Law of Demand can operate and remain valid only if certain things like income, population size, climate, consumer's tastes and expectations, etc., are assumed to remain constant or equal. In other words, there is a need for an assumption or a consideration that these things do not change at all under any circumstances.
The six basic assumptions of law of demand are as follows:
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The following image depicts determinants of demand with their relations.
The factors affecting demand are:
Assuming other factors (or determinants) remain constant (don't change), the change seen in the demand due to a change in the price is called Extension and Contraction of Demand.
The concept of extension and contraction of demand in economics can be studied and best understood with the help of the following graph.
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Importance of International BusinessThe economic importance of international business is discussed below.
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What is Money? MeaningMoney is one of the greatest inventions of mankind. According to Walker,
"Money is what Money does."
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In a wider sense, Money includes all mediums of exchanges like Gold, Silver, Copper, Paper, Cheques, and Bills of exchange, etc.
Importance of Theory of Effective Demand
The Importance or Significance of Theory of Effective Demand is as follows:-
Effective Demand determines the level of employment. When effective demand increases employment also increases and when it decreases employment also decreases. According to Keynes, involuntary unemployment can be removed by raising consumption expenditure and investment expenditure. The same can be achieved by government expenditure. Thus, the principle of effective demand is the basis of the theory of employment.
Keynes General Theory of Income and Employment
(a) Total Employment depends on Total output, which is equal to total income. So National Income = Total Employment.
(b) Total Value of employment depends on Effective Demand.
(c) Effective Demand is composed of Aggregate Demand Function (ADF) and Aggregate Supply Function (ASF). The Effective demand at the equilibrium price where ADF = ASF.
(d) ASF is given in the Short period, and ADF is the significant factor on Keynes's theory.
(e) ADF depends on total expenditure, which is composed of Consumption and Investment Function.
What is Trade Cycle? MeaningThe alternating periods of expansion and contraction in the economic activity has been called business cycles or trade cycles.
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The period of high income, high output and high employment is called as the Period of Expansion, Upswing or Prosperity.
The period of low income, low output and low employment is called as the Period of Contraction, Recession, Downswing or Depression.
Personal interviews are used by all employers and companies for selecting their staff. Interview is one of the most important step in the staff selection procedure. Interview proves important because it connects both the employers as well as job seekers. It assists employers in selecting a right person for a right job. It also helps job seekers to present their job skills and acquire a desired position on merit.
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Measures to Solve Problems of NPAThe problems of NPA have been receiving greater attention since 1991 in India. The Narasimham Committee recommended a number of steps to reduce NPA. In the 1990's the Government of India (GOI) introduced a number of reforms to deals with the problems of NPA.
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Major steps taken to solve the problems of Non-Performing Assets in India :-
Narasimham Committee Report I (1991) recommended the setting up of Special Tribunals to reduce the time required for settling cases. Accepting the recommendations, Debt Recovery Tribunals (DRTs) were established. There are 22 DRTs and 5 Debt Recovery Appellate Tribunals. This is insufficient to solve the problem all over the country (India).
Non-Performing Assets (NPA) - MeaningNon-Performing Assets are popularly known as NPA. Commercial Banks assets are of various types.
All those assets which generate periodical income are called as Performing Assets (PA).
While all those assets which do not generate periodical income are called as Non-Performing Assets (NPA).
If the customers do not repay principal amount and interest for a certain period of time then such loans become non-performing assets (NPA). Thus non-performing assets are basically non-performing loans.
In India, the time frame given for classifying the asset as NPA is 180 days as compared to 45 days to 90 days of international norms.
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This article briefly explains different types of inflation in economics with examples, wherever necessary. It is also supplemented with a hierarchical diagram to help readers summarize and quickly assimilate their list.
Here are different types of inflation depicted and listed below.
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What is Inflation? MeaningInflation refers to a continuous rise in general price level which reduces the value of money or purchasing power over a period of time.
Statistically speaking, inflation is measured in terms of a percentage rise in the price index (i.e. percentage rate per unit time) usually for an annum (a year) or for 30-31 days (a month).
Definition of InflationAccording to Crowther,
"Inflation is a state in which the value of money is failing i.e. the prices are rising."
According to Coulbourn,
"Inflation is too much of money chasing too few goods."
Four Phases of Business CycleBusiness Cycle (or Trade Cycle) is divided into the following four phases :-
Diagram of Four Phases of Business CycleThe four phases of business cycles are shown in the following diagram :-
The business cycle starts from a trough (lower point) and passes through a recovery phase followed by a period of expansion (upper turning point) and prosperity. After the peak point is reached there is a declining phase of recession followed by a depression. Again the business cycle continues similarly with ups and downs.
Meaning of InvestmentIn simple terms, Investment refers to purchase of financial assets. While Investment Goods are those goods, which are used for further production.
Investment implies the production of new capital goods, plants and equipments. John Keynes refers investment as real investment and not financial investment.
Investment is a conscious act of an individual or any entity that involves deployment of money (cash) in securities or assets issued by any financial institution with a view to obtain the target returns over a specified period of time.
Target returns on an investment include:
Types of InvestmentDifferent types or kinds of investment are discussed in the following points.
Franchise MeaningFranchise is a local representative of any organization who markets and conducts the entire marketing activity under complete guideline and support of franchisor in the area allotted to the franchisee. It is a kind of authorization granted to an individual or corporation by a franchisor to sell its goods or services in a defined way. The concept of a franchise was originated in USA.
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Franchise is a system of distribution through which the owner of product approaches independent businessmen in selected territories, appoint them as sole franchisee for particular areas and encourage them to distribute the product within the area assigned. The owner called as franchisor retains control over the technique or style with which the product is merchandised. The franchisees are given certain areas and as per the contract the franchisees are expected to promote the sale in a specific manner. The franchisor provides equipment, gives his brand name, undertakes publicity, provide managerial and technical assistance. The franchisee has to adopt selling techniques and see that maximum sale is promoted through his local network.
In simple words, franchise is nothing but a license allowing a person or company to use or sell specific products in certain areas as per agreement.
Advantages of SupermarketThe benefits or advantages of a supermarket or super bazaar are as follows:
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Supermarket Super Bazaar MeaningSupermarket is also called as Super Bazaar in India.
Bazaar is a Hindi word, which means a market in English.
Supermarket is a large-scale retail organization, selling a wide variety of consumer goods on the principle of self-service. They are rightly called as Self-Service Stores as customers have to serve themselves and there are no counter salesmen to help the customers. Supermarkets are also called Food Fairs or Pick Quicks. It is a large scale retail trading organization housed in a large-size premise dealing mostly in numerous varieties of food products, including groceries, fruits, vegetables, meat, confectionery and dairy products. It is a retail trading organization which resembles departmental stores but has a distinctive feature of self-service.
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Thus, supermarket is nothing but a retail organization providing food and household articles to consumer under one roof without any kind of sales pressure from salesmen and sale assistants. United States of America (USA) is said to be the homeland of supermarkets.
In India, Apna Bazaar, Sahakari Bhandar, etc., are some good examples of supermarkets or super bazaars.
Read article on advantages and disadvantages of the supermarket.
1. Meaning ↓Invoice is a bill of a sale transaction showing the amount to be paid by the buyer.
Delivery note is a note sent by the seller to the buyer informing about the despatch and delivery of goods.
2. Contents ↓Invoice gives details of a sale transaction i.e. description of goods supplied, rate, expenses, amount payable, etc.
Delivery note only gives details of quantity supplied.
3. When Sent?Invoice is normally sent after the despatch of goods or along with the goods.
Delivery note is sent along with the despatch of parcel.
1. Meaning ↓A cash memo is a document stating cash received for the goods sold. It is a paid bill for cash sales.
An invoice is a document showing the amount due from the buyer or the debtor it is a bill for credit sale.
2. When Issued?Cash memo is issued in the case of a cash transaction.
Invoice is issued in the case of a credit transaction.
3. Proof ↓Cash memo serves as an evidence of cash being paid by the buyer to the seller.
Invoice serves as an evidence of the indebtedness of the buyer to the seller.
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