- Shape of economy is a graphical presentation of interactions taking place between four fundamentaleconomic activities of income, consumption, production and expenditure.
- Shape of economy is conceivable due to logical relationship between these economic activities.
Why graphical presentation?
- Because it makes understanding of complicated subject matter easy.
- Graphs demonstrate mathematical relationship between two or more variables.
- Graph of economy, in process of its making also creates sphere shape to denote ideal status of economic equilibrium. Emerging sphere has universal appeal and understanding as to what it stands for. Sphere is not an abstract shape but holds truth of cosmic existence and ultimate scientific ideal.
Absence of ideal in interpreting status of economy is worrisome for every student of economics. The cause-and-effect relationship between four fundamental economic activities exists; however, they are not analysed in totality keeping some ideal in perspective. Shape of economy is conceived using four axes to represent four fundamental economic activities. Correlating and comparing it with ideal shape of economy enhances meaning of graph. Ideal shape so derived has sanctity of science and mathematics. It is the objective to illustrate economic phenomenon in simple manner and make the understanding of economic fundamentals acceptable as they actually are. Fundamental economic activities are very closely integrated. They can be identified and managed separately, but their equal and opposite reactions are inescapable. Shape of economy too, identifies them separately and at the same time analyses them as one integrated unit.
Why Shape?
Shape of economy is one way of reporting the status of economy that concerns us all. The shape of economy can be understood in simplest possible form, it also offers very complicated, yet easy to understand solutions for a serious student of economics. It is a potent tool for managing economy and regulating economic development.
Strength of concept of shape of economy is its graphical interface that results due to mathematical calculations of basic input related to functioning of economy.