Nobody downloaded yet

Intermediate Macroeconomics - Essay Example

Comments (0) Cite this document
Intermediate Macroeconomics Name: Institution: Tutor: Subject: Date: Question 1 An increase in Government’s spending implies more money is injected in the economy. The effect of this is unplanned investments being made by the government. This then leads to stock prices decrease…
Download full paperFile format: .doc, available for editing
GRAB THE BEST PAPER97% of users find it useful
Intermediate Macroeconomics
Read TextPreview

Extract of sample
"Intermediate Macroeconomics"

Download file to see previous pages Finally the interest rates are increased by the central bank in a manner to curd the increased investment rate. The IS curves shifts up (Farrokh, 2009, 133). Overall, this move by the central bank reduces the investment and controls the spending. There is no crowding out of investments because the increase in interest rate discourages borrowings and reduces lending by the banks hence limits the investments made by individuals and private investors. There are only few people left in the trade market hence the LM curve shifts downward. However, some economists like Paul Krugman argue that spending by the government causes crowding in instead i.e. investments increases from private sectors but this has not been measured or quantified (Michel and Kevin, 2008, 107) Question 2 The Uncovered Interest Parity (UIP) condition is the condition where the difference in the interest rates of two countries equates to the resulting change in exchange rates of the two countries. The exchange rates are expressed as a comparison of currency in two different countries. High interest rates in a country correlate with high exchanges. This is examined towards a situation where an increase in interest rates attracts more foreign investments hence causing a rise in exchange rates. This condition is given by the formula (I1-12) =Ee (Hendrik, 2010, 155). Taking an example where UIP exists, assume USA has an interest of 12% and that of Britain is 7%, then the America dollar is expected to depreciate at 5% against the British sterling pound (Maurice, 2009, 169;Michel and Kevin, 2008, 231). Taking an example where UIP does not exist i.e. a profit is actually realized - exchange rate between the Japanese yen and the U.S. dollar is usually stated in yen per dollar (?/$); assuming that exchange rate increases from , say, ?102 to ?109 is an appreciation of the dollar. The UIP is covered against the risk of falling through hedging (Jeff, 2009, 243). Question 3 The LM curve depicts output and the IS curve depicts exchange rate when nominal rate is flexible. This is because a flexible rate leads to balance of buying and selling of bonds and maintains cash at lower levels than other assets. The lower interest rates lead to more investment and vice versa. The essence is that people regulate the markets through spending. The goods market IS, depict exchange rate since if the rate is higher of importing products, consumers use local products more and vice versa. This gives a balance or equilibrium. On the other hand if the exchange rate is fixed, the goods market i.e. IS curve depicts output because the central bank is at the control of funds creating reserves to absorb float rates. Therefore investors’ behavior is directly regulated by the central bank’s decisions (David, 2005, 28). Question 4 For a profit maximizing organization, it is important to hire real labour up to the point where it equals to marginal product labour. Labour is one of the factors of production that is demand driven. If an organization intends to increase its output that relies on workers then they have to hire more labourers and vice versa. The output from any one labourer has its limits i.e. the margin (Francois & Radu, 2006, 44). When wages are increased, workers tend to substitute work with leisure hence maintaining the normal production output. They further reach a point where the amount of money they earn doesn’t affect the production (Karl, 2007, 260). At this point economists refer to it as marginal utility. Efficiency wages ...Download file to see next pagesRead More
Cite this document
  • APA
  • MLA
(“Intermediate Macroeconomics Essay Example | Topics and Well Written Essays - 1000 words”, n.d.)
Intermediate Macroeconomics Essay Example | Topics and Well Written Essays - 1000 words. Retrieved from https://studentshare.org/macro-microeconomics/1438629-intermediate-macroeconomics
(Intermediate Macroeconomics Essay Example | Topics and Well Written Essays - 1000 Words)
Intermediate Macroeconomics Essay Example | Topics and Well Written Essays - 1000 Words. https://studentshare.org/macro-microeconomics/1438629-intermediate-macroeconomics.
“Intermediate Macroeconomics Essay Example | Topics and Well Written Essays - 1000 Words”, n.d. https://studentshare.org/macro-microeconomics/1438629-intermediate-macroeconomics.
  • Cited: 0 times
Comments (0)
Click to create a comment or rate a document
The depression caused the world’s macroeconomists to alter their theories in order to make allowances for paradigm shifts resulting from changes in interest rates and money supply. The original macroeconomic equilibrium takes place when Aggregate Supply of Funding = Aggregate Planned Expenditure = Gross Domestic Product.
6 Pages(1500 words)Essay
The author further discusses the problems related to the effectiveness of the expansionary policy that include inconsistency problem, liquidity trap, crowding out and the Ricardian Equivalence. After the expansionary policies, the author discusses the restrictive policies that are used to fight inflation.
2 Pages(500 words)Essay
Economic Growth
Economic growth is one of the major macroeconomic objectives. Economic growth is regarded as a necessary and desirable feature of modern economies . Economic growth is widely defined as ‘the sustained increase in real per capita incomes’ .
4 Pages(1000 words)Essay
Intermediate Macroeconomics
The main reason behind the increase in the real GDP growth is the declining inflation in the last quarter (RBA Statistics). It is evident that any change in the inflation rate has direct impact on the output level and overall GDP (Leamer, 2009). The decreasing inflation rate will push the Reserve Bank of Australia (RBA) to cut down the interest or cash rate.
4 Pages(1000 words)Research Paper
Intermediate Macroeconomics
rates, Canada, Venezuela, Mexico, and many more, having strong implications on their economic stability and thereby, influencing global consumption and expenditure rates through international trade to a substantial extent. The specific objective of the paper is to illustrate the
17 Pages(4250 words)Research Paper
Intermediate macroeconomics
Trough is a period of stagnant economic growth. Recovery is the above-average economic growth period while the peak marks the highest level of economic growth in which the economy is at full employment. NBER defines
1 Pages(250 words)Assignment
Summarizing the main arguments of the case study: Trends in Labor Force Participation
This trend enables the organizations, to be able to engage its workers in higher complexity of work and also can enable the organization to adjust further it concepts methods, strategies and the skills of its workforce. This trend is
1 Pages(250 words)Essay
Intermediate Macroeconomics
These countries include Saudi Arabia, Iran, Iraq, Kuwait, United Arab Emirates, Libya, Qatar, and many more. Beside the countries in the Middle East, there are also some other countries located
4 Pages(1000 words)Essay
Intermediate Macroeconomics / Managing the Economy: August Coursework: California's Fiscal Rules
It is always important to ensure that there is a continuous effort to ensure that the economy is in the right state to get assurance that a state can sustain itself properly. Reliable report has it that the state of California has history of large budget deficits.
12 Pages(3000 words)Essay
Intermediate Macroeconomics
This paper will specifically discuss merits and demerits of both fixed and floating exchange rate regimes. According to the paper the most notable advantage of fixed exchange rate is that this condition avoids currency fluctuations and related currency losses. Hence, fixed exchange rate would assist an organisation to get rid of the troubles associated with unexpected global financial market fluctuations.
6 Pages(1500 words)Essay
sponsored ads
We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.
Let us find you another Essay on topic Intermediate Macroeconomics for FREE!
logo footer
Contact us:
Contact Us Now
FREE Mobile Apps:
  • StudentShare App Store
  • StudentShare Google play
  • About StudentShare
  • Testimonials
  • FAQ
  • Blog
  • Free Essays
  • New Essays
  • Essays
  • Miscellaneous
  • The Newest Essay Topics
  • Index samples by all dates
Join us:
Contact Us