The most widely reported statistic throughout the world of measuring economic performance is Gross Domestic Product. Gross Domestic Product or GDP is the market value of all final goods and services produced within a nation’s geographic borders during a period of time, usually a quarter or a year.
Circular Flow diagram also called the circular flow model is perhaps the simplest diagram in economics to understand the activity in the economy.
The circular flow model shows,firstly the relationship between households and firms,and secondly how they interact with one another in two markets,namely,in goods and services market and the factor of production market. Continue reading
To measure the economic performance of an economy,the first measure is the Gross Domestic Product or GDP in short. It is an important economic statistic/data because it provides the best estimate of the market value of all final goods and services produced by an economy in one year. It is usually used to measure and compare economic outputs of various countries around the world. It allows us to compare the total output level of one country to the total output level of another country with ease.
GDP is measured in monetary value or cash value of all final goods and services produced in a year . GDP measures two things at once- the total income of everyone in the economy and the total expenditure on economy’s output of goods and services. A higher GDP means more output from an economy and typically a stronger economy. Continue reading
In this episode we’ll look on the impact on Production Possibilities Frontier caused by the change in technology or resources.
Limited resources means limited output. Necessity of choice is created. Choice is reflected in the need of the society to select among the various attainable combinations lying on the PPC.
Economic growth (shifts outward of the curve) occurs because of productive expansion.
PPF change with shifters like
1. Change in resources quantity/quality
2. Change in technology.
3. Change in trade
In this episode we’ll look on the concept of Production Possibilities Frontier or Production Possibilities Curve.
Production Possibilities Curve is an economic model to demonstrate opportunity costs and trade offs. It’s easy to visualise opportunity costs or trade offs through a model or diagram. The curve shows the various combinations of goods and services an economy can produce when all productive resources are employed.
There are 4 assumptions regarding the model:
1. Efficiency: full employment and productive efficiency.
2. Fixed resources: no more available but are shiftable.
3. Fixed technology: state of technology does not change in the period.
4. Two goods: hypothetical to produce just 2 goods or products
There are 2 methods of analysing:
1. Production possibility schedule or table.
2. Production possibility curve
Welcome to another episode of my podcast.In this episode we’ll look on defining economics. Economics is defined as a social science that aims to satisfy how the society allocates it’s scarce resources to satisfy the society’s unlimited needs and wants in the most efficient way. Since resources are limited (scarce) and the needs and wants are unlimited, therefore, we can say that economics is the study of how people make choices.