How to Calculate Marginal Propensity to Save

How to Calculate Marginal Propensity to Save

Marginal propensity to save (MPS) describes the share of additional income that a consumer saves. That means it describes the percentage of additional income they spend on saving instead of buying goods or services. Thus, marginal propensity to save can be calculated as the change in saving (ΔS) divided by […]

Read more
How to Calculate Marginal Propensity to Consume

How to Calculate Marginal Propensity to Consume

Marginal propensity to consume (MPC) is defined as the share of additional income that a consumer spends on consumption. That means it describes the percentage of additional income they spend on buying goods and services, instead of saving. Hence, marginal propensity to consume can be calculated as the change in […]

Read more
How to Calculate GDP using the Income Approach

How to Calculate GDP Using the Income Approach

GDP is defined as the market value of all final goods and services produced within an economy over a specific period (usually one year). There are two primary methods to calculate GDP: the income approach and the expenditure approach (see also Gross Domestic Product). According to the income approach, GDP […]

Read more
How to Calculate GDP using the Expenditure Approach

How to Calculate GDP Using the Expenditure Approach

GDP describes the monetary value of all final goods and services produced within an economy over a specific period (usually one year). There are two main methods to calculate GDP: the expenditure approach, and the income approach (see also Gross Domestic Product). According to the expenditure approach, GDP can be […]

Read more
Three Types of Inflation

Three Types of Inflation

Inflation describes an increase in the overall price level of goods and services within an economy over a certain period. As a consequence, the purchasing power of money decreases, which means the money essentially loses some of its value. Thus, inflation has an impact on the cost of living and […]

Read more
Three Types of Tax Systems

Three Types of Tax Systems

Taxes are one of the most controversial topics in economics. While most people agree that they are necessary, there is a lot of disagreement over how the tax burden should be distributed across the population. Nowadays, most taxes are designed according to what we call the ability-to-pay principle. This principle […]

Read more
Three Government Policies towards Externalities

Three Government Policies Towards Externalities

Negative externalities often cause markets to fail, i.e. to reach an inefficient outcome for society as a whole. When that happens, the government can respond in one of two ways. It can use command-and-control policies to directly regulate problematic behavior, or it can use market-based policies to provide incentives that […]

Read more
World's Top 10 Economies by Imports

World’s Top 10 Economies by Imports

In our globalized economy international trade is one of the most critical drivers of economic growth. While virtually all countries engage in international trade, some of them are more active than others. We have already created a list of the world’s top 10 countries by exports a while ago.  But for […]

Read more
World's top 10 Economies by Exports

The World’s Top 10 Economies by Exports

International trade is one of the most important drivers of economic growth. Most countries export a significant share of the goods and services they produce to other countries. These exports are extremely important, because they have a direct impact on economic growth, employment, and the standard of living within the […]

Read more
Limitations of the Consumer Price Index (CPI)

Limitations of the Consumer Price Index (CPI)

The consumer price index (CPI) is a measure of the overall price level of goods and services bought by a typical consumer in a particular economy.  Its goal is to measure the cost of living and show the effects of inflation on individual consumers. However, like most indicators, the CPI […]

Read more
1 2 3 4