Balance of payments is the difference in total value between payments into and out of a country over a given period. An appreciation means an increase in the value of a currency, and is worth more in terms of foreign currency. One impact of an appreciation on the current account is that exports are more expensive, so there is a fall in exports. Imports are cheaper so imports increase, creating a bigger deficit on the current account. This means that a strong real may lead to a worsening of the balance of trade – much depends on the value of price elasticity of demand for imports and exports.
Above shows a monopoly diagram. The economic inefficiency is highlighted especially by the welfare loss to the consumer this is because between q0 and q1 the extra benefit of the unit (shown by the price) exceeds the extra cost. Therefore welfare
An increase in wages will increase the average variable cost. The more people required to produce additional units of output will be more expensive due to an increase in wages. A lower material cost will result in a lower average variable cost because more units can produced at a lower cost. If the firm produces the same amount of units the cost will fall. The fixed tax will not change the average variable cost.
iii) Indifference Curves Are Convex To The Origin – As the amount of Good X increases by equal amounts, Good Y will reduce by smaller amounts. iv) Indifference Curves Do Not Touch The Horizontal Or Vertical Axis – The basic assumption of the consumer buying two goods in combination would be violated if the curve were to touch either
Current account is the sum of the balance of trade (goods and services exports less imports), net income from abroad and net current transfers. Exchange rate is the value of one currency for the purpose of conversion to another. Investment is when you put (money) into financial schemes, shares, property, or a commercial venture with the expectation of achieving a profit. Consumption is when you spend in order to use a resource. Firstly, if consumption falls for foreign goods then this will better the current account deficit or improve the surplus.
B) maximum opportunity cost combinations of goods and services. C) boundary between the combinations of goods and services that can be produced and the combinations that cannot be produced when technology is changing. D) boundary between the combinations of goods and services that can be produced and the combinations that cannot be produced, given the available factors of production and the state of technology. E) maximum output that can be produced at an opportunity cost of zero. 5) Moving from one point to another on a production possibilities frontier
First, if the government increases its purchases but keeps taxes constant, it increases demand directly. Second, if the government cuts taxes or increases transfer payments, households’ disposable income rises, and they will spend more on consumption. This rise in consumption will in turn raise aggregate demand” (Weil, 2008, para. 4). Consumer income has a huge effect on aggregate supply and demand just as the aggregate supply and demand can affect consumer income.
Since there will be more high income earners in an inequitable distribution of income, and the higher the income an individual earns the greater the proportion of income will be saved, savings will increase in the economy and this will reduce Australia’s reliance upon foreign capital. Unfortunately the advantages of economic inequality are accompanied with the disadvantages. Firstly, overall utility, the satisfaction for the goods and services by the consumer is reduced in our society. This theory is based on the assumption that high income earners gain less satisfaction from an increase in their income than people who earn lower incomes. The reason being as more of a certain good is consumed, it will begin to provide less utility to the consumer.