a reduction in taxes in providing fiscal stimulus to the economy? What does the balanced budget multiplier imply for the conduct of fiscal policy? 5. In assessing the effectiveness of a fiscal stimulus policy why might the composition of the increased government expenditure and/or the form of the changes in net taxation be important? 6. Suppose the following four-sector Keynesian ‘multiplier’ model: AD = Cp + Ip + G + X - M Cp = Co + c(Y-T) Ip = Io G = Go
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demand-side policy can only bring the economy to full employment. Furthermore‚ natural unemployment is caused by supply-side factors. The way to lower natural unemployment is by supply-side policies. An advantage of fiscal policy would be the multiplier effect. Multiplier effect refers to that when a government increases its spending‚ households and firms will receive that spending and re-spend that income. This leads to multiple routes of spending. In the end the net increase in AD is greater than the initial
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Explain the concept of potential output and why actual output can differ from potential output? (2 marks) Potential output is the amount of output that an economy can produce when using its resources such as capital and labour‚ at normal rates. Potential output is not a fixed number but grows over time‚ reflecting increases in both the amounts of available capital and labour and their productivity. As capital and labour can be utilised at greater than normal rates‚ at least for a time‚
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(2000) XXVIX No 3 INSAF 35 DIFFICULTIES SUFFERED BY ACCIDENT VICTIMS ETICAN RAMASAMY* This article highlights the sufferings of victims of motor vehicle accidents due to the amendments to Civil Law Act 1956 by Amendment Act A602 in the year 1984. INTRODUCTION 1. It has been often said that about 50 to 60 per cent of the litigation work handled by lawyers somehow arises due to road accident claims commonly called running down cases. The main claims would be either loss of dependancy
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Economic Output – Ameer Zaharuddin 1. Discuss and explain what effect a reduction in the marginal propensity to consume has on the size of the multiplier. Answer: * C = c1 + c0 YD Marginal propensity to consume‚ MPC= c1 * Where C = Consumption‚ c0 = intercept‚ YD = disposable income When a reduction in marginal propensity to consume‚ consumer disposable income is low‚ consumer does not has additional dollar or ringgit to dispose‚ a degree of decrease in disposable income is likely
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Name: ________________________ Class: ___________________ Date: __________ ID: A Test 2 5. If the economy is in a recessionary gap and the price level falls very slowly‚ then the result will be a prolonged period of a. high unemployment. b. production above potential GDP. c. shortages in supply. d. inflation whenever supply increases. Figure 10-8 6. The slope of the consumption function is measured by the marginal propensity to save. 7. If the stock market falls by 25 percent
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Indeed‚ Santa Claus is coming to town. Only this time‚ he’s a "Secret Santa" in the form of a casino online video slot game provided by Microgaming. It’s hard to imagine there would be slot players who won’t enjoy playing the Secret Santa slot‚ even if it’s only during the holiday season. Since the jackpots and excitement exist year-round‚ it makes perfect sense this game should be considered a keeper 365 games a year. In a world that seems determined to always be politically correct‚ there’s a
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Money multiplier = (1+cr) / (cr + rr)‚ as currency-deposit ratio increases‚ reserve-deposit ratio keep constant‚ according to the Table 4-2 in Case Study‚ it shows the money multiplier: m’ = (1+ 0.41) / (0.41 + 0.14) = 2.56‚ the money multiplier
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Dollar Bank has $5‚000 in excess reserves. b. What is the value of the additional loans that can be made by the commercial banking system? The commercial banking system can make additional loans of $50‚000. c. What is the money multiplier? The money multiplier is 10. d. How much in total deposits will be supported by Dollar Bank’s reserves‚ if this bank lends all its excess reserves and there is no leakage from the banking system? Deposits can be expanded by $100‚000. Q#4 Assume that a
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ECON 248 Assignment 2 1. The bank rate is the interest rate at which the Bank of Canada stands ready to lend reserves to chartered banks. The banker ’s deposit rate is the interest rate that the Bank of Canada pays banks on their deposits at the Bank of Canada. Changes to these rates by the Bank of Canada typically spread to other interest rates and therefore will influence the amount of lending done by the banks. An open market operation is the purchase or sale of government securities‚ which
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