what causes market failure

There are situations and circumstances where the market is not Pareto optimal or Pareto efficient. These situations are called market failure. An economist’s suggestion during these situations is government intervention which is necessary through better policy decisions. Some of the major causes of market failure are:- 1. Imperfect Markets:- Pareto efficiencyRead More →

real business cycle theory ignou economics

What is Real Business Cycle (RBC) theory RBC theory belongs to the new classical macroeconomics models in which business-cycle fluctuates to a large extent and can be accounted for by real (in contrast to nominal) shocks. Unlike other leading theories of the business cycle, RBC theory sees business cycle fluctuations as the efficient response toRead More →