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Demand-pull Theory
In economics, the demand-pull theory is the theory that inflation occurs when demand for goods and services exceeds existing supplies. According to the demand pull theory, there is a range of effects on innovative activity driven by changes in expected demand, the competitive structure of markets, and factors which affect the valuation of new products or the ability of firms to realize economic benefits. See also * Demand-pull inflation * Quantity theory of money In monetary economics, the quantity theory of money (often abbreviated QTM) is one of the directions of Western economic thought that emerged in the 16th-17th centuries. The QTM states that the general price level of goods and services is directly ... * Cost-push theory References Economic theories Inflation Demand {{econ-term-stub ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Demand-pull Inflation
Demand-pull inflation is asserted to arise when aggregate demand in an economy is more than aggregate supply. It involves inflation rising as real gross domestic product rises and unemployment falls, as the economy moves along the Phillips curve. This is commonly described as "too much money chasing too few goods". More accurately, it should be described as involving "too much money spent chasing too few goods", since only money that is spent on goods and services can cause inflation. This would not be expected to happen, unless the economy is already at a full employment level. It is the opposite of cost-push inflation. How it happens In Keynesian theory, increased employment results in increased aggregate demand (AD), which leads to further hiring by firms to increase output. Due to capacity constraints, this increase in output will eventually become so small that the price of the good will rise. At first, unemployment will go down, shifting AD1 to AD2, which increases dem ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Quantity Theory Of Money
In monetary economics, the quantity theory of money (often abbreviated QTM) is one of the directions of Western economic thought that emerged in the 16th-17th centuries. The QTM states that the general price level of goods and services is directly proportional to the amount of money in circulation, or money supply. For example, if the amount of money in an economy doubles, QTM predicts that price levels will also double. The theory was originally formulated by Renaissance mathematician Nicolaus Copernicus in 1517, and was influentially restated by philosophers John Locke, David Hume, Jean Bodin. The theory experienced a large surge in popularity with economists Anna Schwartz and Milton Friedman's book ''A Monetary History of the United States,'' published in 1963. The theory was challenged by Keynesian economists,Minsky, Hyman P. ''John Maynard Keynes'', McGraw-Hill. 2008. p.2. but updated and reinvigorated by the monetarist school of economics, led by economist Milton Friedman. ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Economic Theories
Economics () is the social science that studies the production, distribution, and consumption of goods and services. Economics focuses on the behaviour and interactions of economic agents and how economies work. Microeconomics analyzes what's viewed as basic elements in the economy, including individual agents and markets, their interactions, and the outcomes of interactions. Individual agents may include, for example, households, firms, buyers, and sellers. Macroeconomics analyzes the economy as a system where production, consumption, saving, and investment interact, and factors affecting it: employment of the resources of labour, capital, and land, currency inflation, economic growth, and public policies that have impact on these elements. Other broad distinctions within economics include those between positive economics, describing "what is", and normative economics, advocating "what ought to be"; between economic theory and applied economics; between rational and ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Inflation
In economics, inflation is an increase in the general price level of goods and services in an economy. When the general price level rises, each unit of currency buys fewer goods and services; consequently, inflation corresponds to a reduction in the purchasing power of money. The opposite of inflation is deflation, a sustained decrease in the general price level of goods and services. The common measure of inflation is the inflation rate, the annualized percentage change in a general price index. As prices do not all increase at the same rate, the consumer price index (CPI) is often used for this purpose. The employment cost index is also used for wages in the United States. Most economists agree that high levels of inflation as well as hyperinflation—which have severely disruptive effects on the real economy—are caused by persistent excessive growth in the money supply. Views on low to moderate rates of inflation are more varied. Low or moderate inflation may be attri ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
