...long run A G G R E G AT E AND DEMAND S U P P LY Use the model of aggregate demand and aggregate supply to explain economic fluctuations A G G R E G AT E Economic activity fluctuates from year to year. In most years, the production of goods and services rises. Because of increases in the labor force, increases in the capital stock, and advances in technological knowledge, the economy can produce more and more over time. This growth allows everyone to enjoy a higher standard of living. On average over the past 50 years, the production of the U.S. economy as measured by real GDP has grown by about 3 percent per year. In some years, however, this normal growth does not occur. Firms find themselves unable to sell all of the goods and services they have to offer, so they cut back on production. Workers are laid off, unemployment rises, and factories are left idle. With the economy producing fewer goods and services, real GDP and other measures of income fall. Such a period of falling incomes and rising 413 See how shifts in aggregate demand or aggregate supply can cause booms and recessions 414 PA R T E I G H T S H O R T - R U N E C O N O M I C F L U C T U AT I O N S recession a period of declining real incomes and rising unemployment depression a severe recession unemployment is called a recession if it is relatively mild and a depression if it is more severe. What causes short-run fluctuations in economic activity? What, if anything, can public policy...
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...70+ DVD’s FOR SALE & EXCHANGE www.traders-software.com www.forex-warez.com www.trading-software-collection.com www.tradestation-download-free.com Contacts andreybbrv@gmail.com andreybbrv@yandex.ru Skype: andreybbrv SCHAUM’S Easy OUTLINES PRINCIPLES OF ECONOMICS Other Books in Schaum’s Easy Outlines Series Include: Schaum’s Easy Outline: Calculus Schaum’s Easy Outline: College Algebra Schaum’s Easy Outline: College Mathematics Schaum’s Easy Outline: Discrete Mathematics Schaum’s Easy Outline: Differential Equations Schaum’s Easy Outline: Elementary Algebra Schaum’s Easy Outline: Geometry Schaum’s Easy Outline: Linear Algebra Schaum’s Easy Outline: Mathematical Handbook of Formulas and Tables Schaum’s Easy Outline: Precalculus Schaum’s Easy Outline: Probability and Statistics Schaum’s Easy Outline: Statistics Schaum’s Easy Outline: Trigonometry Schaum’s Easy Outline: Business Statistics Schaum’s Easy Outline: Principles of Accounting Schaum’s Easy Outline: Applied Physics Schaum’s Easy Outline: Biology Schaum’s Easy Outline: Biochemistry Schaum’s Easy Outline: Molecular and Cell Biology Schaum’s Easy Outline: College Chemistry Schaum’s Easy Outline: Genetics Schaum’s Easy Outline: Human Anatomy and Physiology Schaum’s Easy Outline: Organic Chemistry Schaum’s Easy Outline: Physics Schaum’s Easy Outline: Programming with C++ Schaum’s Easy Outline: Programming with Java Schaum’s Easy Outline: Basic Electricity Schaum’s Easy Outline: Electromagnetics Schaum’s Easy Outline:...
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...the individuals and firms in the economy interact to produce a particular economy-wide level of economic performance. * Many thousands or millions of individual actions compound upon one another to produce an outcome that isn’t simply the sum of those individual actions. (rubber-necking traffic jam example) * Paradox of thrift: when families and businesses are worried about the possibility of economic hard times, they prepare by cutting their spending. This reduction in spending depresses the economy as consumers spend less and businesses react by laying off workers. As a result, families and businesses may end up worse off than it they hadn’t cut their spending. * The flip-side is also true; seemingly profligate behavior leads to good times for all * Before 1930’s, economists regarded the economy as self-regulating: unemployment would be corrected through the invisible hand and government attempts would be ineffective/harmful. * Keynesian economics: a depressed economy is the result of inadequate spending. Government interaction can help a depressed economy through monetary and fiscal policies. * Monetary policy: uses changes in the quantity of money to alter interest rates; Fiscal policy: changes in taxes and...
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...Case Study 1, 2, 3 OIL AND THE ECONOMY WHERE IS ALL THE CURRENCY THE HISTORY OF U.S. GOVERNMENT DEBT Submitted by: Julie Ann G. Ropan Carl Cedric P. Albunian BSBA- Bus. Econ III- A Submmited to: Mrs. Pimeh C. Tolentino PH.D Introduction The large production of oil is originated at the Middle East. Crude oil is one of the inputs of production of many goods and services that much of the world comes from Saudi Arabia, Kuwait, and other Middle East Country that which included in the monopoly. Monopoly is one of the market structures that a firm is a sole seller of product without close substitute. When some event (usually political in origin) reduces the supply of the crude oil flowing from the region, the prices of oil rises around the world. Because they think that it would be much profitable to them. But since the U.S is much affected to the inflation of the oil it is not favourable for them. U.S. firms that produce gasoline, tires, and many other products experience rising cost, and they find it less profitable to supply their output of goods and services at any given price level. The result is a leftward shift in the aggregate-supply curve, which in turn leads t stagflation. The countries with large oil reserves got together as member of OPEC, the Organizational of Petroleum Exporting Countries. OPEC is a cartel—a group of sellers that attempts to thwart competition and reduce production to raise prices. And indeed, oil prices rose substantially. From 1973...
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...The role of government in the U.S economy extends far beyond its activities as a regulator of specific industries or gatekeeping. The government is also responsible for managing the overall pace of economic activity, with its objective of maintaining high levels of employment and controlling price stability (inflation). It has two main tools for achieving these goals: fiscal policies, which is done through taxes and spending and monetary policies, through which it manages the supply of money. In this paper, I will discuss the why high deficits of today will reduce growth rate of the economy in the future, look at the history of our nation’s debt and deficits, different elements that causes of deficit and why the cause actually matters, what role the fiscal and monetary policies have to lead to higher or lower budget deficits and how deficits affect the overall long-term economic growth and debt of the U.S. Let us first begin by learning the difference between the terms debt and deficit. In economics, the term deficit means a shortfall in revenue of a fiscal year. It is when the government’s revenue called receipts, which are collected taxes (payroll, corporate, excise, income and social insurance), fee revenues and tariffs that are called receipts are lower that what is spent called outlays. In other words, the federal budget deficit is the yearly amount by which spending exceeds revenue. The term debt is described as an accumulation of deficits so the national debt is the...
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...* * * * * * * Term Project * Global Business Analysis Report of the Dominican Republic * Janay Johnson * Monroe College * * * * * * * * * * * * * The Dominican Republic is a beautiful tourist spot with tropical maritime and little seasonal temperature variation. It is hot with tropical temperatures all year round, with coastal areas being warmer than central regions. There are two rainy seasons: May to August (the heaviest) and the other is from November to December. Hurricanes may sometimes occur during these periods. * As of 2015, the Dominican Republic has an estimated population of 10.6 million, which ranks 65th in the world. Santo Domingo is it's largest city and has a population of 970,000, with a metropolitan population of almost three million. "Other major cities include Santiago de los Caballeros (750,000), La Romana (215,000) and San Pedro de Macoris (190,0000)." In the next two decades the population of the Dominican Republic is expected to increase largely. In 15 years the population will reach 12.1 million, with Santo Domingo alone reaching 4 million. * The country has a racially mixed population: 16% white, 11% black and 73% mixed. "The most common ethnic immigrant groups are West Indians. Many immigrants have moved to the Dominican Republic in search of better opportunities. There are tens of thousands of Jamaicans in the country and more than...
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...Assignment 5: Persuasive Paper Part 3: Possible Disadvantages, Answers, with Visuals Strayer University August 31, 2014 The topic of taxation is a very controversial subject. Due to its complexity, people from the left to the right have objected to it. There was a time when the federal government was funded only with revenue from imported products. A little bit of history informs us that income tax started in 1861 with the Civil War, when congress passed a bill required everyone to pay three percent of their income starting at $600 to $10,000 each year (Boortz & Linder, 2005). Since the end of Civil War, the battle began to get rid of the income tax. The truth is that the tax takes money off our pockets. But, I proposed that tax increase on income $ 250,000.00 or more per year because that will decrease taxation on the lower income levels, and increase revenue to the government to fight budget and reduce the national debt. As stated above, income tax was a battle in 1896 and continues to be a battle in 2012. The Sixteenth Amendment of the US Constitution was born to collect revenue from American workers, and that was a fight between Democrats and Republican over income taxation. Due to a 2% tax in 1894, the two major political parties took the fight all the way to the US Supreme Court with a question about the constitutionality of that law. The Supreme Court ruled that the income tax was unconstitutional. As a response to that ruling, Joseph Bailey a democratic senator...
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...economy. True False Question 3 In a market system, the government enforces laws ensuring that private enterprises and conditions of competition will prevail. True False Question 4 The most common type of business in the United States is the corporation. True False Question 5 Laissez-faire is a policy of no government intervention in the economic activities of individuals and businesses. True False Question 6 In a partnership, each partner’s liability is limited to his or her contribution to the partnership. True False Question 7 There are no government-regulated markets in the U.S. economy. True False Question 8 Which of the following is not among the United States’ economic goals? full employment stable prices healthy economic growth equal distribution of income Question 9 Under the U.S. market system, land and capital goods are owned mainly by the federal government individuals and firms local governments state governments Question 10 The biggest disadvantage of a sole proprietorship is the lack of distinction between the business and the owner. True False Question 11 In the United States, marketing cooperatives are most commonly found in the agriculture industry. True False Question 12 Self-interest is a major tenet of economic liberalism. True False Question 13 Which of the following is considered a command economy? communism socialism fascism...
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...____________________________________________________________________________ A Look at Tourism: Cuba’s Hotel and Resort Industry ------------------------------------------------- Graziella Pastor, Frida Leibowitz, Anthony Eid, Rachel Lauren Abstract Within the past century, Cuba’s economy has evolved drastically in order to meet its changing political atmosphere. At this moment, Cuba’s economy is potentially now the ripest for investment since it is the most liberalized it has been since the Communist government came to power in 1959. For the last seventy years, Cuba has been stricken by poverty and slow development despite its fairly skilled labor force. As Cuba has recently opened its nation for investments and economic improvements, the tourism industry has begun to flourish. Due to the educated population, low labor wages, and the government’s willingness to accept foreign capital, investment in Cuba’s hotel industry is a highly attractive prospect. I. Introduction Cuba, a nation whose communist government suffocated its economy for over half a century, promises profitable returns but requires the investment of pioneer businesses to regenerate the economy. After Fidel Castro came to power in 1959, the dictator quickly acted to transform Cuba into a communist state. Castro’s government unfairly seized private land and companies, imposed heavy taxes on imports from the United States, and prohibited foreign companies...
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...Fall 2012 CHAPTER 1: THE CHALLENGE OF ECONOMICS 1 CHAPTER 1: THE CHALLENGE OF ECONOMICS Definitions and Questions All economic questions and problems arise because human wants exceed the resources available to satisfy them. Scarcity: - The condition that arises because the available resources are insufficient to satisfy wants. o Our resources are limited but our wants are unlimited. - Scarcity: Lack of enough resources to satisfy all desired uses of those resources The Central Problem of Scarcity Our materialistic wants and desires continue to grow. - Newest camera phone - Larger television - Bigger house - Exotic vacation Why can’t we have everything we want? - Our wants exceed our resources. Economics and Opportunity Cost Economics – the study of how best to allocate scare resources among competing users. Opportunity cost – The value or price of the most desired goods and services that are foregone in order to obtain something else. - The next best alternative that you give up. Factors of Production Resource inputs used to produce goods and services. The four resources: - Labor, land, capital and entrepreneurship Resources are factors of production. Economic resources – all natural human and manufactured resources that can be used in the production of goods and services. Land – arable land, forests, minerals, energy (oil deposits and coal), water, air, wild plants, animals, birds and fish. Labor – all the physical and intellectual talents that can...
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...User SONPR:Job EFF01417:6264_ch01:Pg 0:23907#/eps at 100% *23907* Fri, Nov 9, 2001 11:52 AM part I Introduction User SONPR:Job EFF01417:6264_ch01:Pg 1:21266#/eps at 100% *21266* Fri, Nov 9, 2001 11:52 AM C H A P T E R The Science of Macroeconomics The whole of science is nothing more than the refinement of everyday thinking. — Albert Einstein 1 O N E 1-1 What Macroeconomists Study Why have some countries experienced rapid growth in incomes over the past century while others stay mired in poverty? Why do some countries have high rates of inflation while others maintain stable prices? Why do all countries experience recessions and depressions—recurrent periods of falling incomes and rising unemployment—and how can government policy reduce the frequency and severity of these episodes? Macroeconomics, the study of the economy as a whole, attempts to answer these and many related questions. To appreciate the importance of macroeconomics, you need only read the newspaper or listen to the news. Every day you can see headlines such as INCOME GROWTH SLOWS, FED MOVES TO COMBAT INFLATION, or STOCKS FALL AMID RECESSION FEARS. Although these macroeconomic events may seem abstract, they touch all of our lives. Business executives forecasting the demand for their products must guess how fast consumers’ incomes will grow. Senior citizens living on fixed incomes wonder how fast prices will rise. Recent college graduates looking for jobs hope that the economy...
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...User SONPR:Job EFF01417:6264_ch01:Pg 0:23907#/eps at 100% *23907* Fri, Nov 9, 2001 11:52 AM part I Introduction User SONPR:Job EFF01417:6264_ch01:Pg 1:21266#/eps at 100% *21266* Fri, Nov 9, 2001 11:52 AM C H A P T E R The Science of Macroeconomics The whole of science is nothing more than the refinement of everyday thinking. — Albert Einstein 1 O N E 1-1 What Macroeconomists Study Why have some countries experienced rapid growth in incomes over the past century while others stay mired in poverty? Why do some countries have high rates of inflation while others maintain stable prices? Why do all countries experience recessions and depressions—recurrent periods of falling incomes and rising unemployment—and how can government policy reduce the frequency and severity of these episodes? Macroeconomics, the study of the economy as a whole, attempts to answer these and many related questions. To appreciate the importance of macroeconomics, you need only read the newspaper or listen to the news. Every day you can see headlines such as INCOME GROWTH SLOWS, FED MOVES TO COMBAT INFLATION, or STOCKS FALL AMID RECESSION FEARS. Although these macroeconomic events may seem abstract, they touch all of our lives. Business executives forecasting the demand for their products must guess how fast consumers’ incomes will grow. Senior citizens living on fixed incomes wonder how fast prices will rise. Recent college graduates looking for jobs hope that the economy...
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...predicted, it currently carries very may reduce taxes to try to stimulate the little traffic—about 4,000 cars a day. By economy or raise taxes when they believe comparison, America’s longest suspension that aggregate demand is too high. bridge, the Verrazano Bridge that links New In this chapter, we will learn how discre- York City’s Staten Island to the borough of tionary fiscal policy fits into the model of Brooklyn, carries more than 300,000 cars short-run fluctuations we developed in each day. Chapter 10. We’ll see how deliberate In Japan, stories like this are common. During the 1990s the Japanese government What you will learn in this chapter: changes in government spending and tax policy affect real GDP. We’ll also see how ® What fiscal policy is and why it is an important tool in managing economic fluctuations ® Which policies constitute an expansionary fiscal policy and which constitute a contractionary fiscal policy ® Why fiscal policy has a multiplier effect and how this effect is influenced by automatic stabilizers ® How to measure the government budget balance and how it is affected by economic fluctuations ® Why a large public debt may be a cause for concern ® Why implicit liabilities of the government are also a cause for concern spent around $1.4 trillion on...
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...OPEC member countries and were eager to lend at very low rates. Moreover, it is misleading to view the effects of government debt in isolation. Government debt can be divided into two categories namely domestic debt and international debt. The International debt is facilitated by the formation of such institutions like the International Monetary Funds (IMF) the International Bank for Construction and Development (World Bank). Governments borrow money from the private sector and foreign governments if they can't pay for all their spending with taxes and government revenues. A government will issue bonds at bond auctions every so often and market participants will come in and bid for them. Market participants lend the government money and in return the bondholder will receive the face value (the amount lent) of the bond at maturity and payments from the bond issuer called coupons. Governments borrow at different maturities with most major economy's governments borrowing at varying maturities. The UK even issued bonds that have no maturity. Governments have two main options to repay...
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...of a recession is two consecutive quarters of negative economic growth as measured by a country's gross domestic product (GDP); although the National Bureau of Economic Research (NBER) does not necessarily need to see this occur to call a recession. Recession is a normal (albeit unpleasant) part of the business cycle; however, one-time crisis events can often trigger the onset of a recession. The global recession of 2008-2009 brought a great amount of attention to the risky investment strategies used by many large financial institutions, along with the truly global nature of the financial system. As a result of such a wide-spread global recession, the economies of virtually all the world's developed and developing nations suffered extreme set-backs and numerous government policies were implemented to help prevent a similar future financial crisis. A recession generally lasts from six to 18 months, and interest rates usually fall in during these months to stimulate the economy by offering cheap rates at which to borrow money. The sharp decline in economic activity during the late 2000s, which is generally considered the largest downturn since the Great Depression. The term “Great Recession” applies to both the U.S. recession – officially lasting from December 2007 to June 2009 – and the ensuing global recession in 2009. The economic slump began when the U.S. housing market went from boom to bust and large amounts of mortgage-backed securities and derivatives lost significant...
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