This is because as price falls consumers can afford more goods as their real incomes increase and they feel richer. Real income is the bundle of goods and services that an individual can purchase. As we move from A1 to A2 utility increases from U1 to U2 because we move to a higher indifference curve so now the individual can now consume a better bundle of goods. This backs up the non satiation assumption of consumption which states more is better thus when we increase consumption total utility increase. The four axioms of consumption: Transitivity, Non-satiation, Marginal rate of substitution in consumption and Completeness must be met in order to be able to draw
It may also contribute to greater productivity, resulting in a lower inflation rate that would help retirement savings go further. As the proportion of retirees in the U.S. grows, one of the challenges for a shrinking workforce is to produce enough goods and services for both themselves and the retired population. More investment capital in the private sector should result in the kind of productivity gains necessary to meet that challenge. An Impact on the Market Privatization would also have a significant impact on the financial markets, especially the stock market. Younger individuals are likely to invest most of their contributions in stocks, and the increased demand would propel stock prices higher.
When the demand for U.S. dollars increases, the value of the dollar will increase or appreciate (Stone 2008, pp. 685). As a result, U.S. products become more expensive for foriegners causing a reduction in exports and increasing imports. This not only effects the U.S. economy, but also affects the economies in other countries. Monetary policies influence and are influenced by international developments, including exchange rates, and based on these market conditions the U.S. government can make strategic changes to these policies to maintain the country’s economic stability (full employment, stable growth and price stability).
Trident University Macro-Economic Indicators: GDP, CPI, Unemployment, Interest Rates TAWANNA J. RICHARD ECO202 MODULE 2 Cases Dr. Canarella GDP 1. Y= C+ I+ E+ G 1750= 1,000+ 200+ 300+ 250 2. If we increase our domestic energy production, and imported less oil from foreign countries the GDP would raise extremely high due to no out sources. Inflation 1. ((111-106)/106)*111 111-106=5 5/106= 0.0471 0.0471*111= 5% 2.
2. (e) This is the definition of demand. Notice how it is different from the meaning of wants. (d) These changes result because the increase in price of imported cars increases the demand for domestic cars. This is illustrated above, where the equilibrium price rises from P to P’ and the quantity from Q to Q’.
For any supplier, a higher price is an incentive to supply more; therefore, as rental rates increased, the number of apartments GoodLife was willing to lease also increased. Typically, the reason for this shift could be either production or maintenance costs, which means that each additional unit of the product would be supplied at a higher price. As the rental rate increases, the number of apartments supplied increases is an example of an upward sloping supply curve. As for the shift in the demand curve, this was caused by the increase in population even though the supply of apartments was unaffected. At any given rental rate, an increase in population is automatically going to create more people demanding apartments for rent, thus causing the shift in the demand curve.
Monetary policy is the use of interest rates to manipulate the level of aggregate demand in the economy and loose (expansionary) monetary policy is a reduction in the interest rates. This will result in an injection of extra consumption because it is cheaper to borrow money on credit cards and therefore allowing consumers to spend more which will cause an increase in aggregate demand (AD). Additionally, extra consumption will allow shops to gain more profit preventing “business failures.” Furthermore, mortgages will be cheaper and therefore consumers feel richer and there will an extra injection of consumption. AD will also increase due to an increase in investment, causing an increase in aggregate demand from AD1 to AD2 as shown below. However,
The potential to make a higher salary Jobs with retirement plans and benefits The ability to receive promotions and wage increases All of the above Which of the following elements of a comprehensive financial plan discuss analyzing future needs, such as saving for retirement or college funding for dependents? Building wealth Securing basic needs Establishing a firm foundation Protecting wealth and dependents People have different styles when it comes to handling their money. List the two things that affect our personal beliefs and opinions about financial planning. Risk and Reputation. Which element of the comprehensive financial plan focuses on your housing needs, setting aside money for emergencies, and establishing a career path?
Decreasing the interest rate effectively increases consumer and businesses consumption. Lower interest rates also increase investments and net exports (Hubbard, 868). These increases push true GDP back in line with potential GDP and, as a result, production increases. This increase in production also increases the need for workers, ultimately increasing employment. Conclusion The Federal Reserve is a very powerful entity and has a large amount of influence on how our nation’s economy performs.
Satoria Mckenzy Principals of Economics (Ref # 380267) Spring 2013 The Full Economic Impact of an Increase in the Minimum Wage Where minimum began - The history of minimum wage, what is minimum wage, the laws of minimum wage. The minimum wage has a strong social appeal, rooted in concern about the ability of markets to provide income equity for the least able members of the work force. For some people, the obvious solution to this concern is to redefine the wage structure politically to achieve a socially preferable distribution of income. Thus, minimum wage laws have usually been judged against the criterion of reducing poverty. Statutory minimum wages were also proposed as a way to control the proliferation of manufacturing industries.