The current economic crisis has resulted in a recession. Discuss, taking account of economic theory, what the government can do to pull the country out of the recession.
The current economic crisis has resulted in a recession. Discuss, taking account of economic theory, what the government can do to pull the country out of the recession. Following the financial turmoil of the last year, the country has finally reached the point of recession. The actual term 'recession' can be defined as when the growth in the country's Gross Domestic Product (GDP) falls for two consecutive quarters. There are many ways for the government to try and steer the country out of recession and many economic theories that can be applied. Some theories include Keynesian theory and Fiscal theory. Smaller measures can also be taken, such as directing money to poorer families instead of the middle class population. One year ago, there were signs of trouble, but few people were brave enough to forecast that recession would take place. A sharp slowdown was expected in the economy and with oil priced at $100 a barrel, it was clear that there was a danger of inflation levels rising. There were other signs that the economy was facing difficulties. For instance, the housing boom appeared to be coming to an end and some high street retailers such as Marks and Spencer had suffered a huge decrease in sales. The UK last faced recession in the 1990's. During this period, repossession was common and interest rates reached unprecedented amounts, often as high as 15%. The
Singapore Economics
Question 1 a. Obtain data on GDP or GNP (real GDP data preferred) of a country for five years. Using the information gathered, discuss and assess the economic growth of this country. Explain the pros and cons of growth and provide evidences to prove your findings. b. Suggest an alternative method of measuring economic welfare/happiness of a country. Table of Contents .0 Introduction 2 2.0 Economic Growth of Singapore 2 2.1 Property Right 2 2.2 Patents, Copy Right and Technology 2 2.3 Financial Institution 3 2.4 Investment in Human Resource 3 2.4.1 Literacy and Education 4 2.5 Infrastructure 5 2.6 Free Trade 5 3.0 Singapore Growth Analysis 5 3.1 Positive of Growth 7 3.2 Negative of Growth 8 4.0 Introduction to Alternative Method on Happiness 11 4.1 Alternative Method on Happiness / Welfare 11 5.0 Conclusion 13 6.0 Bibliography 13 7.0 Appendix 20 .0 Introduction Singapore is a highly developed and successful free market economy which enjoys stable prices, high income, is ranked 4th in the Corruption Perception Index in 2008 and is the 8th1 wealthiest country in the world. Singapore has established itself as a reputable international financial and trading hub. Singapore's economy largely consists of exports, entrepot trade and re-exports especially in electronics and manufacturing. MNCs account for more than two-thirds of manufacturing output and direct
Explaining how two areas of the housing market works, these being regional price difference and price changes over time.
This essay is concerned with explaining how two areas of the housing market works, these being regional price difference and price changes over time. Regional Price Differences Price is dictated by location, type of property and market trends. These factors can be seperated again and explained further. In the year 2001 the average house prices for London and the North are as so: London average: £147,704 North average: £53,951 The causes of this trend are relatively simple; London is currently a more desirable place to live than the North. The quality of local amenities is better in the South than they are in the North. Schools that achieve good exam results, can contribute to a several thousand pound rise in the value of a house if it is in the local encatchment areas. Also things such as libraries, swimming pools can contribute to a more desirable area, along with a low crime rate will make people view the area as being more desirable, and so the demand is higher causing the price of housing to rise. Transport infrastructures in the area of the house can have an effect on its value. After the electrification of the North Eastern railway line the house prices around the York and Peterborough mainline railway stations went up. 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
International Monetary Fund and long term economic health
"The IMF in many ways is like a medieval doctor where no matter what the ailment, you apply leeches and bleed the patient. My experience is that they are very successful in steering countries' resources toward paying debts to commercial banks, but they are disastrous in terms of the long-term economic health of these countries." Thesis proposed above concerns the effects of IMF policies in attempting to achieve economic growth and development. This study will attempt to justify the above statement. But first of all it might be appropriate to briefly describe what IMF is and its role in the world. As the official web site describes it, the role of International Monetary Fund is to 'foster economic growth and high levels of employment; and to provide temporary financial assistance to countries to help ease balance of payments adjustment'. This is achieved through economic policies. We shall firstly look at what these policies are and then, whether they have been successful in long-term economic health of these countries. Created in 1944 along with World Bank (part of Bretton Woods), IMF has been successfully lending money to mainly developing counties so that they could pay the interest on the already outstanding debts to commercial banks and ironically the IMF itself. In response, the commercial banks increased the loans, in confidence that the indebted countries will pay
"Entry into Monetary Union would have little appreciable effect on monetary policy in the UK" Critically discuss.
Ryan Etherington 2989 words "Entry into Monetary Union would have little appreciable effect on monetary policy in the UK". Critically discuss. "Price stability is a precondition for high and stable levels of growth and employment, which in turn will help to create the conditions for price stability on a sustainable basis. To that end, the monetary policy objective of the Bank of England will be to deliver price stability (as defined by the Government's economic policy) and, without prejudice to this objective, to support the Government's economic policy, including its objectives for growth and employment." Gordon Brown, Chancellor of the Exchequer, 6 May 1997. In the past three decades the UK has had higher than average inflation for a G7 categorized country, and since the war has perceived to have been underperforming in terms of economic growth.1 The two are often linked with this in mind the key monetary policy of the Labour Government (and the Conservatives before it) has been to keep a low and stable level of inflation. The Conservatives originally used the control of the supply of money to achieve inflation results, this was not very successful with inflation both high and erratic. This was due to both the difficulty of the method (i.e. it is hard to define the velocity of money) and the credibility of the government of achieving lower inflation. When the
"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."
"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." Claudia Hafenmayr, 020664947 Term 2 Module: Macroeconomic Analysis The Keynesian Theory was founded by John Mainard Keynes, who published "The General Theory of Employment, Interest and Money" in 1936. During the 1930s the Classical economic theory failed to state the reasons for the economic problems in the great depression. They could not explain why the economy settled into an equilibrium at a high rate of unemployment. While Keynes was convinced that because of imperfect markets a modern economy could be at equilibrium at any rate of unemployment. " [T]he postulates of classical theory are applicable to a special case only and not the general case, the situation which it assumes being a limiting point of the possible positions of equilibrium." (Keynes, 1936, p.6) He concluded that an active fiscal policy is necessary to reduce high rates of unemployment. Throughout the 1960s and 1970s economists started to critique the Keynesian Theory and propounded a theory that stressed the efficiency of the free-market mechanism and the overriding importance of the money supply in economic policy .The monetarist concepts were originated from the Classical economics but they modified some of the
It is said that unemployed face high marginal tax rates and other disincentives to working. Discuss.
Why despite a booming economy does Australia have a stubbornly high unemployment rate of around 6% What microeconomic reforms and welfare reforms might help reduce our NAIRU? It is said that unemployed face high marginal tax rates and other disincentives to working. Discuss. Although Australia's unemployment rate is at the lowest level it has been for thirteen years (Mellish, 2003), the unemployment rate has generally been stuck between six and eight percent for the best part of a decade (See Figure 1). At the same time, Australia's macroeconomic performance has been good according to world standards (Quiggin, 2003). Figure 1: Chart of Trend Unemployment Rate - Australian Bureau of Statistics (ABS) Figure 1 demonstrates that the trend unemployment rate fell rapidly from 10.7% in August 1993 to 8.1% in July 1995. The trend estimate then rose slowly, reaching 8.4% in February 1997, before falling to 6.1% in September 2000. After rising to 6.9% in September 2001, the trend estimate has generally fallen to stand at 5.7% in October 2003 (ABS, 2003). High unemployment rates can be explained through the three types of unemployment, structural, frictional and cyclical, through the causes of each of these and the phenomenon of hysteresis. The overall trend of increase in unemployment since the fifties is primarily due to structural unemployment deriving from the vast changes in
The effect of increases in the world price of crude oil in Australia.
Crude oil prices have recently soared, rising 25% this year to levels not seen since the oil crisis of the early 1980s.1 At around US$40 per barrel in May 2004, oil costs about four times as much as it did at its low point in late 1998 and is within sight of the record price of US$41.15 reached during the Gulf War in 1990.2 This essay will explain the impact of such an event on the Australian economy and its consequences using both the aggregate supply/aggregate demand (AS/AD) model and the aggregate expenditure (AE) models. We can see from the left table above3 that Australia has been in recent times a net importer of petroleum (crude oil). This means that a rise in world oil prices will cause aggregate domestic supply to fall as products from the fractional distillation of crude oil are factors of production for a wide variety of domestic consumer goods such as plastics, wax and petrol. Although the table on the right4 shows that Australia is the second largest consumer of oil per unit of output in the OECD countries, Australia is less vulnerable to higher oil prices than many other countries as domestic production meets most of its needs (refer to table on the left). In fact, a US$10/barrel increase in the oil price would subtract approximately 0.3% from Australian GDP growth although indirect effects from slower major trading partner growth would also impact negatively on
Critically evaluate the assertion that over-demand rather than under-supply was the root cause of the deterioration of urban environments in the nineteenth century.
Critically evaluate the assertion that over-demand rather then under-supply was the root cause of the deterioration of urban environments in the nineteenth century. Taking the basic human needs such as food, water, housing, health and education and addressing their provision during the nineteenth century will determine whether governments or private sectors were undersupplying these goods or whether rapid growth of urban environments were placing too much strain on these systems leading to the deterioration of the immediate environment. London's water in the middle of the nineteenth century came mainly from rivers and wells and drained cesspools, graveyards and tidal areas. The city was regularly ravaged by cholera. People thought that disease was spread by vapours; therefore the under-supply of education can be seen as contributing to the health problems in urban areas. The excess demand for basic service provision in big cities means that goods such as water cannot be supplied by local sources, so they must bring water from distant river basins, and then if they are not wracked by epidemics they must channel their waste for long distances downstream, to distant purification plants well out of contamination's way. In this sense over demand is responsible as if people did not concentrate in one area and share cesspools and water fountains then cholera epidemics would not
Interest elasticity and the stability of the demand for money are crucial for the debate on the relative effectiveness of monetary policy versus fiscal policy. Discuss.
Interest elasticity and the stability of the demand for money are crucial for the debate on the relative effectiveness of monetary policy versus fiscal policy. Discuss. Monetary and fiscal policy are the two key tools at a government's disposal which can be used to control and manipulate the economy. Although both policies use different means to control the economy it is fair to say that they are interdependent. The relative effectiveness of one policy over the other is dependent on which school of thought you belong to. Interest elasticity of money is basically the level at which money will respond to any given rate of interest. High interest elasticity of money implies that there is interdependence between money supply and money demand. This is proven by the idea that a change in money supply will lead to a change in interest rates, this in turn will then lead to a change in money demand: Ms i Md The stability of the demand for money does not necessarily mean that the demand for money is always the same, but only that it changes in a predictable way. The assumption that the demand for money is stable is crucial to monetarists because it means that changes in the money supply will have a predictable impact on the economy. This would thus make monetary policy more effective. Fiscal policy is the means by which the government may vary the level of its