uncertainty. Therefore‚ the governments use macroeconomic policy instruments to keep inflation under control. Maintain a high level of employment High unemployment is bad for the economy. Unemployment means resources are not being utilized properly. Therefore governments take measures to increase employment. Economic Growth If economy grows‚ people can enjoy higher standards of living. Therefore it is always an important aim of government policies. Redistribution of income The market system sometimes
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1. Introduction This essay will discuss on The Economist (2014). The article spoke about the economic policies Japan implemented‚ the intention and aftermath of it. It had covered the “three arrows” of which abenomics is based upon‚ namely fiscal stimulus‚ monetary easing and structural reforms‚ of which is executed to encourage private investments. Major points from the article will be explored in greater detail and a better comprehension will be derived on how the Japanese government intends to
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continue purchasing these mortgage backed securities until the labor markets improve. They will also plan on purchasing more assets if that is the case. The Committee wants to continue extending the holding of Treasury securities‚ and it is keeping the policy of reinvesting principal payments from the holding of agency debt and agency mortgage-backed securities. Their goal by doing this is to keep the Federal funds rate between 0 and .25%. All of this will increase securities held in the long run. They
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because it helps explain why exchange rates move so sharply from day to day. The economic explanation of overshooting comes from the interest parity condition. Question 4 (a) Using the AA/DD framework‚ explain the separate effects of a temporary monetary expansion and a temporary fiscal expansion on the exchange rate‚ output and the current account. [10 marks] Effects of a Temporary Increase in the Money Supply An increased money supply shifts AA1 upward to AA2 but does not affect the position
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resources‚ shortage of management and entrepreneurial expertise and technological retardation. In order to change the business environment to become investment friendly‚ the responsible authorities took the decision to adopt a liberal foreign investment policy which involved providing various incentives‚ including the absence of restrictions with regards to the entry and operations of foreign entities. The elimination of government bureaucracy coupled with dynamic political leadership resulted in direct
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John Maynard Keynes who was once a student of Alfred Marshall introduced what he thought would completely solve the unemployment problem which is called the Keynesian unemployment‚ from the 1930’s to 1970’s government tended to follow the Keynesian policy on how to control the economy and because the need for the solution to unemployment was essential UNEMPLOYMENT Unemployment can be expresses either as a number (e.g. 1.5million) or as a percentage (e.g. 5per cent). But we should consider the
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If the Fed is following a flat monetary policy rule‚ it will Answer aggressively increase inflation if the interest rate exceeds the target interest rate. aggressively increase interest rates if the inflation rate exceeds the target inflation rate. only slightly increase inflation if the interest rate exceeds the target interest rate. only slightly increase interest rates if the inflation rate exceeds the target inflation rate. During the Christmas shopping season the demand
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stably. The exchange rat of RMB became more flexible. The current account surplus increased obviously and the capital account surplus decreased. The foreign exchange reserve still increased quickly. In 2005‚ Chinese government did some fiscal policy and monetary policy. Such as decreased government expense‚ raise the tax rate‚ used managed floating system‚ improve the foreign exchange management‚ enlarged the foreign exchange market. We can conclude that china’s BOP will still keep “double favorable balance”
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Canada became a self-governing dominion in 1867 while retaining ties to the British crown. Economically and technologically‚ the nation has developed in parallel with the US‚ its neighbor to the south across the World ’s longest unfortified border. Canada faces the political challenges of meeting public demands for quality improvements in health care‚ and education‚ social services‚ and economic competitiveness‚ as well as responding to the particular concerns of predominantly francophone Quebec
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high‚ banks will raise interests rates‚ which makes it more expensive to lend‚ it will be much more expensive for companies to borrow from banks (to pay salaries) Interest rates: high interest rates reduce present value of future cash flows Fiscal policy (budget deficit): government spending in excess of government revenues. Sentiment: consumer optimism/ pessimism are determinates of economic performance. **Recap** Buying a stock enables access to a firm’s earnings These earnings are affected
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