The term unemployment is used to describe anyone who is able to work, but doesn’t have an occupation. Unemployment is one of the most common and chronic problems worldwide. It is a concern for individuals as well as global communities. Unemployment is expressed as percentage of the total available work force that is unemployed, but actively seeking employment and willing to work which is known as the unemployment rate. Basically there are five types of unemployment: frictional unemployment, cyclical unemployment, structural unemployment, real wage or classical unemployment, and seasonal unemployment. The level of unemployment varies with economic conditions and other circumstances. The causes of unemployment include increased population, rapid technological change, lack of education or skills and rising cost lead to financial, social and psychological problems. There are four main causes of unemployment. Firstly, the increased population which leads to higher unemployment rates. As the number of people who are Continue reading
Economics Basics
Analysis of Joseph Schumpeter’s ‘Theories of Economic Development’
At the turn of the century, a period of strengthening the role of monopolies, increasing property differentiation of the population and the deepening of cyclical crises appeared the concept of an Austrian economist and sociologist Joseph Schumpeter. Joseph Schumpeter was an economist and sociologist, he came into the history of economic science as a profound scholar of theoretical problems of entrepreneurship and evolution of socio-economic systems, as the historian of economic theory. His broad vision of the evolution of socio-economic processes still has influence on modern economic thought. He presented his understanding of the subject of economics and tried to combine economic theory, economic sociology and the history of economic analysis. He tried to create a coherent system of believes that explains new phenomena and processes. According to his theoretical views, J. Schumpeter does not belong to any known economic schools. He was involved in many issues, focusing on the Continue reading
Objectives of Demand Forecasting
Demand forecasting means an estimation of the level of demand that might be realized in future under given circumstances. These are concerned with the predictions of demand for products or services to minimize the uncertainties of the unknown future. These forecasts on demand facilitate in formulating material and capacity plans and serves as inputs to financial, marketing and personnel planning. The demand forecast itself may be generated in a number of ways, many of which depend heavily upon sales and marketing information. The objectives of demand forecasting are different in case of short run and long run forecasts. Short Run Forecasting Short run forecasting is usually a period not exceeding one year. The following are the objectives of short run demand forecasting. To evolve a suitable production policy: Short term forecasts help the firm to plan the production so as to avoid the problems of over production and short supply. Continue reading
Introduction to Neo-Classical Economics
Neo-classical economics began around the turn of the century. It provided more analysis on the processes through which the market system allocates economic resources. The application of supply and demand curves, micro-economics and price theory helped to calm many of the disquieting aspects that Marx had created around classical economics. It accomplished this by ignoring the class division and working from the assumption of the existence of the “autonomous” rational wealth maximizer as subject for study. Alfred Marshall was a professor at Cambridge in the late 1890’s. He created the idea that supply and demand can be used to determine a fair price for the exchange of commodities in an industrialized society. These mathematical equilibrium curves assume that people act as rational agents pursuing economic ends. Another assumption required was formulated in Say’s Law, which says that all income must be spent. Hoarding was seen as irrational, and the Continue reading
Classical Economics
Beginning with the ideas of Adam Smith (An Inquiry into the Nature and Causes of the Wealth of Nations, 1750), including the ideas of David Ricardo, and ending approximately with John Stuart Mill (1850’s) the framework was established for classical economics. Mill in particular established the foundation for free trade in advocating individual libertarian autonomy rights which had the effect of limiting legislative authority in matters effecting the private economy. In the context of 19th Century Europe, this argument makes much sense, monopolies had been granted to crown corporations for most major state projects and independent private business moguls were working toward respectability. In the context of our 21st Century corporate global climate the argument may validly be reversed. It can be argued that individual rights have the effect of lending legitimacy to legislation over matters effecting the private economy. Overall, the first classical theorists began the analysis of Continue reading
Definition of Inflation – Types of Inflation
Definition of Inflation Inflation is commonly understood as a situation of substantial and rapid general increase in the price level and consequent fall the value of money over a period of time. Inflation means persistent rise in the general level of prices. Inflation is a long term operating dynamic process. By and large, inflation is also a monetary phenomenon. It is usually characterized by an overflow of money and credit. In fact, the root cause of inflation is the expansion of money supply beyond the normal absorbing capacity of the economy. The behavior of general prices is measured through price indices. The trend of price indices reveals the course of inflation or deflation in the economy. Read More about Inflation: Causes and Effects of Inflation The Stages of Inflation Inflation in a Developing Economy Definition of Inflation by Different Economists There is no generally accepted definition of inflation and different Continue reading