exchange rate is said to overshoot when its immediate response to a disturbance is greater than its long-run response. Exchange rate overshooting is an important phenomenon 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
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elasticity of demand Inelastic demand curve will be less than 1 Inelastic demand curve will be less than 1 Elastic demand curve will be greater than 1 Elastic demand curve or Kinked demand curve will be greater than 1 Is there a presence of economic profits? No Yes Yes Yes Introduction: Printing is one of the most highly competitive industries in America today there are literally thousands of printers in the United States‚ they range from a small mom and pop operation to multinational
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Economics Paper University of Phoenix ECO365 May 6‚ 2013 Economics is a tool that we use in our daily lives even if we don’t always realize it. As people we all have things that we want‚ and things that we need. This includes things like food‚ clothing‚ and shelter‚ but it is not limited to those things. In order to get those things‚ people have to spend money. The issue is that everything that people need and want costs money. More often than not‚ people do not have the money to do both so
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& acknowledgementsReprints How to grow Without faster growth the rich world’s economies will be stuck. But what can be done to achieve it? Our economics team sets out the options Oct 7th 2010 | from the print edition WHAT will tomorrow’s historians see as the defining economic trend of the early 21st century? There are plenty of potential candidates‚ from the remaking of finance in the wake of the crash of 2008 to the explosion
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is at max point Managers take production right up to the point where TC=TR; if they can [2] Oligopolies can benefit most from going past the profit maximising output because it gives them a market share advantage over their competition. The economic climate can affect managers’ ability to deploy this tactic. If a recession is on the cards then shareholders will be anxious and keeping them and profits high will be a priority to which managers must abide to keep their position. The Downsides:
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In economic terms‚ employment is defined as the number of people who are involuntary out of work. This means that they are actively seeking a job but unable to find it. Unemployment usually occurs when there is a lack of demand for labour by firms in an economy. The most common types on unemployment are classical‚ structural‚ frictional and cyclical unemployment. The natural rate of unemployment refers to the lowest level of unemployment that can be sustained by an economy without increasing the
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Final draft: 08 Theories of economics: classical economics verses Keynesian economics. Mamun‚ M.H.A Classical and Keynesian economics are two different economic philosophies. The classical economists usually oppose government intervention and believe that the free market creates efficiency automatically (Greenwald et al‚ 1988). However‚ Keynesian economists are in favour of general intervention by the state to create an efficient market (Blinder‚ 2007). Looking at price
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Fiscal Responsibility - the Debate 1. There is‚ by definition‚ a tension between fiscal restraint and finding resources for all the expenditure needs of the government. Where this line is drawn and how this tension is managed is the stuff of much economic analysis as well as ideological debate. The Fiscal Responsibility and Budget Management (FRBM) Act mandates the Centre to have reduced fiscal deficit to 3% of GDP and to completely eliminate revenue deficit by 2008/09. Similarly‚ acting in response
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1. Describe the role played by the following economic sectors: o Household They own the factors of production‚ which they supply to the market. The basic macroeconomic sector that includes the entire‚ wants and-needs-satisfying population of the economy. The household sector is the eating‚ breathing‚ consuming population of the economy. In a word "everyone‚" all consumers‚ all people. This sector includes everyone seeking to satisfy unlimited wants and needs. Members of the household sector
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- Financial flows Deregulation of financial markets (less rules and regulations in currency markets and foreign investment) led to a rapid increase in FDI and portfolio investment. Investment makes economies more integrated as economic changes in one country influence others (CONTAGION e.g. negative effects such as the GFC and the EDC or positive effects such as new technology and booming economies). The main benefits are that it enables countries to finance their domestic economy even if domestic
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