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Elasticity is, in general terms, the amount supply or demand will react to a change in another variable such as income or price. It is very important to economists as it will allow them to estimate econom...

Central Banks have introduced Quantitative Easing (QE) as an additional mechanism to stimulate inflation in the economy.The two mechanisms that drive inflation (theoretically as this has not been proven a...

A market failure is when an allocation of resources has a negative effect on a third party that is outside the market mechanism. The third party effects are negative externalities. Increasing transport us...

Inflation is the increase in general price levels in an economy. It is measured by two indices; retail price inflation (RPI) and consumer price inflation (CPI). CPI is the more common measure and measures...

Since government spending is a component of Aggregate Demand (AD), this expansionary fiscal policy will cause AD to rise. This will be exaggerated by the multiplier effect, whereby an injection into the c...