fiscal channel. (a) A rise in international price of oil will translate to higher import bill for oil for the net oil importing countries like India (see‚ Table 1 and 2). Under the reasonable assumption of low price elasticity of demand for oil‚ ceteris paribus‚ the trade balance will worsen due to an increase in international oil price. Rise in inflation due to increase in oil prices means that the growth in real GDP is even lower. The compression in aggregate domestic demand dampens growth. In figure
Premium Macroeconomics Inflation Economics
Economics is the study of how individuals and societies choose to use the scarce resources that nature and previous generations have provided. There are many reasons to study economics‚ including 1.To learn a way of thinking 2.To understand society 3.To understand global affairs 4.To be an informed voter Economics has three fundamental concepts: a. Opportunity cost‚ b. Marginalism‚ and c. Efficient markets. a. Opportunity cost is the best alternative that we forgo‚ or give
Premium Economics
together for the purposes of exchange or trade‚ we have a market.” - Bamford‚ 2001 These markets work on the basis of demand and supply. Demand refers to the quantities of a product that consumers are willing and able to buy at a given price‚ ceteris paribus. Demand Curve. Price 40 30 20 Quantity D 40 80 60 The diagram shows that there is an inverse and causal relationship between price and quantity demanded. P QD P QD Price is one determinant
Premium Supply and demand Externality Economics
Money Markets Treasury Dealing Report Executive summary 1. This report analyses and forecasts the past‚ present and future of Singapore’s money market situation. The first part shows the behaviour of the interest rates in Singapore for the past 3 years‚ highlighting the reasons that affect the SIBOR. 2. Secondly‚ it expresses our views and forecasts the behaviour of Singapore’s money market over the next six months. It focuses on the identification of the factors that affect the
Premium Inflation Monetary policy Money
Intersectoral Flows: W. Arthur Lewis’ "Surplus Labor" model Lewis wanted to model development in an economy with a large agricultural sector and a small "modern" sector (e.g.‚ manufacturing). His model was subsequently formalized by John Fei and Gus Ranis‚ who ended up at Yale. Ranis also made the first formal empirical application‚ looking at Japan‚ which around 1960 was still a heavily agrarian developing economy. Below we develop this framework to apply to China. First‚ let’s remind ourselves
Premium Agriculture Economics
Importantly‚ individuals are assumed to be the best judge of their own welfare; the notion of ‘consumer sovereignty’. Social welfare is assumed to be simply a function of these individual utilities‚ such that when one individual’s utility increases‚ ceteris paribus‚ social welfare increases. One important condition for maximizing social welfare is that all commodities for which individuals are prepared to pay the social costs are available in the market (Enthoven‚ 2011) In economic point of view major focus
Premium Cost-benefit analysis Health economics Welfare economics
Bank A has an excess reserves ratio of 0.03%. (a) What is the money multiplier faced by Bank A under these circumstances? (b) Using numerical examples‚ discuss the likely effects on this multiplier of the following circumstances (assuming ceteris paribus in each case): (i) The bank expands its operations in the field of financial derivatives; (ii)
Premium Central bank Monetary policy Fractional-reserve banking
1. Because we live in an economy it is important to study economics‚ simply because economics affects everyone. We are part of an economics system‚ where every day we engage in economic activities. Economics helps us to appreciate that the earth’s resources are limited in comparison to human beings want‚ which are infinite‚ and constantly changing along with technology and people’s taste and preference. This excess of wants over what can actually be produced with the limited resources‚ brings about
Premium Supply and demand Economics Consumer theory
WHAT IS ECONOMICS (Chapter 1) DEFINITION OF ECONOMICS * Scarcity: Limited resourcesTime‚ money. * Inability to satisfy all of our wants * Faced with scarcity we must choose among available alternatives * Trade offs * Incentive: Reward that encourages and action or penalty that discourages * Microeconomics: Choices of: * Individuals * Businesses * The way these choices interact in markets and the influence of the government * Macroeconomics: * Study of
Premium Supply and demand
ECON *120: Principles of Microeconomics Spring 2010 I. FOUNDATIONS OF ECONOMICS A. Scarcity‚ Production Possibilities‚ Efficiency and Exchange Section I.A Learning Objectives: • Define or explain a number of basic economic terms and concepts. • Explain‚ illustrate‚ and apply marginal analysis. • Explain‚ illustrate‚ and apply the production possibilities model. • Explain‚ illustrate‚ and apply the law of comparative advantage. 1. “Life is Economics” Q: Is this statement true or false? Why? 2. Economic
Premium Supply and demand Economics