policy have been analysed and recommendations made to manage inflation, employment and debt. Tax increases on higher earners and other possible consumption taxes would slow aggregate demand but allow government to increase its spending. Inflationary pressures are as a result of the economy not being able to meet supply requirements and investment in agricultural practise and increase in the manufacturing sector should assist in reducing inflation which is 11.7%. This will also have positive effects on
Words: 2722 - Pages: 11
Inflation, or the general rise of price levels in an economy, has many deleterious effects. It leaves the economy as a whole poorer relative to pre-inflation levels of wealth (individual and societal). Inflation reduces the value of each unit of currency and thus leaves the holder of that currency with lower purchasing power. Generally speaking, those who benefit from higher inflation are debtors and those who suffer from it- creditors. If one has substantial debt, each dollar one has to repay would
Words: 503 - Pages: 3
level of inflation in Thailand affects Blades (assume U.S. inflation remains constant)? Answer: Higher level of inflation in Thailand can affect Blades. Due to inflation in Thailand foreign goods will become cheap. Again inflation will increase in an increase of imports and at the same time exports will go down. As a result imports of rubber and plastic components from Thailand for Blades Inc. will suffer and it will increase their production cost. On the other hand due to inflation in Thailand
Words: 778 - Pages: 4
nominal interest rate plus inflation. This is a very basic equation. Fisher manipulated it to solve for i, in order to understand the effect that inflation has on nominal interest rate. The famous equation is i = r + π, nominal interest rate equals real interest rate plus inflation. This is basically saying that the nominal interest rate can be changed by a change in either the real interest rate or inflation. The Fisher effect is the one to one relationship between the inflation rate and the nominal
Words: 1695 - Pages: 7
Aggregate Supply - Aggregate Demand Model, which will hereafter be referred to as the AS/AD model. The AS/AD model is useful for evaluating factors and conditions which effect the level of Real Gross Domestic Product (GDP adjusted for inflation) and the level of inflation. The model is an aggregation of the elementary microeconomic supply-and-demand model discussed in the previous chapter. Like the microeconomic model, the AS/AD model is a comparative statics model. The model's insights, therefore
Words: 6745 - Pages: 27
Fundamentals of Macroeconomics Macroeconomics has many different terms that are used to describe specific measurements and groups that comprise an Economic system as a whole. It allows us to understand topics such as economic growth, inflation rate and interest rate, changes in employment and unemployment, our trade performance with other countries and the success or failure of government economic policies. Macroeconomics also shows us how examples of economic activities affect Government, households
Words: 1321 - Pages: 6
1. What is Inflation: Five Types of Inflation Defined Inflation is a situation of sustained and inordinate increase in the prices of goods and services. When there is a rise in general price level for all goods and services it is known as inflation. An inflationary situation could be because of the rise in any single price or a group of prices of related goods and services. Types of Inflation There are no less than five different types of inflation: • Commodity inflation, better known as cost-push
Words: 2352 - Pages: 10
satisfying the needs and wants of the population, by using the limited resources of the economy in the most efficient way. There are generally considered to be four main objectives of an economy: A low level of unemployment A low level of inflation A high level of economic growth A good foreign trading position Gross Domestic Product (GDP) The value of a country's overall output of goods and services at market prices, excluding net income from abroad. GDP can be estimated in three
Words: 960 - Pages: 4
other countries. This article is related to Macroeconomics and concepts are consistent with the course materials. It talks about unemployment, inflation and monetary policy. I found out strengths and weaknesses from the monetary policy that occurred in this article. Different countries concern about different problems within their society whether it is inflation rate or unemployment rate. Emerging markets like China and dominant markets like Japan and Europe conduct tight monetary policy to raise interest
Words: 1168 - Pages: 5
demand for our exports causes a rise in aggregate demand, shown by the lines AD0 to AD1. The short run effect of this is shown by the new equilibrium found where the new aggregate demand meets the short term aggregate supply. This new equilibrium causes a rise in the price level as well as a rise in the GDP. The points Yf and Yf1 show that our economy goes past full employment which will create a shortage in labour, meaning wages will rise and we will be hit with inflation. The shaded blue area shows
Words: 395 - Pages: 2
