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Showing posts with the label Gross Domestic Product (GDP)

Decision Making as Output and Bounded Rationality

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  The classical economics theories proceed on the assumption of rational agents. Rationality implies the economic agents undertake actions or exercise choices based on the cost-benefit analysis they undertake. The assumption further posits that there exists no information asymmetry and thus the agent is aware of all the costs and benefits associated with the choice he or she has exercised. The behavioral school contested the decision stating the decisions in practice are often irrational. Implied there is a continuous departure from rationality. Rationality in the views of the behavioral school is more an exception to the norm rather a rule. The past posts have discussed the limitations of this view by the behavioral school. Economics has often posited rationality in the context in which the choices are exercised rather than theoretical abstract view of rational action. Rational action in theory seems to be grounded in zero restraint situation yet in practice, there are numerous restra
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A Note on Economic Growth

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  When one talks about progress, they usually refer to economic growth. Therefore it would be interesting to decode the dynamics of economic growth. It is quite usual to find in the media reports on how India or for that matter any other country is growing at a certain rate. There is usually talk of how a certain country is experiencing high growth rates. There are reports of how certain countries are experiencing sluggish growth rates. There are reports on how some countries are actually experiencing a negative growth. The latter is of course being pretty common news as the world grapples with the impact of the Chinese virus. In this context, it would be prudent to begin the discussion with the concept of growth.   Economic growth refers usually to the growth in the Gross Domestic Product (GDP) of a country on a year over year basis. In simple terms, the GDP of a country can be defined as the aggregate market value of all final goods and services produced in an economy in a given
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