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International Baccalaureate: Economics
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Use a diagram to show the consequences of government imposing a price above or below the free market equilibrium
When supply contracts, it means that the quantity of oil that is supplied becomes less. Because of the shortage of oil, the demand will extend. The lack of supply of oil and the excess demand, scarcity will occur. Even though scarcity of oil existed before, shortages did not happen before the government imposed. Another outcome of price ceiling is the illegal economic activities that may occur. Because the maximum price that the government pointed is less than the equilibrium price, producers would feel that they could earn more money.
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1. There are too many monopolies formed all of which exploit consumers by charging unrealistic prices. 1 of 6 Economics Project ? Market Failure Research Question 2 ? How does the government deal with market failures? Ans. The government can take the following steps ? 1. Taxation ? Income tax, sales tax and other ad valorem taxes help generate government revenue to provide merit and public goods. Taxes can be imposed on the production of demerit good to reduce production. Taxes can also be imposed on firms which pollute the environment causing negative externalities. 1. Subsidies ? Payments from the government to firms are given to encourage the production of merit and at times public goods.
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Lower production also caused that there were less jobs needed, so the level of unemployment rose. Although it originated in the United States, the Great Depression caused drastic declines in output, severe unemployment, and acute deflation in almost every country of the world. The cause of the Great Depression was not just that the stock market crashed and there have been theories such as Keynesian Theory and Austrian School Theory which tried to explain the causes of the Great Depression. Keynesian Theory says that the problem was lack of aggregate demand. Keynes passionately argued that governments should intervene in the economy to stimulate demand through inspiring consumer confidence by increasing the government spending.
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They may provide the public good themselves. Use taxpayers money. 2. They may subsidise private firms, covering all costs, to provide the good. Under-supply of merit goods Merit goods are goods that will be underprovided by the market and, because of this they will be under consumed. Government thinks providing positive benefits for both the people and society, and that u-s goods should be consumed to a greater degree. E.I Education. Governments will attemt to increase the supplyy, and thus the consumption of merit goods. How they do this depend on how important they think the merit goods are.
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Macroeconomics Article Commentary. The worst problems surrounding youth unemployment in Scotland are not over, a Scottish Government Minister told MSPs today.
Figures show that 102,000 young people are currently unemployed in Scotland. That represents around one in four of those aged 16-24 who are economically active. ?Given the recent economic indicators that suggest things are slightly improving in terms of vacancies, do you think we?re over the most challenging year, and have met the greatest challenge?? Ms Constance said she would not be ?foolish enough to look into her crystal ball? and make such predictions. ?We?ll deal with what comes our way,? she said.
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Commentary on microeconomics. The main problem outlined in the article is low price of tomatoes in Coimbatore market, Tamil nadu
This shift has resulted in the price falling from Pe to p 2. There are several factors that has jointly caused this high increase in supply. First is the weather conditions, ?good southwest monsoon?. The second factor is improvement in technology/ availability of advance machines, ?better irrigation facilities?. And the last factor is ?inadequate demand? in Kerala market that made the farmers in the western Tamil nadu to move their supply of tomatoes to the retail outlets of Coimbatore. It is believed that demand will remain low in Kerala until the national festival onam arrives and will gradually start increasing.
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Main Objectives of Fiscal Policy In India ? The fiscal policy is designed to achive certain objectives as follows :- 1. Development by effective Mobilisation of Resources The principal objective of fiscal policy is to ensure rapid economic growth and development. This objective of economic growth and development can be achieved by Mobilisation of Financial Resources. The central and the state governments in India have used fiscal policy to mobilise resources. The financial resources can be mobilised by :- Taxation : Through effective fiscal policies, the government aims to mobilise resources by way of direct taxes as well as indirect taxes because most important source of resource mobilisation in India is taxation.
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Explain why the debate about global warming suggests that current economic growth is not sustainable
Consequently, the GDP dropped from 3.8 to 1.5, which is more than a 50% drop! Ironically the disaster had a huge death toll but increased unemployment as many firms moved in search of greener pastures. However the economic development of the US is stable as developed countries are able to cope with natural disasters, making them resilient. So we can evaluate from these statistics that global warming is a huge threat to a sustainable development as it exponentially increases the rate and magnitude of natural disasters.
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According to Robert Heilbroner ?...the perpetuation of the human animal becomes a remarkable social feat. So remarkable, in fact, society?s existence hangs by a hair... in a word, if any of a thousand intertwined tasks of society should fail to get done-industrial life would soon become hopelessly disorganised.? He then goes on to outline the three ways man has found to guard against this calamity. The first of these is the continuity of society by organising it around tradition. This method consists of the various roles in society being handed down from generation to generation according to the society?s customs.
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With the possibilities of the new 21-century could help families in much ways of their living choice. If the husband works for a big company which is placed somewhere in the world, he could stay and live where he want to. With E-mails (electronic mail system) there is no problem to lead the company with orders per email. So he could stay in his house for example somewhere in Canada and his company is in Singapore. Todays Families are really under control of the Globalisation of Electronic medias.
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It is the money sent home to the Philippines by its overseas workers, known as remittances, and the rise of outsourced call centers that serve as the long-term stabilizers relatively unhindered by a sagging global economy, according to analysts. About 70% of Philippines? economy is from consumption, so remittance is the key fuel behind that. It drives consumption in malls. Even on the property side, the government estimates a third of remittances go into home purchases and rentals of properties.
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National income accounting measures the welfare of the citizens of a country. By the help of national income accounting economists can compare the standard of living of different countries or of the people of same country of different times. The higher per capita income reflects the higher level of welfare. International Comparison: By converting the local GNP figures into a common unit (usually in US$), the economists can compare the standard of living of different nations.
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Substitute goods ?A substitute is a good which can be replaced by another good?1.Therefore these are the ?Goods for which an increase (or fall) in DEMAND for one leads to a fall (or increase) in demand for the other goods?. eg Butter and Margarine. Therefore for ?Windows 7?, the pre existing systems like ?Windows XP?, ?Windows Vista?, Windows 2000 in use of the same giant Microsoft or operating system of Apple Mac of the rival are substitute goods. Therefore increase in demand for Windows 7 will lead to decrease in demand for XP, Vista 2000 or of Apple , called inward shift in demand.
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Interest rate effect as prices rise interest rates rise, typically when interest rates rise investment falls and consumption falls. What about the supply side? The suppliers of goods and services are the businesses and the government? The production function is GDP = f (capital, labor). As the price of the goods and services businesses and the government make increase, these two entities are more willing to supply their product. What causes the aggregate demand curve to shift to the right or the left?
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