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

Introduction to Macroeconomics - Case Study Example

Comments (0) Cite this document
Summary
Introduction to Macroeconomics A) Why is it considered necessary to control the rate of inflation? It is necessary to control the rate of inflation for its several harmful effects as described in the following paragraphs (Parkin, 2010). Impact on Purchasing Power With the inflation rate gyrating upwards, real wages of the person fall leading to reduced purchasing power…
Download full paperFile format: .doc, available for editing
GRAB THE BEST PAPER97.4% of users find it useful
Introduction to Macroeconomics
Read TextPreview

Extract of sample "Introduction to Macroeconomics"

Download file to see previous pages Moreover, there are always huge numbers of people that are self-employed and every one cannot increase their incomes in proportion to the inflation rate so a huge chunk of citizens suffer in this process. In a way, high inflation impacts living standard of the majority of the people. Impact on Interest Rates Bank interest rates get impacted due to high rate of inflation because banks need to enhance their deposit rates to attract the deposits from the public; moreover, this will also cause lending rates to go up. This puts producers and traders at inconvenience as their production planning process goes in turmoil impacting production, sales/marketing and other related functions. During high inflation regime, investors tend to disinvest from fixed income securities such as bonds, debentures causing a great upheaval in the market. People tend to spend this money on their other needs fueling further inflationary pressure in the market. Impact on Saving High inflation rate discourages saving thus reducing capital formation necessary for economic growth; on the contrary, high inflationary environment forces people to spend as fast as possible before money loses its value. With increased levels of spending, market gets heated up giving a further upward push to the prices. Overall, market gets hooked up in an inflation trap creating a difficult situation for all. Affects Global competitiveness High-inflation at the domestic front, relative to the trading partner, makes imports lucrative and exports less competitive. This disturbs the trade balances significantly and as a natural consequence, industries involved in exports or competing with imports tend to lose market leading to unemployment in those sectors. Eventually, this can cause its impact on nation's GDP and unemployment rate. No democratically elected government would like to live with this situation for a long time and will resort to the measures necessary to cap the inflation at reasonable levels. Labor Unrest High inflation rate could also be a cause for labor unrest. Union activities increase during high inflation environment because often wages and salaries fail to keep pace with inflation. This disrupts the smooth functioning of the manufacturing units harming productivity and economic growth of the country. Uncertainty The companies from within and outside do not want to invest when instability and uncertainty due to inflation prevails in the country. It has a negative impact on economic growth of the nation. Thus, it becomes quite clear that it is extremely important to control inflation in the larger interest of the economy, people and the country. B) Since the financial/economic crisis, which first manifested itself in 2006/7, the UK rate of inflation has deviated from its bank of England chosen target. Identify these deviations and discuss their possible causes. Answer Source: http://citywire.co.uk/global/central-bank-regime-change-the-new-inflation-rules/a645632#i=1 Bank of England’s targeted inflation rate right from 2007 until date as measured by consumer price index (CPI) has been 2.0 percent. Inflation in terms of CPI, most of the time, has remained above 2.0 percent except for the second half in 2009 when it fell down below the targeted level. But since then it has consistently deviated above ...Download file to see next pagesRead More
Cite this document
  • APA
  • MLA
  • CHICAGO
(“Introduction to Macroeconomics Case Study Example | Topics and Well Written Essays - 1000 words”, n.d.)
Introduction to Macroeconomics Case Study Example | Topics and Well Written Essays - 1000 words. Retrieved from https://studentshare.org/macro-microeconomics/1467944-introduction-to-macroeconomics
(Introduction to Macroeconomics Case Study Example | Topics and Well Written Essays - 1000 Words)
Introduction to Macroeconomics Case Study Example | Topics and Well Written Essays - 1000 Words. https://studentshare.org/macro-microeconomics/1467944-introduction-to-macroeconomics.
“Introduction to Macroeconomics Case Study Example | Topics and Well Written Essays - 1000 Words”, n.d. https://studentshare.org/macro-microeconomics/1467944-introduction-to-macroeconomics.
  • Cited: 0 times
Comments (0)
Click to create a comment or rate a document

CHECK THESE SAMPLES OF Introduction to Macroeconomics

Introduction To Human Resource Management

...Running Head: INTRODUCTION TO HUMAN RESOURCE MANAGEMENT Introduction To Human Resource Management [Insert [Insert of Introduction To Human Resource Management Developments during the last decades of the twentieth century have produced what may be termed an era of globalization. As business has continued to globalize or migration of many companies to other economies, one of the most challenging aspects has focused on how UK firms manages its human resources to sustain a competitive advantage. Scholars from several disciplines are addressing these issues-coming at them from the perspective of strategy, cross-cultural management, international business, organizational theory, sociology, and personnel management. It appears... Head:...
7 Pages(1750 words)Coursework

Introduction of the Euro and the European Constitution in Terms of Framework, Authority, and Aspirations

...Discuss the introduction of the Euro & the European Constitution in terms of framework, ity & aspirations Like all other world bodies, there was a need to bring all the European nations to a single platform. This was all the more needed because the rulers of the respective nations wanted their own particular identity and this brings us to the question that if they needed such an identity what was the need of having European Union (EU)? They could have easily made a body comprising of two or for that matter three countries and enacted their own policies and gone about it in the long run but bringing all the European nations together to a single platform only means that there was a courteous move behind the very same... the introduction of the...
10 Pages(2500 words)Term Paper

An Introduction to Family Law in the United Kingdom

When complete judicial separation is not advisable and where children may need continued maintenance the Courts have resorted to Mesher orders in property settlement as set out in the case of Mesher v Mesher, where the wife as the custodial parent is allowed to remain in the home until the children reach the age of 184 and receive periodic payments from the father to look after the children. Alternatively, the payments continue till her death, remarriage or cohabitation with another man. These constitute once and for all maintenance orders that hold good until children reach 18 years of age.
The advantage with this system is that provision is made for the child with a primary caretaking parent, however, the disadvantage is t...
6 Pages(1500 words)Assignment

Introduction to Social Science and Counselling

Qualitative research may be taken as a research strategy that employs a naturalistic and interpretative approach to the understanding of the meanings that people attribute to actions, decisions, beliefs, values and the like within their social world and the mental processes that are employed by the respondents to comprehend and interpret the world in which they live. (2). Qualitative research is characterized by the predominant stress on the inductive approach and the generation of theories; rejects the approaches of the natural scientific model and of positivism, which is replaced by stress on the manner in which the social world is interpreted by individuals and incorporates the perspective of social reality as a constantly chan...
7 Pages(1750 words)Assignment

Mentally Ill People and Their Re-Introduction Into the Workforce

The lay theory proposed in the article states that people who suffer from psychotic disorders are discriminated against when seeking employment and that the culture in China discriminates against these people to a greater degree than a western culture such as the U.S. There have been many inquiries into the difficulties of people with mental illnesses, though this was the first to examine the differences of perception in different cultures. This is the context within which this article exists.

Jason Robert, a researcher from Arizona State University, says on the subject of mental illness that it is necessary to take into consideration biological and socio-cultural factors when making a diagnosis: “My claim is tha...
8 Pages(2000 words)Article

Introduction to Visual Culture

...Page Introduction to Visual Culture Question # 2 Michel Foucault’s (1975) theory of panopticism examines the link between surveillance, discipline and power. In the text(s) you have chosen to study, what is the relationship between looking and power? Introductory answer While discussing the writings of Michel Foucault.--Discipline & Punish (1975), Panopticism, we would like to emphasize on Bentham’s Panopticon to be the architectural figure of this composition. As per bentham “visibility is a trap”. He mentions that panoptic mechanism provides the arrangements of spatial unities, which make it possible to see constantly and then recognize immediately. Briefly said, Bentham’s assessment reverses the earlier theory of three functions...
6 Pages(1500 words)Assignment

Macroeconomics and Trade Policys

Keynes argued that prices and wages do not determine the level of employment, as many classical economists suggested, but instead the level of aggregate demand for goods and services (Case & Fair 683). Keynes realized as well during the Great Depression that the government could intervene in the economy to attain specific employment and output goals by either increasing or decreasing taxes and government spending.

For example, raising taxes will decrease the disposable income of households and thus effectively decreasing consumption. When the government decreases consumption, the household demand for goods and services decreases thus it would only seem reasonable that the amount of output that the economy would also...
7 Pages(1750 words)Article

What Is Macroeconomics

While microeconomics is concerned with the factors underpinning the economic life of individual entities like families and small businesses, macroeconomics looks into the various elements that move or determine the economy in its entirety or what some call an aggregate economy. Macroeconomics is useful because it allows a predictive view of how market forces affect the economy and advises governments appropriate economic policies and gives private individuals and business entities a glimpse of what the future holds economically.
The term macroeconomics did not exist prior to the Great Depression but there was a collective set of theories that were used to study the various workings that influenced the aggregate economy. Econo...
8 Pages(2000 words)Assignment

Intermediate Macroeconomics and Macroeconomic Coordination

...CHAPTER 04 (MACROECONOMIC COORDINATION) We know that when GDP, APE & ASF are unequal, than an interplay occurs (Macroeconomic coordination process) which bridges the gap between these variables. If there is a disparity between ADF & ASF, there will be an automatic reaction among money users & suppliers which restores the magnitude of these variables to equality generally known as funding adjustment. Similarly, if there is a difference in the values of GDP & APE, it will trigger the suppliers of goods & services to act together and bring the figure close to equality. This process is called output-price adjustment. The purchasers of the domestic output can be classified into three groups. Group 1 involves individuals having sufficient money...
6 Pages(1500 words)Assignment

Introduction to Care Policy

...Running Head: Introduction to care policy Introduction to Care Policy of the of the Introduction to care policy Introduction The term welfare state is used for a country where maximum welfare services come directly from government or its agencies and where the system of government allows the state to promote economic and social well-being of citizens. A welfare state protects its citizens from a number of social problems such as poor health, lack of access to education, unemployment, discriminatory and poor housing. The basic idea is to improve quality of life, reduce inequality and achieve greater social integration. According to the views of Fulcher and Scott (2007), the provision of welfare is described by different amount... Head:...
6 Pages(1500 words)Coursework
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 Case Study on topic Introduction to Macroeconomics for FREE!

Contact Us