Macro & Micro economics Table of Contents Summary of chapter 10 3 Summary of chapter 11 7 Summary of chapter 12 11 Reference 15 Summary of chapter 10 The chapter reveals some of the expansionary fiscal and monetary policies which impacts on the aggregate demand of the economy…
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This causes the rate of interest to fall or rise respectively. On the other hand the fiscal policies alter the aggregate demand in the economy through the increase or decrease of government purchase components and the after tax share of the GDY which is held by the private sector. The following diagrams would portray a graphical analysis of some of the policy measures that are undertaken and their impacts in the economy (Ashby, 2011, “Expansionary policies”). In the above diagram the general equilibrium exists at the point if intersection of GDP, ASF and APE. Monetary policies would shift the ASF line to the right. However, it is seen from the diagram that this point cannot be reached as it is impossible for the economy to reach that point. This would consequently require a negative rate of interest but the interest rate cannot fall below zero. This shows that monetary policies independently cannot allow the economy to attain the former GDP. This requires the need for fiscal policies in the economy (Ashby, 2011, “Inconsistency Problem”). Fiscal policies in the form of government purchases and tax cuts would be able to move the APE line to the right far enough so that the IS curve would be able to intersect the GDP line at a point of low interest level which would be attainable. Thus the monetary policy would shift the ASF line towards the right and this would pass through the point which is now attainable. To summarize it, monetary policy can be effective only with the assistance of fiscal policies in order to help the economy recover from the effects of recession. The picture also reflects the potential problems related with monetary policies. The faint response of APE after changes in the rates of interest coupled with the low level of interest makes it unable to fall enough to provide enough impetus to the APE to revert back to the original level (Ashby, 2011, “Some Fiscal Policy is needed”). A major problem associated with monetary policies can be explained in terms of the liquidity traps. This is a situation in which the economy enters into a severe depression which dramatic fall in prices, reduction in profits, businesses making losses which causes them to draw back from making investments in new projects. However, the problem is likely to arise only at extreme situations. Another concern associated with the economy is the crowding out effect which arises out of expansionary fiscal policies which increases aggregate demand, APE significantly without a corresponding rise in aggregate demand or APE. The main concern about the phenomenon is that the resulting loss of funds causes a rise in interest levels and this consequently crowds out the rise in APE. According to the views of Ricardo (1772 - 1823), fiscal policies also result in budget deficit in the government that is financed by treasury borrowing. Ricardo has put forth the fact that the tax payers would be able to recognize the fact the government will be required to redeem the bonds at the time of maturity and would then levy taxes to compensate for the principle amount of the outstanding debt and also any amount of accrued interest. A number of restrictive policies can be undertaken in order to curb inflation arising out of expansionary fiscal policies. Short term measures would include the intervention of government and implementing direct control over wages, prices, rather than the implementation of restrictive fiscal and monetary policies.
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“Macro & Micro Economics Essay Example | Topics and Well Written Essays - 2000 Words”, n.d. https://studentshare.org/macro-microeconomics/1428696-s313-4.
The demand side of the market comprises of the owner and the renter while the supply side comprises of the developer as well as the renovator. In order to analyze the demand and the supply factors a number of modifications need to be implemented in the microeconomic assumptions.
One of the significant areas of economics especially is macroeconomics which is a branch of economics that deals with the problems of a particular country or economic region comprised of several economic agents acting with their individual economic behaviors and the evaluation of the policies taken by the government of these countries in order to tackle those problems (Adams, 2002, p.
vaccinations against infectious diseases). Briefly suggest how government might intervene to correct this under-provision? 5 (C) The Consumer Price Index (CPI) is the official measure of inflation in the United Kingdom. Why might CPI not be an accurate measure of the costs of living for any given individual consumer?
Macro & Micro economics Introduction This paper presents an analysis of an article named “China economic growth lower than forecast” published on 15 April 2013 by BBC. This report explains that China’s growth rate has been lesser than the growth rate that the country had experienced in last three months of 2012 (in the first quarter of 2013 Chinese economy grew at the rate of 7.7% while it was 7.9% in October-December quarter of 2012).
Macro & Micro economics Introduction China is one of the fastest growing economies in the world. Being the second-largest economy, China has shown tremendous growth in the last three decades. According to the estimate of 2012, China’s GDP is US $12.38 trillion (CIA, 2013).
Macro & Micro economics Introduction The Chinese economy has been growing at a significantly high rate since the last three decades. It is the second-largest economy in the world and is one among the fastest growing economies (Chiang and Standing, 2013). Last year (2012), in the fourth quarter, the Chinese economy grew at the rate of 7.9% (BBC, 2013).
Name: Student Number: Short Essay: Macro & Micro Economics 1. Write a paragraph explaining why a “technology-based” water pollution-control standard might not be the most economically efficient (or cost-effective) way to achieve a given level of reduction in water pollution.
Macro & Micro economics Name of the Student Name of the Professor Course Number Date Macro & Micro economics Doll Production Process There are varieties of dolls that are produced in the modern consumer goods market. Though there are certain machines that help to shape up dolls, the production of dolls is majorly a labor intensive method production that requires more of laborers than capital machinery equipments.
Macro & Micro economics Contents Contents 2 Introduction 3 Causes and Mechanisms of the collapse of the world trade 3 Current Trade Policies in Response to the Global Recessions 7 Policy responses on negative impact on the trade balance were implemented in the UK 8 Effectiveness of the EU trade policies in the long run 9 Conclusion 11 References 12 Introduction The Great Depression was one of the most severe economic downturn that the world faced during the twentieth century in the pre-World War era.
Spillover effect is referred to the decrease in the wages of the non-union company. Generally after any organization increase wages then simultaneous they used to reduce the number of employees to maintain the balance in the profitability.
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