aovid mid-income trap
Avoiding the Middle-income Trap Brazil, India and China, which are considered as "B", "I","C" of the "BRIC", have been shaking up the world for their high performance in the economy. However, there has been a long debate since the World Bank put forward the conception of middle-income trap in 2006, which sums up the experience of some countries in Latin America. It warns the countries whose GDP per capita has just crossed the low-income trap that they may reach a certain threshold, preventing them from becoming developed countries. However, the middle-income trap is not unavoidable as it seems to be. This essay will reexamine the term, middle-income trap, and present some evidence. It will first discuss the exact definition of the term and the characteristics of countries dropping into the trap. Flowing this, it will talk about the debate on whether these developing countries will drop into the trap pro and con. Finally, it will present the author's own ideas on this issue and give some probable suggestions. The concept of middle-income trap and some evidence Although the term has greatly attracted people's attention, little evidence confirms the existence. Here, we will discuss the definition of "middle-income trap" and the different income groups classified by the World Bank through reviewing the recent research. Then there will be some details of each group such as the
Clearly explain and discuss the theory of comparative advantage. Given the economic benefits of trade (according to the above theory) why do some countries (give examples) attempt to restrict trade?
Clearly explain and discuss the theory of comparative advantage. Given the economic benefits of trade (according to the above theory) why do some countries (give examples) attempt to restrict trade? ________________ Throughout the following essay I am going to be explaining and discussing in detail the theory of Comparative Advantage. The theory of Comparative Advantage is one the most fundamental and unchallenged laws in economics with many benefits to the economy, and will be basing the core of the essay on this law. The theory of Comparative Advantage was initially put forward in 1817 by David Ricardo which was published in Principles of Political Economy and Taxation. Examples will be used throughout the piece in order to back up the theory and to provide depth to the piece while I put forward arguments as to why some countries restrict trade despite the economic benefits to trade. Comparative advantage is the ability of country to produce a specific good or service at a lower opportunity cost than another country and producing most efficiently. It is said that the country has an advantage over another country at producing that good. So a country should produce and export the product in which they have a smaller absolute disadvantage, and import the other product which they have a greater absolute disadvantage over. To illustrate this I will be referring to an
Discuss, in the light of the economic changes that have occurred within the UK in recent years, whether it is still correct to describe the UK economy as a mixed economy.
Essay B; Discuss, in the light of the economic changes that have occurred within the UK in recent years, whether it is still correct to describe the UK economy as a mixed economy. In the real world it is fairly easy to assess how 'mixed' an economy is. Economists simply look at the percentage of a country's Gross Domestic Product (GDP) that is devoted to government spending and also by looking at how much tax is devoted to the nationalised industries. Currently, the UK devotes about 40% of its GDP to government spending. That extra 10% means that the health service is more comprehensive, as is the welfare state, although it can be argued that both are in decline. The first because the demand for health care grows much faster than the average growth rate of the economy, partly due to the need to introduce new technology as it is invented. The second because of the huge increase in claimants (the unemployed, for example) plus the increase in the number of pensioners relative to those in work. Though, previously during the 1970's and early 1980's, the GDP, which was devoted to government spending, was much higher. This was until Privatisation occurred, when the Conservative governments under Maggie Thatcher developed the policy of Privatisation. Privatisation means the transfer of economic activity from the public sector to the private sector. The Financial secretary of
Report on house prices
Assignment for 4ECQ402 Exploring Business Data A REPORT ON HOUSE PRICES CONTENTS Introduction 3 Overall distribution of house prices 4 Proportion of houses with garages I 5 Proportion of houses with garages II 6 Relationship between House price and Garage 7 Relationship of House price to Size 8 Relationship between House price and Distance 9 House prices in the UK for different regions 10-11 Appendix - Average dwelling prices_________________12 Introduction For this assignment I will be using the data set 'House Prices', which gives some results from a survey relating to house prices in 5 different small towns. I am going to explore this data file using Minitab, and write a report on my findings. The variables in the data set are: Price House price in £000 Bedrooms Number of bedrooms Size Size of property in square feet Distance Distance from nearest large town Town Which of the 5 towns the property is in Garage Whether property has garage (0 = no, 1 = yes) Baths Number of bathrooms (lavatory and washbasin = 0.5) Note: In the following report, the value of price is in £000. And relating to whether the house has a garage, '0' represents 'no' and '1' represents 'yes'. Look at the overall distribution of house prices in the survey. Descriptive Statistics: Price Variable N Mean Median
Compare and contrast New Classical and New Keynesian theories of Business cycle
Compare and contrast New Classical and New Keynesian theories of Business cycle Two schools of thought regarding the role and viability of stabilisation and the function of the labour market influencing policy maker in both public and private sectors. The debate over stabilisation policy is no longer dominated by economists adhering to Classical theory, Keynesian theory, and monetarism. Other schools of thought are also represented, but predominantly the main arguments arise between New Classical macroeconomists (NCM) and New Keynesian macroeconomists(NKM). New classical theory emerged in the 1960's based on three key assumptions: Firstly markets are assumed to be cleared - Input and output prices vary instantaneously so as to equate quantity demanded and quantity supplied. Secondly, individuals and firms are assumed to possess imperfect information. Thirdly, that expectations of individuals and firms conform to theory of rational expectations, individual or firms forecast of a particular economic variable are rational if the individual or firm makes the best possible use of whatever information is available. Furthermore, NCM states that high rate of employment are not evidence of any gap between actual output and potential output that can be reduced through stabilisation policy, any excess unemployment which exists is assumed to be essentially voluntary- workers have the
Open-market purchases permit reductions in currency revenues and thus a lower inflation rate.
BUS305-10, Unit 5, IP Open-market purchases permit reductions in currency revenues and thus a lower inflation rate. The reduction in interest rates engineered through open-market purchases always yield smaller increases in the inflation rate than a reduction brought about by other means, such as a decrease in the required reserve ratio (the ratio of required reserves to the required deposits in given Fed banks). A policy-maker who prefers low inflation and henceforth a reduction in real interest rates should prefer open-market purchases. It is said that it is best to buy low and sell high in the case of long-term bonds, which are essentially IOUs, promises to repay a given amount of money within a specified time and often, by a specific date. Purchases of Treasury securities supply the necessary reserves to the banking system and consequently, downward pressure on the funds rate. Sales remove the reserves and put upward pressure on said funds rate. There are several advantages to Treasury securities: 1 - The market is large and liquid, since the Fed can conduct large trans- actions giving control over reserve balances and the funds rate 2 - They use open-market transactions to implement monetary policy and avoid directly affecting private capital, an important con- sideration in the conducting of monetary policy 3 - They are free of credit risk Federal Reserve banks are
The Deficit: America's Credibility Gap.
The Deficit: America's Credibility Gap March 8, 2004, pp. 132-140 Shawn Tully writes about how America's national budget has jumped from a huge surplus in 1998-2001, to now an enormous deficit. Even though there was an economic slow down during the beginning of this century. There is no excuse for the $375 billion deficit last year and additional $521 billion projected this year. The rationale for this spiraling downward trend is poor monetary spending and budgeting by George W. Bush and his White house staff. What one says and actually does are two different things. This has become a major focus for this election year since Americans, as well as foreign governments and investors whom fund the deficit, are now aware of this escalating problem which may hurt the U.S. economic recovery. Why do deficits matter? First, they increase the national debt causing government spending to grow because of the growing interest expense. Second, they leave us to the leniency of foreign governments and investors to finance that debt. Lastly, they show how the government cannot control their own spending. Right now the foreign investors have faith that our fiscal management will turn things around, however if they lose that faith then financing future deficits will be almost impossible. The prior presidencies of George Bush senior and Bill Clinton helped to create those deficit
Explain how monetary policy can be used to control the performance of the UK economy (10)
Explain how monetary policy can be used to control the performance of the UK economy (10) Monetary policy involves changes in the base rate of interest and the money supply (effectively the amount of bank credit available for borrowing). The aim is to influence the rate of growth of aggregate demand and thus inflation. The government's four main objectives are low and stable inflation, low unemployment, maintaining current account equilibrium and high but stable economic growth. The main objective of monetary policy is to control inflation. Since 1997 the Bank of England has been given operational responsibility for monetary policy. The current target for inflation set by the government using the CPI measure is 2%, although it is allowed to deviate 1% either way of the central target. Higher interest rates will reduce inflation because they reduce consumption and investment. This is because the opportunity cost of saving has increased so consumers would be more inclined to save, and less inclined to borrow. Investment would decrease because it becomes more expensive for firms to borrow money for capital unless they reduce their profit margins, which is unlikely, so investment would decrease. Monthly repayments on existing variable rate debt (especially mortgages) increase, leaving less disposable income for spending on goods and services. Aggregate demand will fall (AD1 to