Money illusion is the belief that an increase in wages guarantees life is better for the individual. This ideal, of course, has not considered inflation.
Posts published in “MACROECONOMICS”
Every economy, from the global marketplace to your local coffee shop, thrives on a foundation of four key pillars: earning, spending, saving, and investing.
What is the Balance of Payments? Describe the main components of the UK balance of payments. What is the Current Account? What is visible trade and invisible trade?
This article is about protectionism. It explains different methods of protectionism and gives arguments for and against protectionism in a country.
This article introduces The Phillips Curve which shows the relationship between unemployment and the rate of change in wages.
This article describes in details counter unemployment policies as well as evaluates methods that governments can use to combat unemployment.
This article is about costs and benefits of unemployment. Effects, both negative and positive, of unemployment, and natural rate of unemployment.
This article defines unemployment and talks about how to measure unemployment. It analyzes why different types of unemployment exist.
The government can reduce inflation via monetary policy, fiscal policy or exchange rate policy. These are the major counter inflation policies.
This article defines inflation. It explains how inflation is measured. Also, it describes the pattern of inflation in the UK in recent years.
This article describes the four basic functions and forms of money. It also explains the main measures of the money supply.
Monetary policy is concerned with the money supply to the economy, interest and the amount of credit available to households and firms.
This post describes the difference between income and wealth. It outlines basic problems of unfair and unequal distribution of income.
This article describes canons of TAXation and describes characteristics of a ‘good TAX’. It also explains three different TAX systems.
This article introduces Direct TAXation and Indirect TAXation. It also explains reasons for TAXation and describes the impact of TAXation on incentives.
This article identifies the main areas of public government expenditure in a country, in this case in the UK. Also, Fiscal policy and government expenditure.