Contact Us
Sign In / Sign Up for FREE
Go to advanced search...

Final - Essay Example

Comments (0) Cite this document
Name: Institution: Professor: Date: Macro economics Question 1 a. If Fed sold 1 million dollars worth of government securities to an agent with a simple money multiplier of 5, then the money supply will decrease by 5 x1 = $ 5million. Interest rates will increase hence resulting into a reduction of money supply and credit creation…
Download full paper File format: .doc, available for editing
GRAB THE BEST PAPER92.6% of users find it useful
Read Text Preview

Extract of sample "Final"

Macro economics Question a. If Fed sold million dollars worth of government securities to an agent with a simple money multiplier of 5, then the money supply will decrease by 5 x1 = $ 5million. Interest rates will increase hence resulting into a reduction of money supply and credit creation. If Fed sells government securities to an agent, then it means that the available government securities reduce hence a reduction in credit creation (Langdana 100). With the reduction in credit creation, interest rates will increase as the government tries to discourage people from borrowing the securities. Graph 1: The effect of increase in the money supply According to Keynes, money supply is fixed by the government and the size of money supply is perfectly inelastic with respect to interest rate changes. Decrease in money supply from MS1 to MS2 leads to an increase in the interest rate from i1 to i2. b. In the rest of the economy, the sale of government securities will lead to a reduction in Gross Domestic Product (GDP). General Price levels will decrease leading to decline in the level of inflation which may make the economy to go into a contraction and recession (Langdana 100). The situation can also lead to an increase the levels or rates of unemployment. Question 2 a. Expansionary fiscal policies have a short and long term impacts on the aggregate economy as well as on the balance of the federal budget. Expansionary fiscal polices involves the attempts of the government to increase the aggregate demand. It will therefore include higher government spending or reduction of taxes in order to increase demand and spur economic growth. Reduction of taxes will lead to an increase in the consumer’s disposable incomes which then leads to a high level of consumer spending (Langdana 100). This then increased the aggregate demand leading to high economic growth. The expansionary fiscal polices will also lead to an increase in the size of budget deficits in a government. This is because the higher borrowings by the government will the cause the market to fear default and push up the rates of interest on government debts. Graph 2: Expansionary fiscal policy b. The expansionary fiscal polices are adopted in order to stabilize employment rates, inflation, economic growth and national output. There is no tradeoff between inflation and unemployment as increased government borrowing may increase inflation rates which will then lead to high levels of unemployment. Question 3 There are various types of budget deficits and they include primary deficit, fiscal deficit and revenue deficit. A revenue deficit occurs the amount of revenue received is short of the expected amounts. Fiscal deficit occurs when the expenditure by the government surpasses its projected revenue (Langdana 100). Primary deficit occurs when government borrow money from lending institutions in order to cover for its expenditures. The interest payment which is then subtracted from the fiscal deficit amount is referred to as primary deficit. Budget deficit occurs when the government spending is higher than the tax collects Persistent budget deficit leads to economic depression which means that the rates of unemployment will be very high as well as the inflation rates. Without a balance trade, deficit spending is a small defense against high unemployment rates. Question 4 a. Fiat money can also be referred to as forced paper money, debt money or managed money and can be defined to the money which does not have intrinsic value and cannot be redeemed for any commodity. There are two ways in which fiat money differs with commodity money. In the commodity monetary system, money supply usually adjust automatically to the monetary needs while the supply of and demand for money usually react simultaneously through the prices for services and goods in the market in order to determine the specified quantity of money. Under fiat monetary system, the supply for money is artificially regulated through the government or through its central bank. The government also decides how much to create and how much to issue. Secondly, commodity money value is directly related to the material in which it is made while in fiat money, the value does not depend on the material and depends on supply and demand for money. b. One advantage of commodity money is that it has value will always be consumed regardless of the market status. One advantage of fiat money is that its value can be increased in a period of time. c. Money was invented as a medium of exchange and to ease trade Question 5 Federal Reserve is a politically formed formal organization in USA which implements monetary system. Its main functions are to set the monetary policy for the nation and also provide emergency liquidity to the country in order to prevent a collapse or a recession in the country. It also regulates the amount of money supply going into the economy (Langdana 100). Federal Reserve or Fed is important to the average American as it formulates monetary polices which then regulates interest rates, stimulates aggregate demand and prevents high rates of inflation making the peoples lives better. Work Cited Langdana, Farrokh. Macroeconomic Policy: Demystifying Monetary and Fiscal Policy. Springer, 2009, pg 100 Read More
Cite this document
  • APA
  • MLA
(“Final Essay Example | Topics and Well Written Essays - 750 words - 4”, n.d.)
Retrieved from
(Final Essay Example | Topics and Well Written Essays - 750 Words - 4)
“Final Essay Example | Topics and Well Written Essays - 750 Words - 4”, n.d.
  • Cited: 0 times
Comments (0)
Click to create a comment or rate a document


The Dispute Over the Territory of Western Sahara: Finding a Final Political Solution

.... In addition, this initiative also promotes reconciliation with the region or the territory. This initiative taken up by the Moroccan Government guarantees to all the Saharan people who are inside and also outside the territory not only to hold quite a privileged position but also to play a leading role in the different institutions of the region without any kind of exclusion or discrimination (Moroccan American Center for Policy, n.d.).   There are also some other aspects of this initiative being taken by the Moroccan government. The initiative has actually been made in an open spirit, and it has made quite evident that Morocco does have the aim to set the stage for further negotiation process that may result in a final political solution...
60 Pages (15000 words) Research Paper

Final Marketing Plan for Industrie Clothing Pty Ltd

...Competition Industrie Clothing Pty Ltd’s faces competition from numerous sources. These include: Small Retail Shops These are typically small shopsthat stock a variety of products in small scale and are usually locally owned. These have limited capacities to attract customers from far away regions and characteristically target nationals at the community level. Most products sold by retail shops are locally made and the quality of product they offer are widely untested for quality. Most of these rely on traditional marketing methods and their brands are not widely known. Some of these firms offer products that are cheaper in price but of lower quality. Their marketing strategies in most cases do not go beyond the use of posters... Industrie...
12 Pages (3000 words) Case Study

Final Group Negotiation Stimulation: Reflective Portfolio

... for the island and yet it is also essential that the beauty of the island is maintained. Hence the theory used here is the Win – win theory of negotiation (E. Lawler & B. Markovsky (Eds.)). The second case is that of Ferent Brios. The case involves the development of a contract between Ferent Brios and the Zijan Mining in China. The companies are required to decide how the final spilt will take place. The situation is one where the companies need to definitely utilise the BATNA Best Alternative To a Negotiated Agreement Theory and apply this before getting into the contract (Bazerman, Mannix, & Thompson, 1988). Using the BATNA will allow the companies to make a more reasonable and informed decision and will allow the companies to develop...
6 Pages (1500 words) Coursework

Final essays

...Failure of Man’s Wisdom and Philosophy 1. Some of the main themes from the Book of Ecclesiastes include: Failure of man’s wisdom and philosophy, everything is meaningless under the sun if we do not have a personal relationship with Jesus Christ, man continues to seek material possessions and personal wealth only to find despair as well as Fatalism – Live for today mentality of man.  2. “Is life worth living?” The Book of Ecclesiastes will make one think about this question in hopeless despair if he or she subscribes to the empty philosophy and limited wisdom of man. However, to the Christians, we see how hopeless life would be without Christ Jesus as our Lord and Savior. Everything in this world seems meaningless... of Man’s Wisdom...
6 Pages (1500 words) Essay

Final Strategic Plan of JDs Way of Life

...Final Strategic Plan The management of JD’s Way of Life has designed a comprehensive strategic plan for its corporate venture in which it has described in details the blueprint and roadmap of the scheme it intends to observe for successful launching of its business activities. Since it has established very high aims of hitching it wagon to the stars, its ascribed vision is to surpass all existing firms and companies in respect of providing various consumer items, particularly healthcare, jewelry and computer accessories, at economical rates without making compromise on the quality of the products. The company will provide the customers with excellent environment, so that they can complete purchasing free from disturbance or interruption...
6 Pages (1500 words) Case Study

Final Project: Economy of the BRIC Countries

...The study will focus on one of the BRIC countries as their economy is predicted to be a strong economy in the coming years. It is assumed that several multinational corporations will seek to do business with the BRIC countries. Unilever is a multinational corporation and has huge operations in several countries. Hence, this company will be discussed in the study. Indian economy has been selected for the study as it has been predicted that the Indian economy will produce more economic impact than other countries of BRIC in the near future. Indian Economy The Indian economy is acknowledged as an emerging economy and has experienced exceptional intensity of economic growth along with Brazil, Russia and China. The economic... study will ...
11 Pages (2750 words) Coursework

Woman study - Final exam

...Feminist A woman was considered to be a ‘parasite’ in some sections of society, yet, we still have a vast majority of people today that believe that women deserve equal rights and why not, let’s face it, they are equal and on some level even over-achievers when compared to men. But this wasn’t the case before. Just like there were discriminations between the black and the white, the poor and the rich, the oppressed and the oppressor, there was also a huge discrimination between Women and Men and their place in society. This discrimination was up to such a level that in some traditional cultures women were considered as nothing but an instrument of exploitation. They were seen as tools for cleaning, cooking, sex, giving birth... A woman was...
6 Pages (1500 words) Essay

Human Resource Management Final Exam

...eby making the productivity plan achievable. In the event of complications in the systems and the other weaknesses within the organization, it can only be the role of such a devolved system to detect and correct the hitches in a timely manner before the arrival of high level managers. This class requires teamwork which implies that this category of remuneration will be determined by team player’s attributes. Finally, a keen eye is required on this class of employees since performance in this category can only be guaranteed if the official is watchful and keen. It therefore means that remuneration will be tied to the actual performance in these and other qualities that make the concierge employee an all round figure. Q3. How will Lisa’s...
10 Pages (2500 words) Case Study

Final of American Urban Society

... Instruction: Task: American Urban Society The sequential arrangement of some of the most significant incidents in the history of the African-American civil rights movements is as follows; the Missouri Compromise (1820), the Dred Scott position (1857), Brown v. Board of Education (1954), the killing of Emmett Till (1955) and the affirmative action executive order (1965). Each of the occurrences played a vital role in combating racism and prejudice (Noll 118). The Missouri Compromise, an agreement between the supporters and enemies of the slave trade, aimed at curbing the predicaments surrounding the extension of slavery. The Dred Scott decision, on the other hand, was a verdict by the U.S. Supreme Court against an African-American...
6 Pages (1500 words) Essay

The Challenge of Hospital Facilities to Senior Citizens: Spiritual Angle is the Final Solution

... Topic: Revisionist Profile Topic: The Challenge Of Hospital Facilities To Senior Citizens: Spiritual Angle Is The Final Solution. Introduction Prime-facie the above topic may appear old-fashioned. Senior citizens, who need medical treatment, have problems and this issue exists all over the world. Their problems are multifarious. In this paper, I have introduced spirituality as the most important factor and how it helps the senior citizens in their mode of treatment. It is not possible to prove this treatment option logically, as spirituality transcends reason, and hence it is beyond the scope of science. Spirituality is practical experiencing of the divinity within...
6 Pages (1500 words) Admission/Application 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 Final for FREE!

Contact Us