In order to analyze whether the advert is misleading
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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 ...
World financial systems have changed and now monetary transmission mechanisms have other distributional effects that are not addressed within the traditional money view. Firstly, I shall explain the distributional aspects of the traditional money view and then that of the credit channel, exchange rate channel and other asset price effects. The traditional money view is an interest rate based channel, featured by the standard Keynesian IS-LM framework with exogenous money supply (www.erc.metu.edu.tr/menu/series02/0203.pdf). The basic assumptions that characterize the interest rate channel are: i) sticky-price adjustment to money supply shocks, ii) direct control of the monetary authority on nominal money supply by adjusting reserves, and iii) presence of two assets such as money and bonds where loans are perfect subtitutes for bonds. The IS-LM view of money stresses that changes in the policy are important only insofar as they affect aggregate outcomes. Investment flactuations are of importance since policies only affected the required rate of return on new investment projects. Hence a monetary policy tightening (Mcauses the interest rate to rise. The rise in interest rates cause investment spending to fall (I. This is a leftward movement along the the investment schedule from I0 to I1. Consequently, the aggregate demand and output fall (Y). Fig.1.(a), (b) and (c)
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Discuss the rationale for and impact of the monetarist policies implemented by the Thatcher administration When Margaret Thatcher was elected into power in 1979 she labelled herself as a 'conviction' PM with her election success attributed partly to her strong character and divided opposition but mainly on her economic pledges. In the 10 years spanning Thatcher's leadership a variety of approaches were adopted towards the economy, some successful and some not so successful. The best way of evaluating the economic policies undertaken is to divide the era into three sections - the early Thatcher period of 1979-1982, the transitional stage of 1983-1986 and the boom and bust uncertainty of 1986-1990. The first period of 1979 to 1982 was known by many as the 'Monetary Experiment' due to the beliefs of the Conservative government and its approach to economics. When Thatcher became prime minister she inherited an economy where inflation was the cause of instability. Not only were 'shoe-leather' and 'menu costs' of inflation inhibiting to business but high levels of fluctuation discouraged long term investment vital to whole economies. In 1978 inflation was 8.2 %, in 1979 it was 13.4 % and in 1980 it was 18 % 1 reinforcing why the government was placing emphasis on its reduction, above everything else, including unemployment. This also represented a major shift in economic thought,
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Exclusive summary Inflation is the inevitable result of economic growth. However, the high inflation will also threaten a country's economy to grow stably. Australian government and Reserve Bank of Australia's official target is to keep inflation rates between 2-3 per cent per annum. If the inflation rate above the RBA's target, it would cause three types of concerns to economy and society, they are output effect, means the output will fall when prices increase; income redistribution and wealth effects, means inflation makes somebody better off and others worse off; and the effects on international competitiveness means a country becomes less competitive in global economy when its exports fall and imports increase during inflation. RBA can use contractionary monetary policy to decrease the inflation pressure. This can be achieved by combing the open market operation and transmission mechanism. Eventually, the inflation pressure will fall when the aggregate demand and expenditure decreased. Introduction Inflation is an inevitable consequence associated with economic growth; however, it would also threaten a country's economy to grow if it was too high or above its target. This paper will basically discuss the concerns caused by high inflation, followed by the evaluation of policies can take to adjust this situation. Body -concerns when inflation is above RBA's target
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Evaluating the Health of the US economy. Analyse the macroeconomic policies of the Bush and Obama administrations.
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