The Brick Wall Economic Theory

In the previous post , we looked at what inflation is and how they calculate it. In today's post, we are going to, as always, look at inflation with a practical example called The Brick Wall Theory example. Don't know what that is? Read about it here . If you don't want to read about what inflation is and just want to see an example that is also fine. I will tell you in short what inflation is to make sure that you will be able to understand the example. Inflation is the process of a sustained, significant rise in the general price level over a period of time. Basically, inflation is the process where money loses its value over time. Your groceries might cost you $50 today, but in ten years time, the same amount of groceries is going to cost you $65. This post isn't going to explain all the things we already covered here with an example, rather we are going to look at the causes of inflation and then we are going to look at what the effects on the brick wall co...

In the previous post , we looked at what the business cycle is and what the different phases of the business cycle are. In today's post, we are going to analyze the different phases of the business cycle by using the Brick Wall Economic Theory as an example. If you want to learn more about the theory behind the Business Cycle you can go read about it here as this post will be a practical analysis of the different phases of the business cycle. On that post, we covered that the business cycle consists of two main phases called the contraction phase and the expansion phase. The contraction phase can then be further broken down into the recession phase and the depression phase where the expansion phase can also be broken down into the recovery phase and the prosperity phase. The different phases of the business cycle coincide with certain human behaviours. Contraction: The contraction phase is where the economy slows down and the total production is less than a time before. I...

The circular flow of the economy refers to how goods and services, as well as money, flows through the economy. Think of it this way. When you buy something, you exchange that product for money. The money you gave don't just stop right there, that money then gets used by the person you bought it from to buy something else. If this sounds a bit confusing to you don't worry because luckily my brick wall economic theory can be used to explain a lot of things related to the economy. (If you don't know what the brick wall theory is, you can read all about it in my first post by clicking here .) The modern circular flow of the economy usually has four major roleplayers: The households(consumers, ordinary people). The businesses(they sell you products and services). The government(they provide government services). The foreign markets(the place where import and exports go) Circular flow of the economy ( Monetary -money- flow illustrated in blue and real flow il...

About three months ago my neighbour announced that he was going to make the wall between our houses taller. This doesn't sound like a problem at first, but then you start to realise what all the implications are. The first problem is that the wall is built with bricks. The wall then gets coated with a special plaster primer paint, and after that, it gets painted with a coat of paint that is resistant to the elements of mother nature. Now you may ask me why that is a problem? See, bricks are placed on top of each other and cemented in place. For those of you who don't know, cement is a runny substance that will succumb to gravity when it is placed on the side of a surface which will then make it run down the surface. In this case, the brick wall is the surface on which the cement is being placed. When the cement runs down the wall it creates this ugly grey patches on our once beautifully painted wall. I'm sure a lot of you at this point is saying, "I thought I cli...