Macroeconomics | Economics Discussion

Theory of Rational Expectation | Theories| Macroeconomics

The new classical macroeconomics is based on the rational expectations hypothesis. This means that people have rational expectations about economic variables. The implication is that people make intelligent use of available information in forecasting variables that affect their economic decisions. According to this hypothesis, forecasts are unbiased and based on all available information. The hypothesis holds that people make unbiased [...]

By Anushree A|2017-03-04T14:07:50+05:30March 4, 2017|Rational Expectations|Comments Off

Models of Economic Growth (With Diagram) | Macroeconomics

In this article, we discuss some basic models of economic growth which lay the foundation for any comprehensive study of the process of economic development. The aggregate production function lies at the heart of every model of economic growth. It is also an extension of the micro-economic production function' at the national or economy wide level. The Aggregate Production Function: [...]

By Anushree A|2017-03-04T14:07:49+05:30March 4, 2017|Models|Comments Off

Relationship: Price Flexibility and Full Employment | Macroeconomics

Keynes's main attack against the postulates of the classical economists centres around the relationship between price flexibility and full employment. Keynes challenged the classical belief that price flexibility can be relied upon to generate automatic full employment. The defenders of the classical school, on the other hand, still insist upon this automaticity as a fundamental tenet. Wage Flexibility: The importance [...]

By Anushree A|2017-03-04T14:07:49+05:30March 4, 2017|Relationship|Comments Off

Tag Archives | Macroeconomics

Theory of Rational Expectation | Theories| Macroeconomics

Models of Economic Growth (With Diagram) | Macroeconomics

Relationship: Price Flexibility and Full Employment | Macroeconomics