Proponents of the notion of a "political business cycle" suggest that: A. The standardized budget is a better indicator of the state of the economy than the actual budget B. Cyclical swings in the economy are produced by the inherent instability found in capitalist economies C. A possible cause of economic fluctuations is due to the use of fiscal policy for political purposes D. There is a tradeoff among goals that tends to make the economic policies of state and local governments procyclical 19. One of the timing problems with fiscal policy is an "operational lag" that occurs between the: A. Beginning of a recession and the time that it is recognized that the event is occurring B.
When there is a larger demand for more expensive commodities, the demand for money increases and the cost to borrow follows. This is following the theory of money demand. (Sparknotes, 2013) It is true for a decrease in output. The fewer consumers are willing to buy, the lower the demand of money is creating lower interest rates. This can be seen in the housing market.
265). An increase in the real investment or in components of consumption will cause a rise in the real GDP and a decrease in real spending will cause a decrease in the real GDP. To calculate the multiplier one takes 1 and divides it by 1 minus the marginal propensity to consume, which is equal to one divided by the marginal propensity to save. Therefore, the “smaller the marginal propensity to save, the larger the multiplier” and the “larger the marginal propensity to consume, the larger the multiplier” (Miller, 2012, pg. 266).
If I take the contradictory monetary policy as an example it will show that; an increase in interest rates will affect investments by decreasing them and that leads to a decrease in consumption, which then continues onto aggregate demand which decreases causing inflation to decrease. This situation most often happens during “the boom” in an economy In conclusion there are many factors that could decrease consumption, however all of those factors can be turned around and used for the exact opposite, increasing consumption. They also all have an effect on aggregate demand and on
The discount yield uses the terminal price, or the security’s face value, as the base price in calculating an annualized interest rate. The bond equivalent yields are based on the purchase price of a security. Because adjusting for both the base price and days in the year difference, requires converting a discount yield into a bond equivalent yield. 4. What’s is the difference between a single-payment yield and a bond equivalent yield?
The following is a dissemination of our reviews and research. Abe & Kuldip: Surplus is an excess of revenues over payments Budget surplus influences the health of our economy by creating additional funds with which the government can use
As situations happen around the world the internal economy is being affected, the price of oil increases and more money in the market should be created, but this will affect the inflation, as more money is in the market, the GDP keep growing and the unemployment is decreasing. To balance the economic growth, lower the inflation, and make a reasonable rate of unemployment it is important to take in consideration that typically if money is released into the system the real Gross Domestic Product will increase, creating opportunities of work and decreasing the unemployment rate. After indentifying the tools used for the Federal Reserve and analyzing the influence this has with the money supply the Feds can add or take money into the system to control the levels of inflation, increase the Gross Domestic Product and reduce the
The level of inflation in Britain and China’s economic environment affect Tesco. Inflation is the changes in price rate of goods and services the customer purchases. Inflation occurs when there is a general rise in the price of goods sold in the whole economy, however not every prise will be rising but average prices will. In the UK average prices are measured by the government using a measure known as the Consumer Price Index (CPI). Inflation damages businesses because it causes uncertainly.
At (L, W), this is where the market ordinarily clears. However, under the imposed legislation, WM, there is now a disparity between labour demanded and labour supplied. The difference, LM – L, is the disemployment that results from the firm facing an increase in input cost. The geometric triangle “ABC” defines the aggregate income lost from the lost work hours as a result of legislation. Data & Interpolation From here, the value of the legislation will be extracted first in terms of incidence of minimum wage workers across different categories.
The factors which contribute to a recession and sometimes a depression are: increase in cost of production, higher costs of energy, and the national debt among many others. This means people and companies alike will tend to cut spending, which by chain reaction will cause the unemployment rates to increase and the GDP to