According to Economypedia, “Microeconomics is a division of economics, which studies the ways by which individuals, firms and families take decisions regarding allocation of the limited amount of resources at their disposal. The studies are done in a context of markets where goods and services are traded.”
Demand and Supply of Foreign Exchange influences the determination of exchange rates and vice versa. The demand for foreign exchange is inversely proportional to the rise of exchange rate. As the exchange rate goes up the demand for foreign exchange declines. The quantity of foreign exchange demanded falls. The supply of foreign exchange shifts depending on demand and not on the exchange rate. If the supply aspect of transaction is plotted on a graph it will be vertical since the supply of foreign currency deposits available at any time is fixed.
In economics, the Theory of Money Demand stresses on the positive relationship existing between the general prices or the nominal expense rate and the total amount of money.
The main focus of the Interest Theory is on the charged amount paid against borrowed money. Though money is the most familiar form of asset at the time of lending, yet during arrangements of fiscal lease, Interest Theory considers other asset forms like consumer goods through hire purchase, shares, factories, aircrafts and other primary assets as well. In each of these cases, the rate of interest is charged on the total asset values, just like it is calculated on money.
According to the Loanable Funds Theory of Interest, the rate of interest is calculated on the basis of demand and supply of loanable funds present in the capital market. The concept formulated by Knut Wicksell, the well-known Swedish economist, is among the most important economic theories.
The concept of Monopoly deals with a steady market condition where only one good or service provider exists, to rule the industrial sector single-handedly, without undergoing any sectoral competition. The characteristic features of the Theory of Monopoly are:
Absence of feasible products acting as replacements or substitutesLack of competition on the economic levels, with respect to the availability of goods or servicesMonopolists are basically price-makers of their own products
