Month: October 2020

Scarcity being the central economic problem is defined as the inadequacy/insufficiency/inability of (economic) resources or goods and services available to satisfy them. Scarcity is therefore not the same as “few” resources. Since resources are scarce (limited in supply) it implies Read More …

Sources of Monopoly power: Exclusive ownership and control of resources (factors of production) Patent rights eg. beer brands like Tusker, soft drinks like Coca Cola etc. Natural monopoly which results from economies of scale i.e minimization of average total cost Read More …

Monetary policy works through the intermediary of monetary policy instruments such as the bank rate, open market operations (OMO), variable reserve requirement (cash and liquidity ratios), funding, marginal requirement, selective credit control and moral suasion. This policy relates mostly to Read More …

Monetary policy refers to the manipulation of money supply, liquidity and interest rates in the economy in order to achieve increased employment, economic growth, reduced inflation and improved balance of payments.

The concept of elasticity can be applied in economic policy decisions in the light of the following situations: Business pricing decisions: revenue can be increased by increasing prices where demand is inelastic; where demand is elastic, revenue could be increased Read More …

Main problems of National Income Accounting: Incomplete/inadequate information Danger of double counting Changes in prices (price instability) Problem of inclusion, in terms of: Subsistence output/income Intermediate goods Housing i.e. rent on owner-occupiers Public services provided by the government Foreign payments Read More …