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University Degree: Macroeconomics
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- Marked by Teachers essays 2
This increased the power both economically and politically for the European Union, as there are gains in prestige and political power associated with a common monetary policy.2(Tsoukalis) The European Union is now compared relatively with America as a large economic power with a single currency; this makes trading with the rest of the world easier as it will "increase the relative political weight of the countries involved with EMU"3(p12). The EU can use this new power to become more confrontational in world affairs.
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By plotting these to curves, we can calculate the equilibrium rate of interest, and would be able to see it move in relation to changes in the economic environment, such as a rise in the demand for capital equipment due to an improvement in technology. If this were the case then there would be an increase in the demand for loanable funds and the demand curve would shift to the right, increasing the interest rate and therefore encouraging a higher level of savings.
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An argument against optimum currency areas (OCA) is that the single currency and the common interest rate used in an OCA would mean one-size-fits-all monetary policy. Explain this argument, and consider whether and under what condit
For example, a two input production function involving capital and labour could take the form: Function 2 Where (K) represents capital and (L) labour. Given a production function like this, a firm could always increase the quantity it produces by increasing one or all inputs and the firm would simply employ an infinite number of inputs in order to achieve infinite output. However, since in reality inputs are scarce and thus have prices, the firm can only employ the combinations of inputs that its budget will allow. For example, if a firm with production Function 2 faced equal prices, say wages for one unit of labour (w)
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Both supply and demand shocks can cause inflation, but, without money growth the inflation would be short lived. Discuss.
However when it comes to inflation in the short run there is a debate between Keynesian and monetarist economists. Monetarist economists believe that the most significant factor influencing inflation is money supply. They believe that for sustained inflation money supply must rise faster than the rate of growth of national income. However the Keynesian view is that changes in money supply do not directly affect prices and that inflation is caused by pressures in the economy such as supply and demand shocks. According to Robert J Gordon's "triangle model", there are three main types of inflation: Demand pull inflation, cost push inflation, and built in inflation.
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Evaluating the Health of the US economy. Analyse the macroeconomic policies of the Bush and Obama administrations.
Adopted from www.tradingeconomics.com If we look at the Real GDP however, it shows a growing trend. Using the year 1980 as the base year, United States real GDP was 3.10% change in 2010 according to the International Monetary Fund (IMF). It is forecasted that US Real GDP for 2011-2015 will be around 2.39% change. Figure 3 Real GDP Rate. Adopted from www.tradingeconomics.com After that, we will also look into the inflation of the economy. Inflation refers to the rise in prices of goods and services compared with the standard of living. The most well known measures of Inflation are the CPI which measures consumer prices, and the GDP deflator, which measures inflation in the whole of the domestic economy.
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(Stanton et.al,,2009) Besides these 2 main players, there are other smaller players as larger regional bakeries such as Daily bakery at Johor, Federal Bakery and Angel Bakery under Kuala Lumpur and Klang Valley region, and Family Bakery in Central Peninsula Malaysia. Others such as Kilang Roti Florida Sdn. Bhd., Lee brothers Bakery, Economic Bakery factory.(Malaysia Business Listings,undated) While for retail bakery chains such as Kings Confectionery, Bee's confectionery and bread boutiques like Bread Story.(Stanton et.al,2009) Bread Industry in Malaysia is categorized as oligopoly which has less number of large bread makers control in the market.
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The purpose of this report is to explore Australias current economic conditions and how the government and central bank utilizes its macroeconomic instruments Fiscal and Monetary policies to accommodate the financial crisis. Moreover, th
This report portrays the current Australian economic situation supported by current economic indicators and variables. Next, the report outlines the macroeconomic policies (Fiscal and Monetary Policies) taken by the Australian government and the central bank to accommodate the Global Financial Crisis. Specifically, the report provides an overview of the government's Economic stimulus plan which includes government spending over a specific horizon. Lastly, the report justifies the reasons for the slowdown of government's spending given the current economic situation and prospects of Australian economy.
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Who and what determines the interest rate Summaries of the processes by which monetary policy is commanded are readily accessible in Budd (1998) and in retrospect, King (1997, 2002). The Monetary Policy Committee (MPC) of the Bank of England has the responsibility for setting interest rates is currently held. The MPC has nine members including the Governor, two Executive Directors, and two Deputy Governors, responsible for monetary policy analysis and monetary policy operations. Other four 'external' members are appointed by the Chancellor of the Exchequer with 'experience and knowledge, which is likely to be relevant to the committee's functions.
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International migration of capital is generated not only by the absolute need of capital mentioned above, but also by the possibility of a more favorable exploitation of the available capital in a country other than that in which it was formed. This way arise the actual flows of financial linkages among countries. A lot of these flows take the form of foreign loans granted or received. 2. In what does the external debt consist of? It includes all loans solicited by the government or by corporations or private households, resident to the country.
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Explain the concept of Price Elasticity of Demand and discuss its relevance for Business and Government.
Demand can be judged to be relatively elastic, relatively inelastic or unitary elastic and can be represented as a figure. It is common for all goods to experience an increase in demand from a decrease in price, however if the reduction in price leads to a more than proportionate change in quantity demanded, it is said that demand very sensitive to price changes. Therefore, the demand is relatively elastic and the price elasticity would be greater than one. On the other hand, if there has been a less than proportionate change in quantity demanded, it indicates that it is not very responsive to price changes; thus demand is relatively inelastic and the price elasticity would be between zero and one.
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The loss of a job would mean lower living standards and often a fall in their self-esteem. Moreover, involuntary unemployment also harms the whole economy, as they are not contributing to the economy's production and potential output is wasted; they are viewed as the burden of the economy and adversely affect the growth of the country (Lipsey et al, 2007). As a result, unemployment is a recurring debated matter of governments. There are two main types of unemployment, equilibrium and disequilibrium unemployment. Keynesian unemployment is often referred as demand deficient or cyclical unemployment and is categorized to being in disequilibrium; this is where "real wage rates in the economy are above the equilibrium level" (Sloman et al, 2010).
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Macroeconomic analysis of Brazil. In the following sections, we give a brief overview of the economys past and then present a detailed analysis of its current macroeconomic policies and the challenges faced.
Brazil's major export partners are China, US, Argentina and Netherlands while its major import partners include China, US, Argentina and Germany. The large inflow of FDI into Brazil in the last decade has played a significant role in the country's industrialization process. The stock of direct foreign investment was $319.9 billion in 2009. In the following sections, we give a brief overview of the economy's past and then present a detailed analysis of its current macroeconomic policies and the challenges faced.
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Welfare Economics. In this essay I will be examine the arguments for and against some of the key concepts (such as the fundamental theorems and Market failures) of this branch of economics.
relative to their budget constraint. The further out the indifference curve the more utility the individual gets. This would mean that U3 is the most desired indifference as it is furthest out however due to the budget constraint U3 is unattainable and U1 gives lower utility. Therefore the highest attainable utility subject to the budget constraint would be on U2 because here the individual's indifference curve is tangential to the budget line. At this point the slope of the indifference curve is equal to the slope of the budget line. The slope budget line is determined by the relative prices of good 1 and 2 and the slope of the indifference curve is simply the marginal rate of substitution2 (MRS)
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The Global Economic Crisis. The present project analyses different approaches of the crisis management in some of the most affected industries and countries. Moreover, the strategies used by some big companies and the measures some governments took durin
ECATERINA MUSTEA, 19 years old "I like interacting with people and because of that I wanted to ask them directly how the Romanian people are affected by the economic crisis." THE ECONOMIC CRISIS Nicoleta Rosu; Andreea Pirvu; Magda Ungureanu; Aurelia Scarlat; Ana Maria Tudose; Alexandra Prunel; Ecaterina Mustea; Adrian Salcu Academia de Studii Economice, Facultatea de Administrare a Afacerilor in limba engleza, anul I ABSTRACT The current crisis is the most global one since the Great Depression of the 1930s.
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What are the costs and benefits of using fiscal policy to manage an economys short-term and long term growth rates? Discuss.
CAD can be financed in two ways: foreign borrowings and equity investments by foreigners in Australia. There is a gap between theory and practice. In theory, CAD can be paid entirely by foreign equity investments and no need to borrow overseas funds at all. But in practice, CADs are financed by a combination of borrowing and equity investments. Consider a situation in which Australia has CAD and borrows foreign funds to cover the CAD. Valuation effect causes the Australian dollar value of our debt to fall. Australian dollar appreciates in value against other currencies. If the value of our foreign debt falls far enough, it may offset the additional funds borrowed during the quarter so that net foreign debt is lower at the end of the quarter than it was at the start.
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Macroeconomics questions - Supply and demand of labour, effects of a minimum wage, labour force participation in Australia.
Minimum wage laws prescribe the lowest hourly wage that employers must pay to workers. The demand and supply model shows that this law must raise the unemployment rate. The real wage is when the quantity of labour demanded equals the quantity of labour supplied (X). If a minimum wage is imposed (Wm) that exceeds the market clearing wage, then the number of people who want jobs exceeds the number of people who are willing to hire, thus creating unemployment. D S Wm X This law benefits especially low skilled workers, who would have not otherwise earned more.
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Macroeconomics- Demand and Supply of Money, Monetary Policy and Whether the Australian Government should tighten monetary policy.
Thus, a higher price level is associated with a higher demand for money. c) Real output Rising real incomes and increasing numbers of people employed will increase the demand for money at each rate of interest. An increase of real output raises the quantity of goods and services that people and businesses want to buy and sell. To accommodate the increase in transactions, both individuals and businesses tend to hold more money. (ii) Define monetary policy. Discuss the possible channels by which monetary policy might affect the economy?
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The Policy Implications of the Relationship between Inflation and Unemployment in Canada (1967 2006)
Friedman believed low unemployment and low inflation were not mutually exclusive policy objectives. There was a trade-off between inflation and unemployment in the short term but not in the long term. This study aims to establish the relationship between unemployment and inflation in Canada for both the short and long term and recommends policy implications for the Canadian Government and the Bank of Canada. II. Economic Theory A negative relationship between wage inflation and unemployment was first hypothesised by Alban Williams Phillips in 1958.
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Economics in theory. The main purpose of this report is to explain a couple of economic concepts to the business men and women attending the conference held by the investment bank of Bluefoot Securities and to further help them understand how to apply ec
2.0 Explanation of Some Key Economic Terms Economics is always related to money according to the general public, which is indeed a part of the research of economics yet not the sole and only part. In effect, economics deals with a lot of researches other than money and this report will begin with some fundamental economic problems. 2.1 Scarcity and Choice Scarcity is an eternal economic topic for human being and it is the result of the bridge between people's infinite desire and finite resources that can be utilised to satisfy people's desire.
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Describe types of unemployment and their causes. Explain Keynesian and classical assumptions in relation to the types of unemployment
People who are considered unemployed are those who are seeking work or lay off for more than a week. There are many different reasons why a person could be unemployed. The government tries to find solutions in order to reduce unemployment by making up policies. The unemployment problem began in the 1990s. First, it resulted from the restructuring of economy. In the period of planned economy, the large-scale corporation is the most common production organization. But to the market economy, the most common one is the individual or small-scale corporation. The workers from the large-scale firms cannot adapt themselves to the production form of the individual or small-scale ones.
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Describe the macroeconomic performance of the UK economy over the past 40 years. How does this performance compare with other developed industrial economies?
Unemployment rates in the UK were as low as 2.2% change but rising to an average of 4.5% throughout the 1970-to 1979. The 1970's was a huge era during this time things started to change a lot economically the way of Keynesian economics was being scrapped and new ways were being brought in, in Britain this change was signified after conservatives won the vote in 1979 under the power of Margret Thatcher which although signaled change it wasn't for the better.
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The cost of production would include things such as land labour and capital all the initial costs the producer faces in making the good. The cost of living is the minimum or the fair cost of how much a person or a worker needs in surviving day to day. The cost of complying with fair trade standards is a key cost as producers are often monitored to ensure they are agreeing to their share of the deal. With the help of the Fair trade Labelling Organisation (FLO), an organisation, which ensures the fair trade name, is not being misused and people are complying with the standards of fair trade.
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It was mainly in charge of money supply and foreign exchange policies. Before it was nationalised during the 1600's ( http://www.bankofengland.co.uk/about/history/index.htm ) The Bank of England was appointed as the English government's bank. At this time, the Bank of England is in charge of monetary stability and financial stability. The instiution works along side the HM Treasury and many other international banks to make sure the economy remains stable and there is continuous growth. Just as the PBC works with the ministry of finance.
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When in a time sensitive situation, a leader will need to put their stamp of approval on the work being done to be assured that the job is done correctly. This leadership seemed most ineffective when trying to develop a strong sense of teamwork, when the team wants a more natural feel to the environment, or when the members of the group have some knowledge or skill for what they need to accomplish a job or project. While working at American Home Shield, this leadership style is definitely used.
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More so, Crowther, defines inflation as a state in which the value of money is falling. On the other hand, Deflation is the opposite of inflation. Here the level of prices is going down and consequently the value of money drops. Professor Paul Einzig in his book monetary policy defines deflation as "a state of disequilibrium in which a contraction of purchasing power tends to cause, or is the effect of a declining in the price level". An economy is experiencing deflation when it is in a period of falling prices and the output of work by productive agents increases relatively to money.
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