[pic] Assignment #3 Principles of Microeconomics Spring‚ 2011 Due Date: March 16th‚ 2011 Lecturer: juwang Answer All Questions 1. The following questions refer to graphs A and B below. In the graphs‚ Qf represents full-employment output and Qu1 and Qu2 represent less-than-full-employment levels of output. ( 3 Marks) (a) Which of the two graphs best illustrates the Keynesian view of the macroeconomy‚ and which best illustrates the classical view? Explain. (b) When demand shifts
Premium Monetary policy Fractional-reserve banking Inflation
rate as it had in the 1980’s the aggregate rate of unemployment for May 1997 would have been 12.5% rather than the actual figure of 8.8%. The same reasoning could be applied to explain our recent decline in the natural unemployment rate. Policies to Reduce Australian Unemployment 1. Labour Market Programs Involving
Free Unemployment Employment
policies to reduce a balance of Payments Deficit 1. Devaluation. This involves lowering the value of the currency against others. · If there is a devaluation in the currency the price of importing French goods increases and therefore the quantity demanded falls. · Exports will be cheaper in price for the French and will increase the quantity of exports · Therefore we would expect a devaluation to lead to an improvement in the current account. However it does depend upon the elasticity of
Premium Inflation International trade Supply and demand
country faced deflation. Deflation was caused by nations state of being trapped in low growth and prices spirals going downward. This position of Japan made its economy like an example how economy should not look like. Other countries were afraid of the fact they may one day become in the position like this. After analyzing the economic situation of the United States‚ many economists remain confident that the US will not have destiny like Japan. They claimed that the US will avoid deflation thanks to
Premium Supply and demand Money Aggregate demand
INSTITUTE FOR ECONOMIC MANAGEMENT CENTER FOR INFORMATION AND DOCUMENTATION ------------------------------------------------FISCAL AND MONETARY POLICY FOR STABLIZING MACRO-ECONOMY AND STRENGTHENING THE ECONOMIC GROWTH IN VIETNAM (SUMMARY)* Fiscal and monetary policy are two important tools in managing and adjusting the macroeconomy. They have different purposes. Fiscal policy refers to the revenues of state budget‚ financial funds and the expenditure undertaken by the government annually. The expenditure
Premium
The Internet is virtual shopping mall that allows the consumer to transact business including banking‚ shopping‚ and a host of day-to-day chores. As much as the consumer has come to rely on this new forum of exchange‚ it is also an instrument of many civil wrongs (cyber torts). This harm includes financial injuries‚ reputable damage‚ theft of trade secrets‚ and invasions of privacy. The Enron Corporation was listed as the seventh largest company in the U.S. with over $100 billion in gross revenues
Premium Enron Enron scandal Tort
Financial Institutions Financial institutions are either private or government owned organizations that operates as a channel between the borrowers and savers of funds. One of the main functions of financial institutions is to provide the financing that boosts the economic development of a nation. For instance‚ a stable financial system accommodates the flow of funds between investors and savers. However an instable financial system occurs when there’s a disruption in this process causing a distortion
Premium Financial services Investment Bank
MONETARY POLICY OF BANGLADESH AND ITS IMPACT ON ECONOMY Monetary policy is concerned with the measures taken to control the supply of money‚ the cost and availability of credit. Further‚ it also deals with the distribution of credit between the uses and the users‚ the lending and borrowing rates of the banks. In a developing country like ours the monetary policy has been effectively used as a tool for overcoming depression and inflation. As Prof R. Prebisch writes “The time has come to formulate
Premium Monetary policy Inflation Central bank
Are monetary disturbances and fiscal deficits inflationary? Empirical evidence from Malaysia Associate Professor Dr Tan Juat Hong College of Graduate Studies‚ Universiti Tenaga Nasional‚ Malaysia ABSTRACT: The study uses the VAR model to investigate the responses of domestic inflation to monetary and fiscal policies‚ with output as the scale variable. The results show that domestic inflation responds positively to monetary policy shocks but not to fiscal deficits. If one assumes the velocity of
Premium Inflation Monetary policy
the same goods it could beforehand. Deflation: A general decline in prices‚ often caused by a reduction in the supply of money or credit. Deflation can be caused also by a decrease in government‚ personal or investment spending. The opposite of inflation‚ deflation has the side effect of increased unemployment since there is a lower level of demand in the economy‚ which can lead to an economic depression. Central banks attempt to stop severe deflation‚ along with severe inflation‚ in an attempt
Premium Inflation