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University Degree: Macroeconomics
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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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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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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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If he/she is non-resident but ordinarily resident, he/she is also liable to income tax on foreign income (other than foreign earnings) where that foreign income exceeds �3,810 in a year of assessment. (c) A non-resident individual, who is an Irish citizen, or, having been resident in the State, is now resident abroad for health reasons, may be entitled to a measure of income tax relief. (d) An individual who is domiciled abroad but who is resident in the State is taxed only on so much of his/her income which arises outside Ireland and the United Kingdom as is remitted to the State.
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Housing Market Mаny еcоnоmiѕtѕ thоught thаt whеn thе U.Ѕ. hоuѕing bооm еndеd, ѕо wоuld thе оvеrаll еc
m?j?r n?g?tiv? imp?ct ?f ? d?clining h?u?ing m?rk?t will n?t hi? until 2008. Th?r? will b? ??m? m?d??t d?clin? in th? r??l gr?wth thi? y??r ?nd n?xt, but ?n incr???? in r??l GDP (B??, 2006). GDP ?l?wd?wn m?y giv? F?d p?u??, ?cc?rding t? bu?in???w??k.c?m (?nglund, M. M?cD?n?ld R. 2006). Th? U.?. ?c?n?my gr?w ?t ? di??pp?inting 2.5% r?t? l??t qu?rt?r, r?i?ing m?rk?t ?xp?ct?ti?n? th?t th? F?d will ?u?p?nd int?r??t r?t? hik??. U.?. gr??? d?m??tic pr?duct f?r th? qu?rt?r und?rp?rf?rm?d. Th? und?rp?rf?rm?nc? ?f ??c?nd qu?rt?r GDP r?l?tiv? t? ?ur ?xp?ct?ti?n? w?? l?rg?ly ? functi?n ?f ? big fix?d inv??tm?nt du?
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A firm's average total cost curve (shown below) and the steepness of it can express the firm's vulnerability. The steepness of the curve is mainly determined by the scale of fixed costs and as a result, those firms will experience more volatility in their financial performance. In addition, increasing returns to labour which is particularly found in professional services also impacts on the gradient. Furthermore, firms which are dependent on external inputs, for example, in construction, are vulnerable to shifts in the curve due to increases in the costs of their inputs.
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Level of Intergration Main features Period Free Trade Area Free trade among members From 1958 to the early 1960s Custom Union Free trade with a common external tarrifs In theory from 1958 but in reality from early 1960s to 1993 Common Market Free mobility of factors and assets across member states. No internal invisible trade restrictions 1993-1999 Economic Union Harmonization of economic policy Early stages in 1993. Partial economic union in 1999 Political Union Common government The creation of a Single European Market seeks to remove the barriers which restrict the free movement of goods, services and the factors of production between national economies.
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This economic growth has probably been aided by an expansion in the labour market, due to the influx of migrants into the UK. The government is expected to exceed its target of 2.75% growth this year, and this is likely to continue for the foreseeable future. It would seem that this can only be positive for the UK economy, improving individuals' standards of living and helping to increase confidence in the economy, increasing investment and therefore increasing aggregate demand. However, economic growth also has costs.
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gave rise socialist ideologies and the famous 'labour theory of income.' The former Soviet Union (Russia today) implemented such an economic system for decades, until the latter part of the 20th century, and still has echoes of the system today (transition to a free market economy is proving more difficult than previously thought). On the other side of the Atlantic, at the time, free market economic ideologies and the notion of the 'invisible hand' were flourishing, and it was probably the most free a market that any economy had been in all history. Much speculation and over valuation led to the stock market crash of 1929, leading to the Great Depression.
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2006, p.12). Increased foreclosures resonated from borrowers' inability to meet their increased loan installments through Adjustable Rate Mortgages (ARMs). Example, ARMs offer low fixed interest rate for two years with periodically adjustments based on selected indexes (BBC, 2007). Appendix B shows an expected subprime ARMs reset of $282 billions in 2007 and $210 billions 2008. The upward trend in foreclosures had steepened from June 2007 because of the increasing ARMs reset before June 2007 (Appendix C). Subsequently, increased vacancy rates; downward trend in building permits; housing starts and new home sales, indicated lower demands for labor in construction (Appendix D & E).
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The nation was hugely affected by harsh poverty and emigration until the 1960s, however, in the 1960s, under the leadership of Sean Lemass, the economy significantly expanded. In 1973, Ireland joined the European Economic Community (EC) and was set to profit from its Common Agricultural Policy. The state would benefit from this membership as it would guarantee high prices and secure access for Irish agricultural exports to the EC markets. (Munck, 1993, pp.109-110) However, the 1970s was a difficult period for the Irish economy as there were two major oil price increases - one "towards the end of 1973 and the second beginning late in 1979".
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Macroeconomics then deals with the economy as whole rather than individual activities; it deals with the economic aggregates such as the level of output, prices and unemployment in the economy. The UK stable economic environment can be affected or stimulated by fluctuations in the economic activities and macroeconomic variables such as economic growth, unemployment, inflation and the balance of payment at unacceptable levels. Macroeconomic problems Economic growth, inflation, unemployment and the balance of payment are macroeconomic problems that the UK encounters both past and present leading to macroeconomic objectives by the government.
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and low taxes and overheads. Organised Retailing Organized retailing comprises mainly of modern retailing with busy shopping malls, multi storied malls and huge complexes that offer a large variety of products in terms of quality, value for money and makes shopping a memorable experience. Retailing Scenario in India Most of the retail sector in India is unorganised, which were known as mom-pop stores. The biggest advantage in this sector is the consumer familiarity that passes on from one generation to the next. The transformation stage of the retail sector started in late 1990's.
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The economic implications for countries dealing with trade deficits are that when a country's imports are in excess of exports it would suggest that there is a negative demand for that country's goods and services from abroad. Reduction in foreign demand would cause the aggregate demand to come down as it has the same implications on the economy as a reduction in one of the other three components of aggregate demand. So as a result, this will bring down the country's output and thus the producers will only need fewer workers, causing a decrease in the level of workforce employed which would eventually create unemployment.
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Discuss the limitations in the use of index data in producing Williamson and Lindert?s results. Comment in reflection on Crafts and Flinn?s criticism.
The article by Peter Lindert and Jeffrey Williamson 'English Workers' Living Standards During the Industrial Revolution: A New Look' provides new evidence to the standard of living debate in an attempt to offer a clearer representation on workers prosperity after 1750. New wage data and new employment weights make it possible to assess nominal earnings growth from 1755 to1851 for a number of labouring classes: farm labourers, urban workers, white collar and blue-collar workers. New cost of living data, increased by rents make it possible to assess real earnings growth.
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World financialsystems have changed and now monetary transmission mechanisms have otherdistributional effects that are not addressed within the traditional moneyview. Firstly, I shall explain the distributional aspects of the traditionalmoney view ...
Three conditions are necessary for the money channel to work. First, banks can not perfectly shield transaction balances from changes in reserves. Second, there is no close substitute for money in the conduct of transactions in the economy. Thirdly, it makes no difference which type of assets banks hold. Fig.2 shows the transmission through the major channels. The traditional view however has inefficiencies. Firstly, in the IS-LM analysis, the bond market is assumed to be in equilibrium. Banks have a primary role of providing capital for businesses but the model totally ignores the banks involvement in the economy.
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"Examine the major areas of disagreement between Keynesians and monetarists. Comment briefly on the view that their disagreements are as much a matter of ideology as of economics."
One of the academic leaders was Prof. Milton Friedman, who demonstrated a close correlation between changes in the money supply and the rate of change of money GDP, and therefore prices. So the monetarists suggestion was that there is a strong causal relationship between the supply of money and inflation. The very basic Keynesian equation is the national income accounting equation: Y = C+I+G, (Y= National Income, C= Consumption of the private sector, I = Investment, G= Government expenditure.) Government expenditure and investment are exogenously given and the consumption is determined by C=Cv+cY (Cv= Autonomous Consumption , c= marginal propensity to consume).
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Explaining how two areas of the housing market works, these being regional price difference and price changes over time.
The North is seen as having fewer amenities and has a higher crime rate than the South, this been a consumer perception, and so the house prices in the North are lower. This graph shows how when the demand of a house increases the price increases if the demand stays the same. The more expensive areas to live like the Home Counties and Greater London have a greater demand due to desirability and Price. However if everything is ceteris paribus but Price and demand then we should see more expensive places having a lower demand like so: However this is
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PHASE 1 (1977-84) THE SECTION ,THE INFLATION GROW FROM 2.7 UPSERGE TO 6.35 THEN DROPED BACK TO3.4 IN 1983. In Germany, Bundesbank has a very anti-inflationary biased behavior. This traditional strong fiscal prudence approach has only been interrupted twice since the Second World War. During late 1970s the shock of 2nd oil crisis had lead to a slackened growth rates in Germany and in 1978 the Government planned increases GDP 6 to boost world economy. Numerous unfortunate side effects resulted-Inflation increased by 2% , current account became negative7 and public deficits increase over the next few years8. Moreover, the shift in distribution of income led to a squeeze on profits and Kay Page 2 5/8/2007 unemployment did not fall appreciably.
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Compare the positions of the New Classicals and New Keynesians regarding: (a) market competition; (b) flexibility of prices and wages and (c) speed of price and wage adjustments.
They argue that in the short run, quantities supplied and demanded need not be equal and the economy may remain out of general equilibrium. Keynesians are sceptical about the economy's ability to reach equilibrium rapidly on its own, they are much more inclined than are classical economists to recommend that government act to raise output and employment during recessions and to moderate economic growth during booms - Demand Management. As pointed out above, Keynesians believe that wages and prices do not move rapidly to clear markets - wage and price rigidity.
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The current method understates the level of unemployment in the UK. Since 1986 the unemployment rate has changed. Prior to 1986 the denominator consisted of the unemployed and the employed. Subsequently this has also included the self employed and HM Forces. Since 1979 there have been around 30 changes since 1979, all but one of which have served to reduce the official claimant count. Survey Method Labour Force Survey Conduct surveys to find out about the Labour Force. Definition of Unemployment: people without a job who were available to start work within the next two weeks and who had either looked for work within the four weeks prior to interview or who were waiting to start a job.
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If the increase in spending is permanent the state will require to find �100m each and every year. This implies either or both A rising debt-GDP ratio A rising nominal money stock Note. If the government funds it's deficit via bond sales, it will also require to raise additional capital to service the annual interest payments if it wishes to maintain a permanent nominal spend of �100m . Suppose r=10%. In year 2, the govt will require to raise not only �100m but also 10% of �100m. In total, the government needs to raise �110m in year 2 to maintain it's deficit spend of �100m on public spending programmes.
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Is the food spending of female garments workers depend on the following variables? : Family Income, Family size, Earning member, House rent, and Education.
the following aspects: * Economic conditions, such as wage payment, total family income, job experience * Social conditions, such as education level, number of family member, earning member. Development of the Theoretical Model We know the consumption is depending on disposable income. Thus we can say Consumption function is a relationship between consumption expenditure and disposable income. If we consider 'C' is Consumption Expenditure and 'YD' disposable income we get, C = f (Y0) So Consumption = f (Disposable Income)
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There is a wide range of price indices which may be used for this purpose such as the retail prices index (RPI), index of wholesale prices, a set range of commodities, or a general increase in prices including interest rates or indeed any combination of price increases the government chooses to use in the measure of inflation. To measure the inflation the percentage change in the price level is calculated, the higher the percentage the higher the increase. When compiling the RPI certain items will always receive a heavier weighting than others as the cost of a luxury car rising
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The amount that has to be repaid in the form of mortgage repayments is determined by the interest rates. If the central bank decides to increase interest rates, consumers will be discouraged to move and buy a new house, and new house owners to buy a house at all. This is because mortgage repayments would b higher, and it adds to the cost of buying and maintaining a house. This reduces consumers' disposable income, and discourages buying a house, causing the demand for houses to decrease and eventually causing house prices to decrease. The increase in interest rates will discourage consumption and increase saving, because consumers would gain a good return on money saved.
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