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Money Supply

This refers to the amount of cash circulating in an economy. Money Supply is measured in different ways (see M0, M4) depending on its use; e.g. sometimes including bank deposits in current and deposit bank accounts. Money Supply is a term normally found in business economics and financial management.

Monetarism

This refers to a macroeconomic philosophy which emphasises the importance of controlling money supply in maintaining a stable economy. A monetarist approach uses government intervention to control inflation; this approach assumes wages (typically a major cost element for most goods and services) are flexible with the level of unemployment being allowed to rise rather than… Read more

Keynesian economics

This refers to a macroeconomic philosophy which emphasises the importance of fiscal policy in maintaining a stable economy. A Keynesian approach uses government intervention to stimulate demand and economic growth through higher public borrowing and spending, particularly at times of recession. Keynesian Business economics is a term normally found in business economics and financial management.

Supply Side Policy

This refers to economic interventions to increase or reduce the supply of goods and services. Supply Side Policies may be longer term interventions than most demand side policies, for example boosting the education and skills levels of the workforce in order to support the supply of higher value goods and services. Changes to corporate taxation… Read more

Demand Side Policy

This refers to economic interventions to increase or reduce the demand for goods and services. For example; if inflation is deemed to be rising too quickly a rise in interest rates will reduce demand, similarly reducing taxation will increase demand. Demand Side Policy is a term normally found in business economics and financial management.

Marginal Propensity to Save.

Also referred to as MPS, it recognises that changing disposable income results in changing spending, with the MPS reflecting the ratio of saving likely when disposable income levels change. MPC is a term normally found in business economics and financial management.

Marginal Propensity to Consume

Also referred to as MPC, it recognises that changing disposable income results in changing spending, with the MPC reflecting the ratio of spending to saving likely when disposable income levels change. MPC is a term normally found in busines economics and financial management.

Multiplier Theory

This refers to the economic principle that an increase or decrease in investment will lead to a greater increase or decrease in demand for goods and services. Multiplier Theory assumes that there is a direct relationship between the level of investment in an economy and the rate of output of the economy; for example, in… Read more

Accelerator Theory

This refers to the economic principle that an increase or decrease in the demand for consumer goods will cause a greater increase or decrease in the demand for machines required to make those goods. Accelerator Theory assumes that there is a direct relationship between the rate of output of an economy and the level of… Read more

Marginal Propensity to Consume

This refers to the economic ratio of the change in consumption to a change in income. Marginal Propensity to Consume (MPC) recognises that changing disposable income results in changing spending, with the MPC reflecting the ratio of spending to saving likely when disposable income levels change. Marginal Propensity to Consume is a term normally found… Read more