Understanding HDI, Poverty, Inflation, and Economic Policies in India
Understanding Key Economic Concepts and Policies in India
The Human Development Index (HDI)
The Human Development Index (HDI) is a composite index that measures a country’s average achievement in three areas of human development: access to knowledge, a decent standard of living, and a long and healthy life. The United Nations Development Programme (UNDP) introduced the HDI in 1990 to provide a more comprehensive measure of human development than traditional economic indicators.
The HDI value ranges
Read MoreUnderstanding Externalities: Pollution and Positive Impact
Externalities
An externality exists when the production or consumption of a good directly affects consumers or businesses not involved in the buying or selling of that good, and when those effects are not reflected in market prices.
When introducing the concept of externality, it’s useful to distinguish between social and private valuations. Social valuations include the social and private benefits or costs that the market has not taken into account due to the externality.
Negative Externalities:
Read MoreGeneral Equilibrium and Economic Efficiency
Item 16: General Equilibrium and Economic Efficiency
General Equilibrium Analysis: Unlike partial equilibrium analysis, general equilibrium analysis determines prices and quantities simultaneously in all markets. It explicitly considers feedback effects. A feedback effect is a price or quantity adjustment in one market caused by price and quantity adjustments in related markets.
Efficiency in Exchange: In an exchange economy, two or more consumers trade two or more goods. An initial allocation of
Read MoreEconomic Systems: Market vs. Central Planning
Economic Systems and Basic Needs
An economic system is the way individuals in a society are organized to solve their basic economic problems. Every economic system must answer three basic economic questions: what to produce, how to produce, and for whom to produce.
What to Produce
This involves determining which goods and services will be produced and in what quantity. Are we going to produce many goods? Is it better to produce a large quantity of lower quality, or a smaller quantity of higher quality?
Read MoreSpanish Financial System: Accounts, Trends, and Analysis
Net Interest Income (1994-2000)
- General reduction in interest rates.
- Increase in banking competition (price wars: on the liabilities side since 1989 and on the assets side since 1991).
- Financial disintermediation process.
Bigger impact of both factors on the return on assets than on liabilities. Continuous narrowing of the differential between return on assets and cost of liabilities.
Net Interest Income (2000-2007)
Interest rates decreased between 2001 and 2005. Interest rates increased between 2005
Read MoreService Sector Evolution in Spain: 1985-2008
Developments in the Service Sector
The service sector is determined by factors of supply, but also takes into account changes in demand. Key features:
- Expansion in the share of services in production at current prices: from 59% in 1985 to 67% in 2008 (out of €100 to be produced in the economy, almost 70% is from services).
- At constant prices, the change is only from 66% in 1985 to 69% in 2008.
- Services usually maintain their participation in real production and increase production in times of crisis