Saturday, June 9, 2018

Opportunity Cost

Opportunity cost of a product or service can be defined as the
" next best alternative product or service that has been sacrificed and forgone "

Production Possibility Curve

Production Possibility Curve or Production Transformation Curve or Production Possibility Frontier is a statistical device used to indicate economic problems like allocation of resources, efficiency of production and distribution and growth.
" a graph plotted by joining various combinations of two goods that can be produced by an economy fully utilising available resources and technology".

Friday, June 8, 2018

Marginal Opportunity Cost

Marginal Opportunity Cost is defined as the amount of one good that needs to be given up or sacrificed in order to increase the production of the other good by one unit or the change occurred in another product when an additional unit of first product is made.

Monday, February 19, 2018

Monetary Policy in the Brunner Meltzer Model

Monetary Policy in the Brunner Meltzer Model
Assume that monetary base is increased by open market operations. Gour expenditure excluding interest payments and tax rake remain unchanged so the B B line does not shift until nominal income starts to change.

The expansionary monetary policy shifts the ADO schedule upwards from an initial long run equilibrium position at point E. A short run equilibrium occurs at point j the price level rise from Po to P, and real output from Yo to Y,. Since nominal income has risen and government interest payments have fallen the budget moves into surplus. The B B line shifts to the left. Larger the proportion of the budget . Surplus financed by withdrawing bonds, further to the left B B shifts. An intermediate equi is attained at point price and real output have fallen to the P n Y n respective the intermediate. Our conclusion correspond of these Keneysian models, except that in fixed price model only real output can fall.
However, as with physical policy , long run conclusions of this model differ from Keynesian ones because money wages adjust to price changes. In this instance, since the price level has fallen, money wages fall and as A s schedule would shift down to the right. The reduction in the stock of bonds would then rise asset prices and lower rate of return. Consequently the capital stock is increased- In long run equi output per unit of labour has risen and the price level has fallen.

Thursday, February 8, 2018

Brunner Meltzer Model

Brunner- Meltzer Critic of I S-L M is associated with following views physical policy is largely ineffective. Advantages in the money supply have a strong impact on nominal income . Budget should be balanced and money should grow at a constant rate preferably one consistent with a stable price level.
Brunner and Melt zer's main quarrel with the IS LM model is that it has a very restricted range of assets, money and bonds. They also Concentrate on stock adjustment rather than flow adjustment as in the ISLM model. A further difference is their specification of the aggregate supply function. In the short run money wages are fixed and outpUt rises with Inareases in the price level .In the long run money wages adjust to price changes, causing the short run aggregate supply function to shift.
Brunner and Meltzer illustrate their mathematical model by means of usual aggregate demand and supply function. Aggregate demand consists of govt expenditure and private sector demand, Which depends on the various interest rates, price level and wealth This includes the govt budget constraint. The govt budget is balanced along line B B . as Tax revenues rise with nominal income a lower_ combined with some higher price level- budget balance to the right of B B- and to the left a deficit- changes because interest payments varying- to the outstanding stock of govt bonds- will be changing as income changes and- budget imbalance.
Physical Policy in Brummer- Meltzer model'

In initial steady state equilibriumm at point E. An increase in govt expenditure financed by some constant proportion of bonds to money expenditure shifts ADo to AD, The budget is deficit so that B B line also shift right to B BI, This is short run equilibrium at point such as F where AD is temporarily equal to AS. Point F is only a short run equilibrium point because the govt budget is in deficit. This ensure that there are further wealth effects which cause AD to continue shifting upwards. Once the budget is balanced some point such as G is attained.

Tuesday, February 14, 2012



Democracy in its  purest or most ideal form would be a society in which all adult citizens have an equal say in the decisions that affect their lives. Democracy is usually considered as “the government of the people, by the people and for the people”
                According to Henderson, “democracy is based on two assumptions: the infinite value and worth of human personality and belief that men are capable of managing their own affairs in such a way as to promote the welfare of all and that, therefore, they should have the freedom to do so”
                The term democracy come from the Greek word “demokratia” meaning “rule of the people”  which was coined from “demos” meaning “people” and “kratos” meaning “power”. The word democracy on the one hand, points towards the type of the government and on the other way a way of life.
                In a democratic government there are provided free opportunities for the self expression to an individual. Dewey is of the opinion that in democracy besides the form of the government something else is involved. This is mainly the way of life for good living which is based on experience. Bode considers democracy as “a way of life” and by way of life he means “a determining influence in every major area of life”
                From the political point of view, democracy means “the government of the people, by the people and for the people”. In democracy the government is formed by the majority but the rights of the minority are not ignored.
                In the economic sphere democracy means that each individual should be given freedom to earn his own living through his own efforts.
                Democracy is taken in the social sense, when there are no impediments in the progress of any race, class or religion. The meaning of this is that for all the people there should be equal opportunities so that they may become good citizens.
                Democracy believes in giving independence to the people. But if the people are not educated and are not discipline for social good then this independence would be very costly and would take the form of anarchy. For the success of democracy some pre conditions are very necessary. They are,
1.       There should be economic betterment of the people. Democracy cannot be established on the hungry stomachs of the people.
2.       The second pre condition is the formation of an educated electorate. Democracy can function properly when the people are educated and they are conscious of their rights and duties.
For the success of democracy it is essential that each individual owns his responsibilities consciously and this will be possible only when the individuals power of understanding is high and he is of  good character. It is the duty of the society that it should prepare the individual from intellectual moral and physical point of view to discharge hi duties of citizenship. So that the society may remain happy and rich. The main features of education are usually sited as two fold. Firstly, it is to transmit the social and cultural heritage to the new generation. (example through schools). The second function of education is to create among the students a feeling of adjustment to the environment. The school should develop all the qualities among the children which are desirable in a good citizen. This qualities includes,
1.       Self realization
2.       Human relationship
3.       Economic efficiency
4.       Civic responsibility
True education for democracy should help the people to appreciate the urgent necessity of acquiring knowledge to discriminate between facts and prejudices, to weigh and judge efficiencies, to arrive at conclusions.
                A person learns the first principle of democratic life from his or her home. The individual learns the best methods for his socialization by spending a wholesome life in his family and by gaining experiences from the social life of other persons.
                We know that the school is a formal agency of education. In the school, proper arrangement can be made for the education for democracy. The people through the personal efforts and through group activities can learn the responsibilities of a future citizen. The state should ensure that there available opportunities for universal free primary education.
                The informal agencies are also helpful in developing desirable public consciousness. Education does not end with school education but it is a continous process. The informal agencies take the responsibility of education about the rights and duties to the individual even after their formal schooling. Democracy will become successful only, if the citizens are intellectually advanced and educated. In democracy, the opinion of the people influences government policies.
                The preamble of Indian constitution clearly mentions that the democratic form of government is to be the pattern of the government in India. Justice, liberty,  equality and fraternity are given as the fundamental rights to all the citizen of the country. In general our education should be based on thes principles. It should inculcate the ideals of democratic socialism. In India, citizens are given equal status, rights, opportunities and facilities. Education for every child is a constitutional obligation. To fulfill these obligation all types of school must be established and in all these schools admissions must be made freely and justly.
                In India, through education, the ideals of democracy can place before people. Literacy rate in India is very low and this is creating a great danger to the democracy. This shows the great need for the improvement of our educational system. It should be improved from within. In 1935, Mahatma Gandhi said, “I hold that the democracy can not be evolved by forcible methods. The spirits of democracy cannot be imposed from without. It has to come within.”
                Harmonious development of the individuality of the citizen is the main aim of education in all democratic countries. In the democracy, there must develop a capacity to understand the social, economic and political problems in a practical and efficient way. He must think in a creative way. The education should give importance to both individual and social development.
                Education should develop socialism both in thought and action of the people. According to the secondary education commission (1952-53), “three aims fit in democracy, 1)the framing of the character to fit the students to participate creatively as the citizens in the democratic social order; 2)the improvement of their practical and vocational efficiency so that they may play their part in building up the economic prosperity of their country; and 3)the development of literacy , artistic and cultural interest which are necessary for self expression and for the full development of the human personality, without which a lively national culture cannot come into being”
                In order to achieve democratic ideals the curriculum should be well planned. Role of curriculum in creating democratic ideals are given below.
1.       Different activities like play, school education, co curricular activities, etc should include in curriculum
2.       There should be ample scope for individual freedom and it should be flexible in nature
3.       While selecting a course intelligence, capabilities and necessities of individual must be considered
4.       Curriculum should give importance to local needs
5.       Curriculum should be social oriented
6.       Importance should be given to efficient utilization of the leisure time
7.       Vocational needs should also be considered while the framing of the curriculum
Every school is established by the society for the welfare of the society. In democracy, the school should propagate democratic ideals. Some important roles of schools are given below,
1.       The school should make the students capable of living in democracy
2.       Steps should be adopted to develop secularism and religious neutrality
3.       Teachers should have freedom to select their own methods and text books
4.       Democratic feeling should be given to the teachers
5.       Create desirable environment for developing friendship among teachers, principals and inspectioners
6.       Co-operation, sympathy, love, etc should be given special emphasis
                Every democratic society, the teachers should be given high status to bring desirable change in the society and this will lead towards the progress of the society. The teacher should have adequate training and must have competency or developing the feelings of democracy among the children. He should be able to understand the potentialities of every child. He should have ability to provide education for good citizenship and must be a man of high character.
The method of teaching can influence in developing democratic set up in every nation. The teaching methods must follow the below given facts.
1.       The methods of teaching must be flexible
2.       The teaching methods must be based dynamisms and progressivism
3.       The teaching methods must be activity centered
4.       There must be individual freedom (use methods like Dalton plan, project method, Montessory)
5.       The methods should emphasize the intellectual and social development of the child
Self discipline also has importance in democracy. It should be emphasized in democracy. For this children should be given opportunity for self government. It is essential to remember that, democracy weather in the school or society can be only successful when its members have proper approach towards it. We can conclude by quoting the words of Alexander Meikeljohn, who says, “the art of democracy is the art of thinking independently together”