Economics or Political-Economy, one and the same, has
a direct link with the standard-of–living of a country which is the product of
higher-growth-rate, the barometer to measure the rate of improvement in the productivity
and wages, and, demand and growth which may or might have a correlation with
the lives of the country-men for which a low and constant un-employment-rate and price-level
is must because of the same and same demand and supply, the former same
because, of the key-words in Economics and the latter same is because the quantity-demanded
must match quantity-supplied to fulfill the aforesaid objectives but, in the
real-world the match is often absent due to inconsistent monetary and fiscal
policies dependent on the data delay and availability for transmission of signals, action
and change in the economic variables and higher growth could be related to the
higher-investment, though not in case of higher inflation because that would
require tightening and higher unemployment and lower-prices to restore value of
money and equilibrium between demand and supply by managing interest-rate or
natural-real-rates, the money-rate or nominal-rate of interest (minus) .the
rate of inflation. Lower-natural-real-interest-rate could linked to
higher-investment, higher-supply, lower unemployment, and, higher-demand and
spending - consumption and investment - even across economies,
international-trade has a role since it may help to lower the price-level in
the long-run, beyond five-years, and it would also increase demand in the
trading-partners economies and they would demand more exports and could help-us
earn foreign-exchange, wealth would increase, in the old-times gold, which
would also increase employment and lower-poverty because it would also increase
taxes and the government-spending on education and research and, skill-development
to increase innovation and productivity, and, real wages and demand, and
economic-growth or GVA (the Gross-Value-Added after deducting the deflator), in the
domestic-economy and also externally.
All the three - monetary-policy, fiscal-policy, and the foreign-trade-policy
are responsible to achieve the NAIRU (Non-Accelerating –Rate-of-un-employment).
The NAIRU is that rate of un-employment at which the rate of change in the
general-price-level does not reduce the value of money, and, demand and economic
growth-rate, in case of lower prices money-supply is loosened and when there is
inflation the money-supply is tightened which help maintain full-employment and price-stability to
achieve the projected economic-growth.
It is also true for INDIA…
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