different in different countries and the same country in different situations. However, the 5 major roles and objectives of fiscal policy can be listed below: Let’s explore each of these fiscal policy objectives: Optimum Allocation of Resources One of … Read more
Meaning of Fiscal Policy Fiscal policy refers to a policy that is concerned with the effects of government expenditure, taxation, and public borrowing on output and employment. Fiscal policy is a policy concerning the receipts and expenditures of the government. It belongs to the budgetary policy of the government. It operates through changes in government … Read more
Objectives of Monetary Policy The objectives of monetary policy may be different at different times and in different economic conditions. In the pre-Keynesian times, the monetary policy was the only macroeconomic policy and the objective was only price stability. But after the 1930s the role of monetary policy was drastically changed. Broadly speaking, the six … Read more
Definition of Monetary Policy Monetary policy concerns the country’s monetary system. It refers to the policy measures undertaken by the Central Bank to influence the money supply as an investment in achieving the objectives of general economic policy. Monetary policy helps realize objectives such as the optimum level of output and employment, price stability, and … Read more
Definition of Business Cycle A business cycle or trade cycle is defined as an alternation of periods of good trade i.e. increasing trends of economic variables and periods of bad trade i.e. falling trends of macroeconomic variables. Business conditions never remain unchanged. A business cycle refers to oscillations in aggregate economic activities, particularly in employment, … Read more
Meaning of Classical Theory of Employment The classical theory of employment states that, in the long run, full employment is always possible in a free capitalist closed economy. The classical theory of Employment was developed by the combined contributions of classical economists such as Adam Smith, J.S. Mill, A.C. Pigou, Ricardo, etc. The theory is … Read more
Difficulties in Measurement of National Income Estimating national income is quite a complicated task. It is beset with difficulties of various kinds. These difficulties in the measurement of national income can be broadly classified into two categories: (a) conceptual difficulties, and (b) practical difficulties. While conceptual problems are general and appear in almost all countries, … Read more
Theories of Foreign Direct Investment (FDI) Foreign direct investment (FDI) theories are a means to understand the environment of international investment in different countries. The 4 main theories of FDI are mentioned below: Monopoly Theory of Advantage The monopoly theory of advantage states that the investing firm possesses a relative monopolistic advantage abroad against the … Read more