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This article distinguishes between the income elasticity of demand and the cross elasticity of demand. Income elasticity of demand is calculated by dividing the % Change in Quantity Demanded by the % Change in Income, while cross elasticity of demand is found by dividing the % Change in Quantity Demanded of Good A by the % Change in Price of Good B.
Published by Braden Galea 66 months ago in Economics & The Economy | +4 votes | 2 comments
Capital-output Ratio Criterion for investment in development planning An investment criterion that has often been advocated by various econo­mists is that of capital output ratio. That is, in choosing among investment projects and in determining priorities, capital-output ratios of different invest­ment projects be compared. Those investment projects (for their technical forms) should be selected that minimize the capital-output ratio. If capital-output ratio of investment A (3:1) is le...
Published by Niitesh Mundra 66 months ago in Economics & The Economy | +0 votes | 0 comments
Arguments against Foreign Aid For an under-developed country, desirous of treading the road to development, foreign aid is essential, nay indispensable. But when one is opposed to it, it is on the ground of improduce. Foreign aid such countries must irk and accept but they must remain within limits of prudence. Prudence is required to be exercised on the quantum of foreign aid, the terms on which it is taken and the period for which it is taken or is continued. Foreign aid may be opposed if t...
Published by Gazu Lakhotia 66 months ago in Economics & The Economy | +0 votes | 0 comments
Foreign aids assists in the path of economic development in the following ways (1) Filling the Foreign Exchange Gap. The under-developed countries, awakening to the urgent need of rapid economic development, urgently require to import from the already developed countries, machinery and other capital equipment, technical know-how and some essential raw materials to support a programme of large-scale industrialization. Even for agricultural development they may have to import fertiliz...
Published by Gazu Lakhotia 66 months ago in Economics & The Economy | +0 votes | 0 comments
Need For foreign Aid in economic development Few developing countries have been able to carry on their development programmes without foreign aid. The reason is obvious. They have entered the race for economic development late and they are impatient to catch up with the advanced countries at the earliest. But the domestic resources are meager in relation to their requirements or their ambitions. There is no doubt that they do make an effort to mobilize their own resources in the form of addit...
Published by Gazu Lakhotia 66 months ago in Economics & The Economy | +0 votes | 0 comments
Case for Balanced Growth Say's law propounded by classical economists tells us that production or supply creates its own demand. But this law cannot be accepted in the sense that the production of cloth creates its own demand because the workers engaged in the making of cloth will not spend their entire earnings on the purchase of cloth. In the same w ay production of shoes cannot create its own demand. The reason lies in the variety of man's demands.
Published by Niitesh Mundra 66 months ago in Economics & The Economy | +2 votes | 0 comments
Many of our politicians continue to tell us that drilling more oil in the United States will lower our gas prices. The US is drilling more oil and yet gas prices are still high. Are the politicians right or is this just partisan politics. Who should we believe about oil drilling and gas prices?
Published by Sam Montana 66 months ago in Economics & The Economy | +6 votes | 2 comments
The basic characterstic of a command economy is the ownership and control of the means of production and of the industry by the community as a whole through the Central Government. The Government owns the resources, allocates them according to the needs of the society, decides what is produced and determines the methods of production. Buyers and sellers exchange goods and services as determined by the Government in controlled markets.
Published by Braden Galea 66 months ago in Economics & The Economy | +0 votes | 0 comments
Government Measures to Promote Development In view of the peculiar circumstances in which politically, socially and economically the under-developed countries are placed, there is not only a great urgency about economic development but also an infinitely much greater effort is required to generate the forces of economic growth. This effort is obviously beyond private enterprise in such countries. Owing to adverse political, economic and social factors, these countries have been for long ...
Published by Niitesh Mundra 66 months ago in Economics & The Economy | +0 votes | 0 comments
Role of government in economic development In modern times, State participation in economic activity can hardly be a matter of disagreement. The free play of economic forces, even in highly developed capitalist countries, has often meant large unemployment and instability of the system. Hence, there is a considerable dilution of the laissez faire principle and the governments are now called upon to intervene in economic fields which were considered sacrosanct
Published by Niitesh Mundra 66 months ago in Economics & The Economy | +0 votes | 0 comments
Criticism of the theory of disguised unemployment The theory of disguised unemployment as a saving potential, put forward by Nurkse, has been subjected to the following criticism:— 1. It is said that full mobilisation of the saving potential would, no doubt, increase investment without reducing consumption. But there are practical difficulties in this mobilisation. People accustomed to agriculture do not take easily and kindly to industrial jobs. Being misfits, they indul...
Published by Niitesh Mundra 66 months ago in Economics & The Economy | +0 votes | 0 comments
Methods and Problems of Utilizing Surplus Labour Now let us understand in what practical manner the saving potential in the disguised unemployment can be mobilised for capital formation. In other words, how can this surplus man-power be used for purposes of economic development and what problems will arise in this connection? There are two ways of utilizing this surplus labor. One is to put this labor on some productive projects iri the locality so that they continue to live in t...
Published by Niitesh Mundra 66 months ago in Economics & The Economy | +0 votes | 0 comments
Meaning of disguised- unemployment Five decades ago, Mrs. Joan Robinson coined the term 'disguised -unemloyment' to denote workers who were pushed down to less remunerative occupations in order to have something to survive. Contemporary economists refer to 'disguised unemployment' to mean a sort of pseudo-employment where workers appear to be employed, but in fact are not. This is so where more laborers are tied up in different lines of production, mainly agriculture, than are necessary ...
Published by Niitesh Mundra 66 months ago in Economics & The Economy | +1 votes | 0 comments
Measures to Reduce the Inflationary Potential of Deficit Financing What is deficit financing? When a ruling body uses us in excess revenue received by means of taxation as well as fees throughout the current fiscal year, it hits in to a deficit budget. When such deficit budget is meet up by means of loans generally from the Reserve Bank of the nation and the general public and banks, it is known as deficit financing.
Published by Gazu Lakhotia 66 months ago in Economics & The Economy | +0 votes | 0 comments
Does Deficit Financing necessarily Lead to Inflation? It is not necessary that deficit financing may add to the purchasing power of the community. There may be some disbursements which do not have this effect. For instance, if the budget provides a grant of Rs. 5 crores to the Industrial Finance Corporation to be used in emergencies, this amount, though spent by the Government, will not make any addition to the spending power of the community till an emergency actually occurs.
Published by Gazu Lakhotia 66 months ago in Economics & The Economy | +0 votes | 0 comments
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