explain keynesian econimics?
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Keynesian economics is one philosiphy of money.  Monetarism theory is the other philosiphy of money.  Monetarists believe there is direct causual relationship between the money supply and economic activity.  Where as Keynisian economics is interest rate oriented.  e.x. If interest rate goes down, Investment goes up, therefore GDP goes up.  Remember that GDP, which is a measure an aggreate measure of our economy, is made up of Consumption, Investment, Government expenditures, and Net exports.  And that Investment is a function of interest, while Consumption is a function of income.
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efficient capital market allows more money to be invested, which means more goods and services produced, which means lower prices. \n\nyou get more investment b/c efficient market has zero gap between the rate that users of capital pay, and the rate that owners of capital receive. In real world, this gap is non-zero, so less capital is supplied to the market; and less capital is demanded.
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this link will be of help to u...go thru it .. u will understand...\nhttp://en.wikipedia.org/wiki/Capitalism#Capitalist_theory
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The Economist has an Economics A to Z section to help you understand various terms.\n\nIts helpful for looing up depreciation, gross, net, etc.
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Some people think that markets, including foreign exchange futures, behave like natural phenomenon, and these people are always looking for analogies to the natural sciences to use to help them decide what to do in the marketplace.\n\nOne theory is that the price of a currency will rise to 1.618 times its value before it falls to 0.618 times that value, and it will do so, repeatedly, at roughly the same time interval. Those numbers are the ratio between two consecutive numbers in the Fibonacci sequence, and the ratio of the ratio between two consecutive numbers in the sequence.\n\nI think it's just plain silly, but speculators often have very little to go on and really want to believe they've found some sort of a law of currency value fluctuations.\n\nIf you'd like to hear something a little more sensible about how to trade in currencies, and how the natural sciences really don't apply to market economies, you might want to check out some books by George Soros.
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this will explain the economy.\nhttp://www.philipdru.com/griffin3_stream.html
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the main cause of inflation is the government increasing the supply of money. But it is a little more complicated than that.  When the price of oil increases, the costs of everything that depend on oil also increase, for example. That then causes an increase in prices charged to workers. Workers then demand increased wages to maintain their standard of living. Employers give them higher wages without too much fuss because they know that they can pass the increased costs on to consumers.  The government facilitates all of this by printing more money. The government loves inflation because they borrow a lot of money at fixed interest rates. If they can cause the value of the dollar, peso, pound, euro, or whatever to decline they do not have to pay back all of what they borrowed. A neat trick and used successfully by all governments. Inflation also increases tax revenue.  If a person buys a share of stock for $100 and ten years later sells it for $200, he has to pay taxes on $100.  But if the inflaction rate is 4%, he actually made only $52. So the government makes out like a bandit again. The same goes for all borrowers.  \n\nOn the other hand those who lend money are loosers. Consequently, inflation tends to dry up the sources of capital. It is better to spend your money than to save it. Hence, that is why people have not been saving money since 1999, because Greenspan reduced the interest rate to 0. People are not as stupid as the government is.
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based on supply and demand.  Too detailed to explain in a q&a.  If you're in school, take a finance and economics class.
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Capital, labor, and technology\n\nY=A*F(K, L)
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Macro (meaning large) Economics involves the economy as a whole - the overall functioning of the whole economy.  As opposed to microeconomics which deal with the workings of a single industry (or several industries).  Microeconomics would look at supply and demand of a single product such as oil.  When Katrina hit and disrupted the oil supplies and the oil industry in the Gulf of Mexico, oil prices shot up (supply and demand).  That is Microeconomics.\n\nMacroeconomics would look at that same event (Hurricane Katrina) and examine how that event would impact total good produced.  How would the rise in oil prices affect the shipping of goods (and the airline industry in general) and how would that reduction in goods shipped impact employment in affected industries?  How should the Federal Reserve respond and adjust interest rates and the money supply to dampen those negative effects?\n\nWhat would the impact of Katrina be on quarter-to-quarter growth in the economy?
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Inflation is actually created by growth. The key to keeping the economy in balance is growing at a steady rate. That's why we experienced widespread inflation in the 90s with such unreasonable growth. As fantastic as growth is, it has its own problems.\n\nHowever, there can also be inflation at the same time as an economy slowdown. (For instance, in any major historical depression, infation becomes high. In the German depression after WW1, people would actually run out and buy things immediately after getting paid because their money depreciated by the minute.)\n\nMostly, increased demand increases inflation. Decreased supply (such as with oil) also increases inflation. There are several other factors, but these are the major issues.\n\nRaising prices, though an indicator of inflation, also work to curb inflation sometimes by curbing demand. Of course, this only really works with goods that have relatively elastic demands.
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If you're really interested in economics, perhaps you're looking in the wrong place for an education. Try out the Mises Institute - http://www.Mises.org.\n\nIn addition, here are a few basic economics books that are an easy read:\n\n"Economics in One Lesson" by Henry Hazlitt\n"Economics For Real People" by Gene Callahan
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The most common approach to measuring and understanding GDP is the expenditure method:\n\nGDP = consumption + investment + exports − imports \nConsumption and investment in this equation are the expenditure on final goods and services. The exports minus imports part of the equation (often called net exports) then adjusts this by subtracting the part of this expenditure not produced domestically (the imports), and adding back in domestic production not consumed at home (the exports).\n\nEconomists (since Keynes) have preferred to split the general consumption term into two parts; private consumption, and public sector spending. Two advantages of dividing total consumption this way in theoretical macroeconomics are:\n\nPrivate consumption is a central concern of welfare economics. The private investment and trade portions of the economy are ultimately directed (in mainstream economic models) to increases in long-term private consumption. \nIf separated from endogenous private consumption, Government consumption can be treated as exogenous, so that different government spending levels can be considered within a meaningful macroeconomic framework. \nTherefore GDP can be expressed as:\n\nGDP = private consumption + government + investment + net exports \n(or simply GDP = C + G + I + NX)
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The Stock Market and Investment: Another look at the micro-foundations of q Theory\nAbstract\nThis paper introduces a novel distinction between real q and financial q. The paper examines\nthree versions of financial q developed by Brainard and Tobin, Minsky, and Hayashi. These\ntheories differ regarding the nature of stock market price determination and their use of marginal\nproductivity theory. It is shown that non-profit maximizing behavior by managers does not\ninvalidate q theory. It is also shown that if managers and shareholders have different profit\nexpectations, this leads to an equilibrium value of q that differs from unity. Lastly, the implicit\nclaims in q theory regarding the efficient role of stock markets as regulators of capital\naccumulation are shown to depend on assumptions about stockholder behavior.\nJEL ref.: E2\nKeywords: q theory, stock markets, investment, arbitrage, cost of equity capital, profit\nmaximization.\nRevised August 1999\nForthcoming Cambridge Journal of Economics.\nThomas I. Palley\nAssistant Director of Public Policy, AFL-CIO\n815 Sixteenth Street, NW\nWashington DC 20006\n1\nI The implications of stock market q for policy\nThe monetary transmission mechanism remains an enduring area of interest in monetary\nmacroeconomics. Macroeconomic models have traditionally emphasized the interest rate channel\nwhich affects investment spending by establishing a hurdle rate of return for the marginal\nefficiency of investment. However, this traditional channel has been replaced increasingly by\nBrainard and Tobin's (1968, 1977) q theory of investment. Their approach emphasizes equity\nprices, and shifts attention away from the bond and money markets toward equity markets. In\nplace of interest rates, equity prices become the main channel whereby monetary policy affects\ninvestment spending (Blanchard, 1981).1\nThe q approach to the transmission mechanism increases the macroeconomic significance of\nstock markets which now take on an important role in managing the process of capital\naccumulation. This argument has taken on heightened policy significance owing to the debate\nover privatization of state funded old age pension schemes. Privatization would likely increase\nsaving in the form of equities, thereby increasing equity prices and q. If q theory holds, this\nwould raise investment spending and capital accumulation, thereby helping address the problem\nof supporting an aged population.\nA second reason why q theory has taken on increased policy significance is the shift within\nthe U.S. to budget surplus. Fiscal conservatives argue that a reduced national debt will increase\ninvestment because reduced supplies of debt will lower interest rates and have a portfolio knock-\n1. Both q and the conventional Keynesian interest rate mechanism share a reliance on asset\nmarket "price" signals as the means for affecting real economic activity. This contrasts with\ntheories emphasizing "quantity" effects, such as the credit rationing approach (Stiglitz and\nWeiss, 1981). In addition to affecting investment spending through q, equity prices also affect\nconsumption spending through their impact on household wealth. This wealth effect is separable\nand distinct.\n2\non effect that raises equity prices and q. Finally, a third policy development concerns the\nfostering of equity markets in developing countries. If q matters for investment, then developing\ncountries should be encouraged to promote local stock markets, and this provides a justification\nfor privatization in order to create widespread equity ownership.\nFor all of the above reasons, q theory of investment has taken on greater policy significance.\nThis paper analyzes the theoretical foundations of q’s claimed link between equity markets and\ninvestment spending. It clarifies the differences between alternative constructions of q, and\nshows that these rest on (i) different interpretations of the efficiency of stock m
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The business cycle or economic cycle refers to the periodic fluctuations of economic activity about its long term growth trend. The cycle involves shifts over time between periods of relatively rapid growth of output (recovery and prosperity), alternating with periods of relative stagnation or decline (contraction or recession). These fluctuations are often measured using the real gross domestic product. One of the government's main roles is to smooth out the business cycle and reduce its fluctuations.\n\nTo call those alternances "cycles" is rather misleading as they don't tend to repeat at fairly regular time intervals. Most observers find that their lengths (from peak to peak, or from trough to trough) vary, so that cycles are not mechanical in their regularity. Since no two cycles are alike in their details, some economists dispute the existence of cycles and use the word "fluctuations" (or the like) instead. Others see enough similarities between cycles that the cycle is a valid basis of studying the state of the economy. A key question is whether or not there are similar mechanisms that generate recessions and/or booms that exist in capitalist economies so that the dynamics that appear as a cycle will be seen again and again.\n\nMore info: http://en.wikipedia.org/wiki/Business_cycle\n\ncc
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Expansionary monetary policy is monetary policy that seeks to increase the size of the money supply. In most nations, monetary policy is controlled by either a central bank or a finance ministry.\n\nNeoclassical and Keynesian economics significantly differ on the effects and effectiveness of monetary policy on influencing the real economy; there is no clear consensus on how monetary policy effects real economic variables (aggregate output or income, employment). Both economic schools accept that monetary policy affects monetary variables (price levels, interest rates).\n\nMonetary policy relies on a number of tools: monetary base, reserve requirements, discount window lending and interest rates.
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ECONOMICS is primarily about the efficient use of scarce resources.\n\nCant get any simpler than this