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Household economics analyses all the decisions made by a household. These analyses are both at the microeconomic and macroeconomic level. This field analyses the structures of households, the behavior of family members, and their broader influence on society, including: household consumption, division of labour within the household, allocation of time to household production, marriage, divorce ...
The New Home Economics developed in the 1960s and continues to be one of the main approaches in the field of family economics in the 21st century. The household production functions introduced by Gary Becker in his article "A Theory of Allocation of Time" are used in the analysis of many household decisions.
Household production theory has been used to explain the rise in married female labor-force participation over the course of the 20th century, as the result of labor-saving appliances. [4] More recently with the rise of the DIY or Maker movement household production has become more sophisticated.
According to Ross and Sawhill, most economic activity in pre-industrial times occurred within the household, with economic activities like production and distribution being arranged through culture and tradition. [2] The family was also important because birth, family ties, and local custom determined economic status in communities. [2]
The multiplier–accelerator model can be stated for a closed economy as follows: [3] First, the market-clearing level of economic activity is defined as that at which production exactly matches the total of government spending intentions, households' consumption intentions and firms' investing intentions.
Knight pictured a circulation of money and circulation of economic value between people (individuals, families) and business enterprises as a group, [15] explaining: "The general character of an enterprise system, reduced to its very simplest terms, can be illustrated by a diagram showing the exchange of productive power for consumption goods ...
Aggregate consumption is a component of aggregate demand. [8]Consumption is defined in part by comparison to production.In the tradition of the Columbia School of Household Economics, also known as the New Home Economics, commercial consumption has to be analyzed in the context of household production.
Business cycles are a type of fluctuation found in the aggregate economic activity of nations that organize their work mainly in business enterprises: a cycle consists of expansions occurring at about the same time in many economic activities, followed by similarly general recessions, contractions, and revivals which merge into the expansion ...