One of the objectives of government is to promote economic stability. Explain how the authorities use the interest rate (monetary policy) during economic downturns and upswings, in order to meet this objective.
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One of the objectives of government is to promote economic stability. Explain how the authorities use the interest rate (
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- The primary economic function of the "financial system" is to provide "financial intermediation," which means: Select one: O a. keeping the inflation rate at zero, ceteris paribus. b. keeping the inflation rate at the Treasury's "target rate" ceteris paribus. c. matching one person's consumption expenditures with another person's capital expenditures. d. matching one person's borrowing with another person's saving.b. How do fiscal and monetary policies differ in their approaches to managing the economy during periods of recession? Provide examples of each policy tool.What is the ideal balance between monetary and fiscal policy for a nation like Japan, where prices are rising yet unemployment is under control? a. Decrease taxes, increase government spending and increase money supply b. Decrease taxes, decrease government spending and decrease money supplyc. None of these choice is correctd. Increase taxes, decrease government spending and decrease money supply
- 18. Which of the following policies is not classed as a stabilization policy? 4) A policy aimed at reducing unemployment. b) A policy aimed at reducing the number of people in poverty. C) A policy aimed at reducing the rate of inflation. d) A policy aimed at shifting the production possibility frontier outwards. 19. Which of the following statements is a positive statement? a) Bankers' bonuses should be taxed. D) The eurozone ought to allow member countries in difficulty to stop using the euro and use currencies of their own instead. c) One of the largest industries in the UK is the financial services industry. d) The UK government ought to split up some of the largest UK banks to promote more competition in the banking industry. 20. Suppose you buy Economics book by Abigail Padi. What is the opportunity cost of your purchase? a) The money you paid for the book. b) Whatever you would have spent the money on if you had not bought the book. c) The cost of producing the book. d) The time…How does high inflation lead to a recession in the country? Explain the role ofthe Government and the Central Bank to address the economic recessionproblem by using appropriate fiscal and monetary policies.8. You are given with some economic data of Economy A in 2021. Answer this question using the economic data given. Economic data Economy A Nominal GDP growth rate 300% Real GDP growth rate 2% Identify the major short term economic problem facing Economy A. Provide evidence from the table to support your answer. а. b. What is the main cause for the problem in part a? Explain how it leads to the problem. Suppose you were the chairperson of the central bank, what kind of policy с. could you adopt to tackle the problem in part a? How does the policy work? Explain your answer.
- c.Explain in detail, 4 possible causes of change in the direction of the business cycle. You are looking for things that are out of the control of the government. Do not talk about fiscal or monetary policy tools here. Don’t say inflation or recession!What is a key distinction between monetary policy and fiscal policy in economic management?A. Monetary policy involves government spending and taxation, while fiscal policy focuses on interestrates and money supply.B. Monetary policy is set by the central bank, while fiscal policy is determined by the government'sbudget decisions.C. Monetary policy primarily influences employment and economic growth, while fiscal policy mainlyaffects inflation.D. Monetary policy is a short-term strategy, while fiscal policy is a long-term approach to economicmanagement.a. Examine the fundamental causes of a nation’s business cycle fluctuations. Also, examine the relationship between total spending by government and consumers in a nation and the location of the countries’ GDP on the business cycle. b. 1. Suppose you have $200,000 in a bank term account. You earn 5% interest per annum from this account.You anticipate that the inflation rate will be 4% during the year. However, the actual inflation rate for the year is 6%.Calculate the impact of inflation on the bank term deposit you have and examine the effects of inflation in your city of residence with attention to food and accommodation expenses. 2. The Australian Bureau of Statistics (ABS) reported in May 2017 that the civilian population in Australia over 15 years of age was 20.8 million.Of this population of 20.8 million Australians, 13.5 million were employed and 0.7 million were unemployed.Calculate Australia’s labor force and the number of people in the civilian population who were not in…
- Credit Market A. Plot the credit demand and supply curve in a figure. Specify the equi- librium real interest rate (r*) and the equilibrium quantity of credit (B*) in your figure. B. Everything else remaining unchanged, what is likely to happen to the credit market if the following scenario occurs? Separately and graphi- cally show the change of each scenario. Specify the new equilibrium in the credit market. B.1 Businesses in the economy see scope for growth and are planning to expand production in the future. B.2 Households expect a recession in near future. B.3 The government is planning to borrow money from financial in- stitutions for investment in infrastructures.1.Which of the following ideas from prominent economic thinkers is the oldest? a.Control of the money supply is the most effective economics stabilisation policy. b.The government can take on a role smoothing out economic fluctuations. c.Specialisation and trade is the source of wealth creation. d.workers will eventually rise up in revolution and take over the means of production.What is money, according to Adam Smith? Is it an economic instrument that creates wealth, or inequality? Describe 1 argument and make explicit reference to an idea from The Wealth of nations?