EconomicsNotes

  The Economic Debate The 1970s in the West saw the emergence into policy of a debate which had been continuous but which was largely conducted amongst intellectuals and policymakers. This was the battle between the Keynesians who had defined the ‘post-war settlement’ and Monetarists who were focussed upon inflation. The consequences of this battle were to be quite serious, and pushed economics and political economy towards a kind of market-based, anti-inflation position which prevailed across the world with few exceptions by 1987-91. The basic disagreement was between those who believed that Aggregate Demand drove the economy, and that the worst problem in a real economy was unemployment, and those who believed that all policy eventually came down to how sound and trusted the money supply of a country was and could be. The former group argued that governments should spend against the economic cycle, that deficits were not a bad thing, and that the economy could be stimulated...

  GDP National Income is a metric of the flow of money in an economy represented by its goods, services, and wealth in a given period of time. It is essentially the same as National Output and National Expenditure, and is sometimes used as equivalent to Gross National Product (GNP.) In most economic discussions, GNP is adjusted twice. Firstly, economists tend to strip out net income earned abroad from GNP. This gives a figure for Gross Domestic Product. This is useful for economic studies because it focuses the analyst on what is going on within the economy. Secondly, economists usually adjust the nominal, ‘raw’ GDP figure for price changes, which leaves ‘real GDP’ as the key figure. [1] Change in Real GDP is therefore the most used and important indicator economists use. It tells the examiner about growth and allows for assumptions about the economic cycle . Real GDP tells economists about the accumulated flow of money around an economy but it does not really give an in...