Knowledge in Macro economics
Consumption, Saving, and Investment
Consumption, Saving, and Investment
Kajal Jindal
Unemployment and Inflation
Unemployment and Inflation
Exchange Rates and Business Cycles
Exchange Rates, Business Cycles, and Macroeconomic Policy in the Open Economy
Abhishek Kalra
Money Supply and Money Demand
This ppt talks about the money supply and money demand in detail.
Satyaki Kundu
Open Macroeconomics
Questions on Open Macroeconomics
Bhagavathi Sapavathu
IS-LM curve
IS-LM curve Questions
AD-AS curve
AD-AS curve - Questions
Akshay Raut
Unemployment in India
In this clip I talk about the various aspects of unemployment plaguing the country.
Abhinav Kumar
Demand Curve
The PDF is about demand curve explaining price elasticity.
Krumil Mehta
Demand and Supply: Changes and Effects.
Small notes containing some graphs and changes in the demand and supply curve with respect to various factors.
Vaibhav Sabar
Gold Standard and 1929 Crisis
What is Gold Standard and how does it works? The gold standard is a monetary system where a country's currency or paper money has a value directly linked to gold. With the gold standard, countries agreed to convert paper money into a fixed amount of gold. A country that uses the gold standard sets a fixed price for gold, buys and sells gold at that price. That fixed price is used to determine the value of the currency. What are the advantages and disadvantages of Gold standard? The advantages of the gold standard are that (a) It limits the power of governments or banks to cause price inflation by excessive issue of paper currency, although there is evidence that even before World War I monetary authorities did not contract the supply of money when the country incurred a gold outflow, and (b) It creates certainty in international trade by providing a fixed pattern of exchange rates. The disadvantages are that (a) It may not provide sufficient flexibility in the supply of money, because the supply of newly mined gold is not closely related to the growing needs of the world economy for a commensurate supply of money (b) A country may not be able to isolate its economy from depression or inflation in the rest of the world (c) The process of adjustment for a country with a payments deficit can be long and painful whenever an increase in unemployment or a decline in the rate of economic expansion occurs. Why did Britain go off the gold standard in 1918? As in the case of other wars, governments suspended the gold standard during World War I, to increase the money supply and pay for the war. Therefore, as in the case of all post-war eras, many countries faced much higher inflation rates at the end of World War I. Britain was one country that went back to its pre–World War I parity, even though the post-war price level was higher than the pre-war price level. The British government made this decision to maintain its credibility as the world’s superpower. However, maintaining the unrealistic pre-war parity meant that the British pound was overvalued. To avoid further problems with the gold parity, Britain implemented a monetary policy of higher interest rates (or lower quantity of money, essentially a contractionary monetary policy), which led to a weak output performance and unemployment in the years following the end of World War I. Why did Britain again revert to gold standard around 1925? Britain returned to gold in 1925 and by 1927, the vast majority of trading nations had joined the system, which was, in effect, a global fixed exchange rate system. In Britain, the conventional wisdom after the First World War was that a return to gold would provide stability and prosperity. The Cunliffe Committee, which was established to make recommendation for the development of the economy, reported in 1918 "it is imperative that after the war, the conditions necessary for the maintenance of an effective gold standard should be restored without delay." The commitment of the Government to return to gold, combined with relatively high interest rates to facilitate the return, caused the sterling exchange rate to appreciate. In April 1925, the Chancellor of Exchequer, Winston Churchill, restored the sterling to the gold standard at its pre-war exchange rate of $4.86 Why did Britain again go off the gold standard in the September of 1931? In 1929, the world entered a global recession, there was even less demand for British goods abroad, and so it is not surprising that the unemployment rate in Britain towards the end of the 1920 has skyrocketed to about 20%. To add to these problems in 1931 there were worries that a British bank was going to go insolvent. Because of this a lot of foreigners who had money sitting in British banks began to redeem their British pounds for gold and move the gold outside the country. This began depleting the central bank’s gold reserves and they were faced with the option of going off the gold standard or raising interest rates to try to stem the flow of gold to outside of Britain. Raising interest rates even more would have caused the unemployment rate that was already 20% to skyrocket even more and so it’s not surprising that by September 1931 Britain went off the gold standard.” What this meant is that the British pound became less valuable compared to gold, which we can see in the green graph. We also see the deflation or the decreasing prices in Britain stop after they went off the gold standard. Also, because the British pound was now worth less that meant that British exports we are now cheaper to the rest of the world and so after Britain went off the gold standard unemployment started declining.
Sachin Jagtap
Market failures and externalities
Market failures and externalities
Aakriti Yadav