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According to Fisher’s quantity theory of money, the value of money depends on the quantity of money in circulation in the economy and the relationship between this two is inverse.
That is, if the quantity of money in circulation is doubled, the value of money will be halved (or the price level. will be twice as high as before).
The government often observes that the price of a specific good or service is either too high for consumers or too low for producers. Consequently, it uses its power to regulate prices – a process called price control. Price control is the process by which the government through its agencies enact laws to regulate prices. […]
Being the diligent students that you are, your mind would have already been ingrained with the law of demand.
Specifically, the law of demand states that as the price of a good or service increases, the quantity demanded by consumers decreases, and vice versa.
However, the law of demand does not always hold true in every situation. There are some cases where the quantity demanded of a good or service increases as its price increases or decreases as its price decreases.
These cases are known as the exceptions to the law of demand.
The law of demand states, all else being equal, that there is an inverse relationship between the price of a good or service and the quantity demanded by consumers.
It states that as the price of a good or service decreases, the quantity demanded for that good or service increases, and as the price of a good or service increases, the quantity demanded decreases.
In simpler terms, people tend to buy more of a product when the price goes down, and when the price goes up, they buy less.
The equilibrium price and quantity of a good or service are determined by the intersection of the supply and demand curves in a market.
The supply curve shows the relationship between the price and the quantity supplied by producers, while the demand curve shows the relationship between the price and the quantity demanded by consumers.
There are two types of changes in demand that can affect the equilibrium point: an increase in demand and a decrease in demand.
An increase in demand means that consumers are willing and able to buy more of the good or service at any given price, causing the demand curve to shift to the right.
A decrease in demand means that consumers are willing and able to buy less of the good or service at any given price, causing the demand curve to shift to the left.
Demand is influenced by certain factors, which are called determinants of demand.
More appropriately, determinants of demand are factors that can affect or determine the demand for goods and services in a market.
Market equilibrium is a state in which the supply and demand for a good or service are balanced.
This means that the quantity of a good or service that consumers want to buy is equal to the quantity that producers are willing to sell at a given price.
Market disequilibrium is a situation where internal and/or external forces prevent market equilibrium from being reached or cause the market to fall out of balance.
It arises when the quantity of a good or service demanded by consumers does not equal the quantity supplied by producers at the prevailing market price.
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