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That makes lending conditions more difficult, especially at smaller banks. The March loan-to-deposit ratio of 83 per cent for Chinas small and midsize banks was already above the 75 per cent limit set by the regulator.
In aggregate, though, it isnt clear the banks are short of funds to lend. The level of reserves banks hold above the requirement held steady at 2.2 percentage points in March, up from 0.8 points in the middle of 2011. The seven-day interbank lending rate was 3.2 per cent Friday, down from an average of 4 per cent in 2011. Both measures suggest that liquidity conditions are improving.
With no shortage of funds in the banking system, but new loans low, the obvious conclusion is that it is constrained demand for loans, not a constrained supply of credit, that is the problem. The shrinking share of long-term loans in the total for new lending - down to 28 per cent in April from an average of 51 per cent in 2011 - suggests businesses dont see so many opportunities for profitable investment.
In the past, demand for loans was always strong. Increasing supply by lowering the reserve-requirement ratio was a sure-fire way to give growth a boost. If demand is now less assured, opening the lending taps may no longer provide a quick
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For instance, Adam Smith’s theory of the invisible hand argues that when people engage in business and selling they are governed by the invisible hand of the market that helps regulate prices and ensures that businesses and people act in certain ways. Indeed, the nature of economics is like psychology in that it presents theories of human behavior.
As such, economic analysis relates to the study of economic systems in an industry to ascertain the effectiveness of the operations of a given industry with reference to its profitability1. With this, we are able to establish the optimum use of the limited resources to achieve a given economic objective.
Thus, short-run is the time period that quantity of an input or at least one of the many inputs is fixed while other inputs’ quantities can vary. Long-run on the other hand is that time period where inputs in entirety can be varied. Therefore, there is no specific time that can be taken as fixed or even marked on the dates of the calendar to distinguish short-run from the long-run.
If the quantity demanded of a certain product changes minimally or does not change at all, then that product is said to be a Price Inelastic Good. Consequently, if a product whose price increased and such a change brought forth an abrupt drop in quantity demanded of the same product, the good is said to be Price Elastic.
e that the people of a country would receive the best of every thing that could be education, housing, health services or the other various basic necessities.
Economics has been called and is known as a Social Science one that actually focuses on the subject matter that is
sought to apply a broader theoretical and conceptual tradition of economic thought by placing emphasis on neo-classical synthesis – a combination of neo-classical economics and Keynesian economics.
Conservative economics is based on Milton Friedman’s teachings and
s the above figure illustrates, if there is a supply shock in an economy (such as increase in the price of oil, labor or other costs that increase the cost of doing business), the short run AS curve shifts to the left. The real GDP decreases from Q to Q’ and the price level
These tools enable professional mainstream economists to address various economic issues facing the world. Mainstream economics is about modeling in a way that traditional or heterodox economics is not. It originated from the neoclassical synthesis of the neoclassical
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