He believed in the concept of comparative advantage, the idea of nations to specialize in specific industries and trade with other nations for products not produced nationally. (David Ricardo) Comparative advantage is the foundation of industrialization as a means for globalisation. Classical economics was very much in fashion till the early 20th century with the advent of the Great Depression. John Maynard Keynes, a British economist, was the founder of Keynesian economics and the concept was first published in Keynes' book The General theory of Employment, Interest, and Money published during the Great Depression. (Keynesian Economics) Keynes attempted to explain the causes of the Great Depression, and how to to deal with the recession.
Chapter 9: Forecasting Exchange Rates Small Business Dilemma Exchange Rate Forecasting by the Sports Exports Company 1. Explain how Logan can use technical forecasting to forecast the future value of the pound. Based on the information provided, do you think that a technical forecast will predict future appreciation or depreciation in the pound? Logan can apply the technical forecastby reviewing historical values of the British pound to forecast the future values as a continuation of a recent trend that has been detected. As the historical trend shows a consistent upward trend in the pound’s value, therefore it is believed the technical forecast would likely reflect appreciation of the pound.
(Kelly, M. and McGowan, J., 2012)(p.19 & 21). Fiscal policy is more effective in promoting economic growth, by increasing government spending or reducing taxes. Fiscal policy in economic has reflected both political and economic realities. Monetary policy has the ability to slow down the economy in order to promote full employment and inflation. The monetary policy to economic is to increase the amount of money, by cutting interest rates.
Monetary Policy is used to make changes in the nation’s supply of money. These changes affect interest rates which affects the amount of spending. Monetary policy is supposed to get price levels stable increase employment and grow the economy. In chapter 15 of our text it shows a consolidated balance sheet of the Federal Reserve Banks. The Federal Reserve Banks (there are twelve Federal Reserve Banks) are really a “banker’s bank” (McConnell, Brue 2005).
Keynesian Theory Maynard’s theory is a combination of monetary policy of the central bank and the fiscal policy of the government. He believed that both policies, working in conjunction of each other, will help stimulate the economy during recessions (www.en.wikipedia.org/wiki/Keynesian_economics). For instance, if the central bank reduced the interest rate of the loans to commercial banks, the government in return signals the commercial banks to follow suit in reducing their interest rate. The government then begins to invest in the infrastructure, thus outputting income into the economy. This action then helps to create business opportunities, employments, and demands thus resulting in reversion of the initial imbalance (www.en.wikipedia.org/wiki/Keynesian_economics).
The reason I would make this choice is to stimulate lending to businesses, reduce unemployment and increase household income so that the economy could then recover naturally. Scenario 2 In 150 to 200 words, explain your reasoning for the way you are planning on using the Discount Rate. Be sure to address the following: 1. How the Discount Rate can affect the economy 2. How your action will affect economic growth 3.
By this he meant that he was a new strand of the Labour party, which merged strands of neo-liberal policy and socialist policy, to which he called it ‘the third way’. The aims of the third way were to end the cycles of boom and bust, to restore a sense of responsibility to both monetary ad fiscal policy, to be able to afford increased expenditure on public services, to reduce the levels of poverty, to improve the competitiveness of British industry and finally to create conditions for the UK to join the single currency. Tony Blair wished to achieve this with a number of policies, one including the monetary policy committee of The Bank of England. This transferred control of interest rates from the government to the new monetary policy committee at The Bank of England. The purpose was to control
Despite certain of potential drawbacks, providing vocational training to rural migrant workers and new members of the workforce in urban and rural areas is the most realistic and beneficial option to balance equity and efficiency in China’s development. These solutions will be evaluated using the criteria of cost, practicality and effectiveness. Reforming the income distribution system can possibly be the most immediate way to change China’s current inequity status quo. This can be achieved by using tax, supervision and subsidy to properly improve the income level of the low-income families, enhance the ratio of the middle-income group and adjust the excessively high income of some monopoly industries (Riskin, Zhao and Shi, 2001). As Feng et.
Why are Tropical Countries so poor? “Development implies change, and this is one sense in which the term development is used, that is, to describe the process of economic and social transformation within countries.” So Economic development should lead to the improvement in the economic and the social aspects of an economy; such as a countries standard of living, the infrastructure within the country and a stable economic environment that encourages investment activities. Developed economies tend to have high GDP per capita when compared to their undeveloped counterparts; thus individuals are richer as oppose to the poor in underdeveloped countries. Economic growth is achieved via the supply of goods and services, what an economy do and make is what improves our living standards. If one lives in an economy which produces high quality products, then the living standards of those within that economy will be higher than that of individuals who live in an economy that produces poor quality goods.
This essay will seek to examine these policies and their varying successes or failures. Economic policies in Fascist Italy can be divided into distinct periods. In Mussolini’s early years, from 1922-1925, the economy was run using traditional liberal ‘laissez-faire guidelines.’ Under the guidance of the then Minister of Finance, Albert de Stefani, taxes were lowered and government expenditure cut. These policies found favour amongst the industrialists, bankers and big landowners who had been instrumental in the Fascist rise to power and thus served the ‘dual purpose of placating the big-business interests and balancing the state’s budget.’ Although the economy enjoyed modest growth, its inherent structural weaknesses were not addressed and in 1925 de Stefani was sacked amidst rising inflation and a falling Lira. The economic policies he had implemented had served their purpose in helping to garner further support for Mussolini and the fascists.