Keynesian Multiplier and Fiscal Policy Effects
Keynesian Multiplier and Demand Changes
The idea of compensating changes in private demand with changes in public expenditure rests on the Keynesian Multiplier. An increase in public spending increases domestic production and, consequently, agents’ disposable income. In turn, these increased incomes finance consumer demand and investment, leading to a further increase in production, which generates more income, and so on.
Multiplier Conclusions
Conclusion 1: Haavelmo Theorem
An increase in government
Read MoreBusiness Structures and Global Trade Organizations
Types of Business Ownership
Sole Proprietorship: A business that is owned and operated by only one person. The owner makes all the decisions and keeps all the profits, but they are also personally responsible for all the business debts. If the business has problems, the owner must pay with their own money or property.
Examples:
- Bakery run by one person
- Freelance graphic designer
- Carpenter with a personal business
- Clothing seller at a market
Partnership
A business owned by two or more people. They share
Read MoreFundamentals of the Economic Enterprise and Firm Structure
Item 1: Introduction to the Firm
The Concept of the Economic Enterprise
The company is currently one of the fundamental pillars of the economic system. From an economic standpoint, the company is the “basic unit of production.” Families are economic agents whose primary function is consumption, but they also provide some of the factors of production.
Classification of Companies
Companies can be classified based on several criteria:
Classification by Size
Criteria: Number of employees / Annual Turnover
Read MoreFinancial System, Central Banks, and Monetary Policy Basics
The Financial System and Intermediaries
Financial intermediaries are banks (those whose indirect financial assets are generally accepted as payment) and non-bank institutions (those that issue non-financial assets, often referred to as narrow money).
The financial system consists of the set of institutions that mediate between applicants and suppliers of financial resources.
Components of the Financial System
- Financial Intermediaries (Banks): Bank of Spain, private banks, savings banks, credit unions,
Global Economic Stability: WTO, IMF, World Bank, and India’s Free Trade Strategy
World Trade Organization (WTO)
The World Trade Organization (WTO) is an international organization that deals with global trade rules between nations. Its primary objective is to promote free and fair trade among countries, ensuring a level playing field and fostering economic growth and development.
Key Functions of the WTO
- Negotiating Trade Agreements: The WTO provides a platform for member countries to negotiate trade agreements, reducing tariffs and other trade barriers.
- Resolving Trade Disputes:
Understanding Urban, Rural, and Tribal Communities
Communities: Urban, Rural, Tribal
Urban Communities
Definition
Urban communities refer to populations living in cities and towns, characterized by a high density of population, infrastructure, and economic activities.
Characteristics
1. High Population Density: Urban areas have a high concentration of people, leading to increased social interaction and diversity.
2. Diverse Economy: Urban economies are diverse, with a mix of industries, services, and commerce.
3. Modern Infrastructure: Urban areas have