There are three different Theories of Efficiency that we are going to focus on. The first Theory of Efficiency is Pareto efficiency or Pareto optimality. The second is the Kaldor–Hicks improvement, and lastly the Zero-profit condition or Zero Profit Theorem.
A firm or individual’s decision for allocating its wealth amongst assets is known as the Theory of Asset Demand or Portfolio-Choice Theory.
The Aggregate Demand and Aggregate Supply Equilibrium provides information on price levels, real GDP, and changes to unemployment, inflation, and growth as a result of new economic policy.
The Phillips Curve showed that there was a trade-off between the inflation rate and the unemployment rate. Alban Phillips based the original work on data from the UK from 1861-1957.
Durable goods are those goods that don’t wear out quickly and last over a long period. While non-durable goods or soft goods are those goods that have a short life cycle.
The Harrod Domar model shows the importance of saving and investing in a developing economy. The model was developed independently by Roy F. Harrod and Evsey Domarin 1939.
The Theory of Production explains the principles by which a business firm decides how much of each commodity that it sells it will produce. And how much of each kind of labor, raw material, fixed capital goods, etc., that it employs it will use.
Even though developing nations have very different backgrounds in terms of resources, history, demography, religion and politics, they still share a few common characteristics.
Central banks oversee the banking system in their country. They play an important role in managing a state’s currency, money supply, and interest rates.
A bill of exchange is a specialized type of international draft used to expedite foreign money payments in many types of international transactions. In addition, a draft is commonly used in the U.S. while a bill of exchange is primarily used outside the U.S.
In the Cost Theory, there are two types of costs associated with production – Fixed Costs and Variable Costs.