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The Washington consensus package consisted of ten policies elaborate enough to cover macro and micro economic variables in respect to market and trade. The package included stimulus recommendations relating to tax reforms, fiscal policies, liberalization of trade, deregulation among others (Scott 357).
Contrary to what the name suggests, “Washington Consensus” was not made in Washington. The Washington Consensus package was in fact borrowed from the economic stimulus policies that were being used in Latin America to mitigate the effects of economic crisis. Actually, Williamson resents the fact that the package was named Washington Consensus since it has nothing to do with Washington.
The Washington Consensus ideology was very popular in Latin American countries. The events that happened immediately after the World War II disrupted the economic structures of countries in Latin America. This prompted the need for economic reforms that would ensure recovery of the overall economy amidst influential factors of politics. “Washington Consensus” came to happen because this region needed the back up of Washington in order to succeed (Scott 185).
The economic reforms in Chile can greatly be attributed to the Washington consensus albeit indirectly. The “Chicago Boys” made economic recovery after the fall of military rule and prowess of the same possible. Friedman and Harberger trained these young economists in the department of economics in University of Chicago. The idea was generated by the U.S as it sought to influence reforms of Chilean economy. The Chicago boys brought the same ideas of market-oriented economy common with Washington Consensus to Chile. All these events happened after Pinochet, head military ruler, stepped down. Currently Chile finds pride in their economic and social status in the world, which they owe indirectly to Washington Consensus (Scott 208).
The aftermath of WWII left Japan in ruins with no viable political
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Brazil on the other side is one of the countries that are growing at alarming rate and is apparently the largest economy in the Latin America. Economic analysts have been expressing visions that going by the current economic development, Brazil will most likely become the world’s superpower.
The ability to maximize one’s profit is key. One theory is that this success might have to do with the fact that, according to Png and Lehman (2007), “[t]he profit-maximizing scale of operation is where marginal revenue equals marginal cost” (pp. 203).
A rise in exchange rate also happens when demand grows slower as there is little importation happening. When investors are offered higher rates, these countries will attract more capital (Baumol and Blinder 758). There is also another type of exchange rate system also known as the fixed exchange rate which is run according to the fixed rules set by the government.
It mainly occurs when there is an extensive increase in the supply of the money within the economy which is not balanced with the growth of Gross Domestic Product (GDP) of a particular economy. As a result, there occurs an imbalance in the supply and demand, relative to the revenue of the country.
Econ reading and short essay questions Student Name: Tutor Name: Course: Date: . 1.) Answer Questions for Review #1 near the top of page 641 Money is combination of assets that used as a medium of exchange in an economy while commodity money is the value that an item has even if it has not been utilized as money for example; a gold (Mankiw, 2011).
Here, in this case, autonomous consumption expenditures, autonomous investment totals, autonomous government expenditures and autonomous net export expenditures amounted to 5000, 500, 2000 and -600 respectively. Therefore, the equilibrium value of real income in this economy will be [5000+500+2000+(-600)] = 6900.
The stock market of American S&P 500 given in the graph below, predicts recession since the prices of stocks were stable and steadly growing until 2002-2003 and also in the year 2008-2009. These years were characterized by
The ‘labor theory of value’ states that the value of a service or good depends on the labor used in its production. The first proposer of this theory was Adam Smith. This theory suggests that goods should cost the same as the amount of time used to produce
Inflation: for both January and March, FOMC’s reported inflation to have fallen further below the committee’s longer-run objective. Even though it appears that there is no difference in the January and March views, one can conclude that the
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