Macroeconomic factors and the firm - Broadside.
Alistair Courage - Macroeconomics Assignment 1 Macroeconomic factors and the firm - Broadside . (a) Inflation Between 1945 and the end of the 1960s the primary tool used to control the economy was fiscal policy; this was during the Keynesian era and Keynesians still believe that fiscal policy coupled with reasonably steady interest rates is the right approach to take. Fiscal policy is concerned with government expenditure and taxes; the theory is that if you decrease government expenditure and increase taxes this will steady a booming economy and prevent inflation from escalating out of control, lessening the effects of 'overheating' - this is known as deflationary fiscal policy. The reverse of this is used when an economy is experiencing the symptoms of recession - increasing government expenditure and decreasing taxes gives the economy a helping hand and is known as expansionary fiscal policy. In the 1970s political and economic attitudes changed to bring about an age of monetarism that went hand-in-hand with monetary policy becoming the focus for control. John Sloman (see bibliography) tells us that "the high point of monetarism came in the early 1980s. Governments around the world made the control of inflation the number one short-term macroeconomic objective". Monetary policy can relate to three main areas: Controlling the supply of money Controlling
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
Money and economy.
Money, any medium of exchange that is widely accepted in payment for goods and services and in settlement of debts. Money also serves as a standard of value for measuring the relative worth of different goods and services. The number of units of money required to buy a commodity is the price of the commodity. The monetary unit chosen as a measure of value need not, however, be used widely, or even at all, as a medium of exchange. During the colonial period in America, for example, Spanish currency was an important medium of exchange, while the British pound served as the standard of value. Money of the World Most nations have their own system of money and print their own currency. Made of paper, these pieces of currency have very little intrinsic value. As fiat money, however, the paper bills represent a specific monetary value decreed by the government and accepted by the people. The bills pictured here are examples of fiat money from all over the world. George Chan/Photo Researchers, Inc. II MONEY AND THE ECONOMY Circular Flow of the Economy This illustration presents a simplified version of how money circulates in the U.S. economy. Although it does not take into account several major factors, such as the role of government in the economy, the diagram shows the basic money transactions that make the economy work.© Microsoft Corporation. All Rights
Economics of economic growth
Macroeconomics of Economic Growth Coursework 2007 By Ravi Waghela URN: 1455303 . True The Solow growth model is a model that shows the effect of savings rate, depreciation and capital accumulation on economic growth. At the steady state savings equals the depreciation rate of capital. The main weakness of the simple Solow growth model is that at the steady state there is no sustained growth in per capita terms. When investment equals depreciation, the economy hits a steady state. k=sf(k) - (n+ ?)k where k =0 so therefore sf(k) = (n+ ?)k and growth in output per capita is Zero y/y = 0 Relaxing this assumption of diminishing returns would mean that f(k) would not be concave and in fact would be a straight line and therefore sf(k) would be a straight line. This would never cross (n+ ?)k and a steady state would never be achieved and that capital per capita will increase. Solow growth model does not explain the growth rate of an economy so relaxing the assumption shows how an economy grows. This is not an ideal way of solving the problem, but nonetheless is a quick fix. Sustained growth occurs in the presence of technological progress. 2. False If all countries are on the same production function and are at the steady state. The differences in output and capital will be due to different savings rate. Country 1 with a low savings rate will be on a lower steady
Unemployment and Inflation - The Phillips Curve.
Unemployment and Inflation - The Phillips Curve Inflation and unemployment both have a relative negative impact on the economy as a whole, if either factor is high. The costs can be further highlighted if unemployment or inflation are inaccurately forecast or anticipated. Both issues also have a negative impact on economic growth. Unemployment is the existence of a section of the labour force who are willing and able to work, but cannot find work. The Goodman definition of unemployment sets three criteria, to be unemployed; the individual has to be registered as unemployed; the individual has to be in receipt of benefit; the individual has to be deemed to be actively seeking work. Unemployment is measured in the UK using two methods, the Claimant count, where all those seeking unemployment benefits are classed as unemployed, and the Survey, where market research techniques are used instead. Five main causes of unemployment have been identified and analysed: Frictional unemployment is caused by those people who are between jobs. Most people who lose their jobs move into anther job relatively quickly, but this transition is far from smooth and their will always be some short term unemployment, e.g. due to immobility of labour. Structural unemployment is unemployment which rises because of changes in the structure of the economy. In a dynamic economy there will always be
Economics in theory. The main purpose of this report is to explain a couple of economic concepts to the business men and women attending the conference held by the investment bank of Bluefoot Securities and to further help them understand how to apply ec
Economics in Theory Prepared By *** Course Title: Module Title: Tutor: Table of Contents .0 Executive Summary 3 2.0 Explanation of Some Key Economic Terms 3 2.1 Scarcity and Choice 3 2.2 Opportunity Cost 4 2.3 Micro versus Macro Economics 4 3.0 Demand and Supply Curves 5 3.1 Individual & Market Demand Curve 5 3.2 A Firm's Output Decision in the Short Run 6 3.3 A Firm's Output Decision in the Long Run 8 3.4 Equilibrium Price and Equilibrium Quantity 9 3.5 Effects of Excess Supply and Excess Demand on Market Equilibrium 10 4.0 Market Structures 11 4.1 Perfect Competition 11 4.2 Oligopoly 14 5.0 Keynesian and Monetarist Schools of Thought 15 5.1 Keynesian Economics 15 5.2 Monetarist Economics 16 6.0 References 18 .0 Executive Summary The main purpose of this report is to explain a couple of economic concepts to the business men and women attending the conference held by the investment bank of Bluefoot Securities and to further help them understand how to apply economics in their own organisations. This report comprises four different major areas of economics that are to be addressed. Economics is not only a simple theoretical tool but also a useful aid to business decisions if properly applied. To gain a clearer understanding of the subject, this report will look at economics in terms of its use in the business
Analysis of external debt: Romania vs Bulgaria
The Bucharest Academy of Economic Studies INTERNATIONAL BUSINESS AND ECONOMICS Analysis of external debt Romania vs. Bulgaria 2010 CONTENT I. General information about Bulgaria and Romania.............................3 II.General definitions..............................................................4 III. Analysis of external debt - ROMANIA...................................6 IV.Analysis of external debt - BULGARIA..................................11 I. General information about Bulgaria and Romania * official name (short form): Bâlgarija * country code ISO: BG * time zone: +2 UT * surface (land) area: 110994 sq.km * borders (land): Romania, Serbia (Fed. Yugoslavia), Macedonia (FYROM), Greece, Turkey, (coastline): Black Sea * independent since: 1877; 1908-05-10 * type of government: republic * capital: Sofija * population according to the last census: 7973,671 * population density: 72 per sq.km = 187 per sq.mi * population growth: -0,5% //; deminishing population * life expectancy: 72 years (male: 68; female: 75) * urbanisation: 70% //; - urbanisation growth: 2,6% * ethnic groups: Bulgarians 86%; Turks 9%; Roma 3,7% ; Macedonian 1,2%; Armenian, Romanian, Greek * currency: [Nova] Lev (Lw) (plural: leva) = 100 stotinki * official name (short form): România * country code ISO: RO * time zone: +2 UT * surface (land) area: 237500 sq.km * borders
Economics Questions on National Income, Aggregate Demand and Business Cycles.
F101ECO – Assignment 2 Calum Stringer 0600532 Q1A When determining National incomes there are three methods: There is the expenditure method: This is when all the spending in the economy is totaled up using this formula: C + I + G + X - M. This represents Gross Domestic Product (GDP) at market prices, it includes: . C = Consumption. 2. I = Investment this includes: Unplanned increases in inventories or stocks and planned investment in capital. 3. G = Government spending on services and goods. 4. X = Exports that the economy receives. 5. M = Imports this must be deducted because of the spending on services and goods from external economies. The income method takes into consideration the sources of income in the economy. Transfer payments (unemployment, welfare benefits and pensions) are not included: no service or good is created for income. Income includes: . Salaries and wages. 2. Self-employed income. 3. Profits that have been split into dividends with undistributed or remunerations retained. 4. Rent that includes costs of any raw materials, any intermediate inputs and attributed rent on owner-occupied housing. 5. Interest. The output method which adds up the value added by a business’s production: . The value of the business’s output less the value of inputs 2. Instead this method totals the output of final services and
"It was a supply-side shock, not deflationary monetary and fiscal policies, which initiated depression in 1920 and contributed to the subsequent slump". Discuss.
"It was a supply-side shock, not deflationary monetary and fiscal policies, which initiated depression in 1920 and contributed to the subsequent slump". Discuss. Jaede Tan December 2004 During the immediate aftermath of the First World War, Britain experienced an economic boom, during which nominal wages, real G.D.P and industrial output all rose, whilst wholesale prices rocketed to three times their pre-war levels1. The boom effectively lasted just over a year, starting roughly six months after the war ended, and breaking in the second quarter of 1920. Howson estimates that by the end of 1919 both industrial output and real G.D.P had risen to their 1913 pre-war levels, whilst Pigou states that between April 1919 and April 1920, nominal income rose roughly 25-35%.2 Whilst the causes for the boom are generally and widely attributed to demand-side factors, such as increased consumer saving during the later years of WWI and hence a build up of effective consumer demand coming out of the war, the causes of the slump that quickly followed Britain's post-war boom have been more widely contested. Of the many schools of thought on the issue, the two that are most widely documented are the "supply-side shock" argument and the effects of monetary and fiscal policy. During the course of this essay I will examine the effects that both supply and demand side shocks had on the post-war
The Policy Implications of the Relationship between Inflation and Unemployment in Canada (1967 2006)
The Policy Implications of the Relationship between Inflation and Unemployment in Canada (1967 - 2006) James Allen* University of Bath This paper sets out to determine the nature of the relationship between inflation and unemployment in Canada. The results suggest that the static Phillips curve proposed by A.W. Phillips (1961) suffers from serial correlation. The short term Expectations Augmented Phillips curve developed by Phelps (1967) and Friedman (1968) holds for this period. The notion of a long run relationship between inflation and unemployment in Canada is found to be errant. Canada's NAIRU is also found to be unusually high which this paper recommends can be corrected by supply side policies. *Acknowledgement goes to Issam Malki for his Invaluable Help I. Introduction The minimising of inflation and unemployment are two major policy objectives for central banks and governments. One of the major questions in macroeconomics is whether both low unemployment and low inflation can be achieved simultaneously or if there must always be a "trade-off" between the two. The topic has been a matter of debate for the past 50 years since Phillips (1958) first postulated that a negative relationship occurred between wage inflation and unemployment. Further analysis in 1962 by Phillips established an inverse relationship between general inflation and unemployment. The