For analysing the internal and external balances through the synthesis between monetary and fiscal policies, the IS (Investment-Saving) function, the LM (Liquidity preference - Money supply) function and the BOP function (B) are to be derived as below: Derivation of IS Function: The investment-saving function (IS) in an open system is determined on the assumption that the real market is [...]
In this article we will discuss about the internal and external balances of a country. A balance or equilibrium means a situation in which transactions tend to repeat themselves indefinitely, since there is-no force calling for increase or decrease in any variable. The internal equilibrium or balance refers to such values of the economic variables within the economy that all [...]
In this article we will discuss about:- 1. Meaning of Balance of Payments 2. Is Balance of Payments Always in Balance? 3. Equilibrium or Disequilibrium. Meaning of Balance of Payments: The balance of payments is a summary of all the international transactions of a country and its citizens during a specified period of time. This period is usually of one [...]