INTRODUCTIONIt is now widely recognized that the state has a sine qua non in the regulation of economic activity along the desired lines. Fiscal policy is traditionally concerned with the determination of state income and expenditure policy. However, in recent times, public borrowing and deficit budgeting have also become a part of fiscal policy.Thus...

 IntroductionMost of the economists believe that debt redemption that is the repaymentof pubic debt is desirable for the government.The need to repay public debt exercises a sort of check on the recklessnessof the government. A weak government may borrow large amounts to finance its expenditure because public debt does not impose a burden on the...

Introduction In an open economy, domestic spending no longer determines domestic output. Instead, spending on domestic goods determines output. A currency depreciation (increases in R) has two distinct effects on this measure: (i) value effects, and (ii) volume effects. A currency depreciation is equivalent to an increase in the relative price...

Introduction The transactions in the exchange market are carried out at what are termed exchange rates. It is the price of foreign money. Thus, exchange rate may be defined as the price paid in the homes currency for a unit of foreign currency. Or more simply, rate of exchange is the prices of one national currency in terms of another. It can be...

Introduction The mechanism through which payments are effected between two countries having different currency system is called foreign exchange. In simple words, by foreign exchange we mean foreign currencies. However, in broad sense, the term refers to the system of external or international payments. It covers methods of payment, rules and...

Kinked Demand curve The Kinked Demand curve theory is an economic theory regarding oligopoly and monopolistic competition. Kinked demand was an initial attempt to explain sticky prices.The kinked demand curve hypothesis is developed by Paul M Sweezy (Paul M Sweezy, Demand Under Conditions of Oligopoly" Joumal of Political Economy, August 1939, reprinted...

Policies for Internal and External Balance A deficit in the balance of payments implies an excess of expenditure over income. To correct it, expenditure and income should be brought into equality. Expenditure-reducing policies aim at reducing aggregate demand through higher taxes and interest rates thereby reducing expenditure and output. The reduction...

Introduction Macroeconomic Policy means the monetary and fiscal policy it refers to the instruments by which a government tries to regulate or modify the economic affairs of the country in keeping with certain objectives; In other words, it tries to assess the behaviour of the economy as a whole and to seek ways in which its aggregate performance...