Central Bank College Essays Samples For Students

The European System of Central Bank (ESCB) is governed by European Central Bank (ECB) and the National Central Banks (NCB) of European Union Member States. European Central Bank is the Central Bank of Europe Zone. ESCB is governed by the governing council and other decision making bodies of ECB. The governing Council is responsible for making monetary decisions and the Executive Board is empowered to implement monetary policy as per the framework of decisions laid by the Governing Council. Just like any other Central Bank, the core function of ECB includes maintain price stability of the local currency in ...

Introduction:

Monetary policy refers to the strategy undertaken by a country’s monetary authority to control money supply usually by targeting the interest rate to facilitate economic growth and stability. The Australian government charges the Reserve Bank of Australia with the responsibility of maintaining sustainable economic growth, high employment rate and steady prices. In other words, the RBA strives to achieve the goals of full employment and non-inflationary level of total output. To accomplish these objectives, the RBA closely monitors the economy and puts in places policies to either increase or decrease the amount of money circulating in the economy. Consequently, ...

Introduction

In order to ventilate on whether poor countries around the globe get richer, the author explores the possibility that poverty trips exist, and they ensure that even if the economic performance of poor countries is at par or even better than that of rich countries over a similar period, poor countries remain poor over time. I argue that the possibility of poor countries getting richer is impeded by protracted periods of negative economic growth and stagnation in the national incomes.

Discussion

The economic growth of a country is influenced by many factors, among them, per-capita income. Per capita income is very potent ...

Introduction

Monetary policy is the endeavor by the federal or state government to control the amount of money circulating within an economy. These control measures are undertaken to cub the instances of inflations or to control the interest rates to sustainable levels. Monetary policies can either be expansionary or contractionary. Expansionary monetary policies are meant to expand the supply of money to the economy thereby boosting the economic activities (Afonso, 2012). Expansionary monetary policies also lead to a reduction in average interest rates. Contractionary monetary policies, on the other hand, are macro-economic tools used by the federal or the state ...

Gupta and Goldfajin defined a tight monetary as “a case in which real interest rates in the aftermath of the crises are higher than the average real interest rate during the 24 months preceding the crises”(Goldfajn and Gupta, 1999, p.4). The primary objective of ensuring that the monetary policy is tightened is to make sure that the supply of money in the economy is reduced and also to ensure a conducive environment for businesses. For a commercial bank to lend money, there are a lot of factors that it considers. Some of the factors include the volume of ...

Introduction

The actions taken by the Reserve Bank of Australia to influence the cost and supply of money in the economy are referred to as the monetary policy. The main tools through which the monetary policy influences the market operations is the interest rate that is paid on the loans from the money market. Manipulating the interest rate is the main tool of RBA to influence its monetary policy. RBA is the central bank of Australia; and it is the role of the central bank to ensure price stability by controlling the supply of money. So, a stabilizing role is played ...

The financial crisis post 2008 forced regulators to consider unconventional steps in monetary policy. At first, the US Fed used various tools in its economic arsenal to set the country on a fast growth path and to prop up the inflation numbers that would indicate an enhanced demand of goods and commodities. When everything failed, the US Fed and the Government decided to go ahead with a plan called Quantitative Easing. The plan simply consisted of buying bonds and other government securities by printing money which would introduce money into the system, keeping some other factors constant. This method ...

Introduction

Situated between the North Atlantic and Arctic Ocean, Iceland is one of the Nordic countries falling into the European continent. The population of the country is 321,000 and the total area of the country is 40,000 sq. mile. Iceland is the least densely populated country in Europe. The capital city of Iceland is Reykjavik which is also the north most capital city in the world. In 2008 when a global financial meltdown started in US after the bankruptcy of Lehman Brothers, Icelandic economy was hurt badly by the crisis. This resulted in the whole banking sector of Iceland ...

ABSTRACT 3

INTRODUCTION
Background 4
Information Sources 4
Limitations 4
ANALYSIS
Quantitative Easing 5
Third Round of Quantitative Easing 7
Fiscal Cliff 8
European Debt Crisis 9
CONCLUSION 12

REFERENCES 13

Abstract
In is an analysis of the government’s role in the economy is presented. The articles from Economist.com namely, The Federal Reserve launches QE3 and The ECBs Bond-Buying Plan were analyzed in light of the theories and principles in Economics.
The themes of the two articles focused on the two Central Banks’ (the Federal Reserve and the European Central Bank) ...

1. Misconceptions
Money generation remains central to economic activity. The process of how money is generated / created and destroyed is not, in fact, readily understood and is subject to numerous misconceptions. If anything, main conceptions about money creation and destroy assumes a linear conceptualization mode. Typically, money is widely – but mistakenly – believed to be created and destroyed by a direct relationship by which an owner places money deposits in a financial institution which, sooner or later, lends money to borrowers and hence creates more money. In modern era, particularly in a global financial system in which financial transactions ...

Introduction

The economic objectives of growth, stability and development can be achieved in an economy through two major forms of economic measures, monetary measures and fiscal measures. Thus monetary policy and fiscal policy forms the two primary pillar of economic action by the state.

Tools of Monetary Policy

Monetary policy achieves the objective of price stability and growth by controlling the monetary variables in the economy. The monetary authority of the country, the central bank, controls the money supply and demand in the economy through various monetary tools at its disposal. These tools include the interest rate; cash reserve ratio and open market operations . ...

Indian Rupee value against U.S. Dollar is hitting all time low. For past few months a significant down fall has been noticed in the value of Indian rupee. In the month of August value of rupee against USD reached to 68.8 by touching all time low. Reserve Bank of India took several steps to control the down fall of rupee in order to protect economic balance. This paper intends to discuss causes and effects of Indian rupee depreciation. The paper will further elaborate benefits of depreciation to Indian economy, internal and external factors, and necessary measures, to be taken by ...

Most of the central banks in many countries have almost similar structure. However, the Federal Reserve System in the USA has a totally different structure. Federal Reserve System was created in 1913. The reasons as to why it has 12 Regional Federal Reserve Banks can be traced to the American political history .

Before the Federal Reserve System, there was fear in America, in the political arena, of centralized power. The Americans had a great resistance towards setting up of a central bank. They also had a high doubt on the moneyed interests upon which central banks were formed. This distrust had led ...

Problem 1

In a fixed exchange rate regime (also known as pegged exchange rate), official exchange rate is tied to the exchange rate of another country. In some cases, it can be tied to the prices of gold. Free floating exchange rate changes freely and is determined by the demand and supply of that particular currency relative to other currencies. In the managed floating system, central bank at some frequency often intervenes not to allow the exchange rate getting away to some unexpected level.
The fixed exchange rate system keeps currency value within a narrow range, whereas currency value can be volatile ...

Introduction. 3

Expansionary monetary policy.3
Contractionary monetary policy3
Australian monetary policy3
Objectives of Australian monetary policy.4
Australian Monetary policy framework4
The decision process in monetary policy...5

Monetary policy implementation in Australia5

Transmission of Monetary policy to Australian economy.6
Conclusion .7
Introduction
The monetary policy is a policy that is used by the monetary authority of a given country to control the money supply in the economy. This policy frequently targets a certain interest rate with an objective of promoting economic stability and growth in an economy. The official goals normally include relatively low unemployment and stable prices. This policy can either ...

Since the Great Depression, economists have been arguing about Keynesian and Monetarist Theories. They argue which theory was best suited based on its infrastructure for the situation. It causes them to argue today on which theory would be best for the nation’s economy. While the two theories overlap slightly, they are vastly different, with one focusing on the economic stimulation the central bank can provide, and the other focusing on the central bank’s monetary supply. While both have faced criticism, and both have been used to manipulate the country’s economy, it seems Keynesian Theory is best ...

Introduction

Monetary policy refers to those policy measures targeted at achieving desired economic outcomes through money market operations. Authorities in charge of money market control use different policy instruments to control the money supply in order to achieve suitable market prices as well as stability in the national economy. The key instruments at disposal for those authorities include open market operations, minimum reserve ratio as well as bank rate. However, the policy instruments application does not have a direct impact on market prices and demand but follows a transition mechanism from the authorities’ actions to the desired economic results. In that respect, ...

Introduction

Current problem: Greece’s economy was in the brick of falling and other nations had to look for a way to stabilize their economy.
Thesis statement: During an economic meltdown, there is no winner or loser since it affects everyone in one way or another. Coming together to save a failing economy is the only way out of a financial meltdown

Background

Greece was heavy in debt and could not borrow more to settle its creditors. The failing economy spiked major concern to its investors (Mattich, Could Greek Deal Be Bad For Eurozone Growth? par 1).
Major Point 1: Despite ...

The article being summarised is titled ‘Global Currencies Soar, Defying Central Bankers’ that appeared in The Wall Street Journal on March 17, 2016. The article discusses various actions by different central banks and the impact that such actions have had on the market.
The article states that recent efforts by central banks to depreciate their currencies by decreasing interest rates have not yielded much result and the currencies have in fact appreciated during the period.
The cases in example are of Bank of Japan and ECB cutting rates into negative territory, but Yen and Euro still appreciating against US ...

Introduction

A firm well established in the market with impressive revenue returns and profit cannot consider its challenges to be over. A firm has to long-sighted in planning its operation strategies. A firm has to face a number of changes in its exogenous environment. Such changes can be brought about from a number of sources. There can be increased competition from entry of other firms into the industry. This entry can eat upon the profit of the incumbent firms. Government policies related tax, subsidy and market control also affects the firm. Even the policies related to foreign trade can affect ...

Introduction

The Foreign Sovereign Immunity Act is a law that has been codified in the United States that was specifically made to establish the grounds and limitations as to whether a foreign entity, or a foreign sovereign nation at that, can be charged and be subject to trial in a U.S. federal or state court . Apart from being a common legal ground for various legal cases that mostly involve multi-national entities or those that have different international origins, the Foreign Sovereign Immunity Act (FISA) may also be used as a strong basis—in fact, in many legal cases, it the Act is being used as the sole ...

Inflation targeting and Interest rate targeting are two primary and most popular monetary policies across the globe today. Inflation targeting can be defined as a central bank policy that revolves around meeting and adhering to preset and publicly displayed targets for the annual rate of inflation (investopedia 2013). The benchmark used for inflation targeting varies from country to country but is some form of price index of a variety of consumer goods. Most commonly this benchmark is Consumer Price Index (CPI). While Interest rate targeting as a monetary policy regulates and checks the interest rate charged by one depository institution on an ...

STATEMENT TO BE SIGNED BY EACH STUDENT

1. I have read the section on plagiarism that appears on the reverse side of this sheet.
2. In my assignment I have carefully acknowledged the source of any material which is not my own work.
3. I am aware that the penalties for plagiarism can be very severe, including withdrawal of permission to enrol in the University.

REVIEW ESSAY QUESTION (20% of Unit Marks, 1,500 word limit)

Using the two papers by Rousseau and Sylla, what lessons can be drawn by emerging markets economies from the experiences of the countries covered? In your answer, include issues relating to the creation of a viable financial system (and the ...

Recently, China has recorded a remarkable growth in its economy of nearly 10% per year. The bulk of this growth comes from the banking sector characterized by poor asset quality, low capitalization, and massive state intervention. For this reason, the government introduced sweeping changes to the financial sector to boost its stability. These changes included transforming the banking sector from a policy-driven, state-owned, non-performing system to a profit-driven, multi-ownership, competitive system. Although the sector has recorded marked improvements in its operation and efficiency, additional efforts is needed to deal with problems revolving around non-performing loans and shadow banking. The ...

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Money and its Functions

Introduction
Money is an integral and essential part of the financial system in each country. The United States dollars, Russian rubles, British pounds or French francs - money serves as the means of payment and the measure of value in all economic systems. In this paper, we try to consider the nature of money, their economic importance and the factors that determine their amount (mass). We will attempt to show how great is the economic importance of the money exchange and the significance of the role that money plays in economic policy development.
Money ...

The article on ‘What is Quantitative Easing?’ published by The Economist on March 09, 2015 explains the shift in monetary tools used by central banks around the World from conventional rate cuts and increases to more modern tools such as Quantitative Easing (QE). The article explains the process and working of QE and examines its utilities as a long term option for central bankers.
The article starts off with explaining that before the 2008-09 financial crisis, central banks could just alter interest rate to modify demand and supply of money in the economy. This rate adjustment factored in growth ...

The Mexican peso in this case appreciates in relative to the US dollar, is of great benefit to the Mexican production industries. This is because the cost of exports will raise thus increase in profits for the Mexican industries. Mexican products too will be competitive in the international market as the production cost does not exceed the sale value of the product. US investment in Mexico will increase due to certainty of the value the peso and the higher inflation rate of Mexico than that of US. Foreign exchange risk is minimized as investors are able to eliminate all ...

Introduction

Lender of Last Resort (LLR) refers to an institution, commonly a country’s central bank, which offers loans to the banks and other financial institutions experiencing financial difficulties during the financial crises. As the lender of last resort, the central banks provide loans to the banks and other financial institutions to mitigate and prevent the financial crises. According to Kindleberger, the goal of the lender of last resort is essentially to prevent the financial panics as well as bank- runs that spread from one bank to another due to a lack of liquidity. The lender of last resort convinces individuals that ...

Abstract

The US Federal Reserve and the European Central bank perform the function of formulating the monetary policy of US and Euro zone. The banks use different tools to formulate the policy as discussed in the paper. The structures of these banks are analyzed. The two banks have recently adopted different security policies that have caused the US treasury to run out of funds. Federal Reserve together with other banks plays a role of controlling the money supply, and this means that the banks shape the financial system of the world. A policy adopted to delay dividends shows that these banks ...

The European Debt Crisis or the Eurozone Crisis of 2007 up to the present time is considered as one of the major declines of the European market since the inception of the European Union in 1993. What was considered an ideal move to unite the integrating the European countries into one currency, it became a disaster that has made these same integrating countries experience bankruptcy due to the depreciating rate of the Euro. Not only did the crisis escalate into financial debt and economic instability, it had also influenced as to how the European Union competes with the international market ...

Japanese Economy in the Recent Years

Introduction
During the advent of economic downturns particularly in terms of financial crises or bubbles, the usual resort of the government is to rely primarily on its monetary tools alongside expansionary fiscal policies to stimulate the economy.
Monetary policies are tools used to deal with inflation, budget deficits, unemployment, incomes, international economic relationships among others. Monetary policies have profound effects on our jobs, incomes, livelihood, and career choices.
One of the considerations and is always on the watch in an economy is the behavior of prices of the goods and services. As the law of demand states that with ...

In America, central banking was introduced in 1913 with the establishment of the Federal Reserve System, based in Washington DC (Federal Reserve 10). Congress passed an Act that addressed the need for a central bank that ensures a stable, safe and flexible financial mechanism. The Federal Reserve provides oversight and regulatory functions over banks to protect clients, manages risk, implement monetary laws that boost the economy and offers services to government institutions (Federal Reserve 10).
Based in London, the Bank of England is the central bank of the United Kingdom and it manages the central accounts of the government ( ...

Introduction

Monetary policy is the process of government control on the economy through monetary instruments. The monetary authority in the economy uses the tools of monetary policy to affect demand and supply of money with the objective of fostering growth and maintaining price stability in the economy along with financial market stability. The instruments of monetary policy include rate of interest and open market operations. In this paper we attempt to show that monetary policy is effective in the short run but not in the long run. We use two different models to establish our argument, the AD/AS model and ...

Complexities of U.S. Financial System
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U.S. Financial System
U.S. Financial System is made up of numerous different markets for diverse products offered on a various trading platforms and exchanges. Among the many products traded are stocks or equities, fixed income securities, foreign exchange, commodities, derivatives etc. Financial market helps to keep the wheels of the economy moving by allowing individuals and businesses either to invest their excess funds in different products or to sell their products to raise cash when they want to. That is the market offers liquidity- the ease of buying and ...

Introduction

This is the central bank of Australia and its head office is in Sydney. This bank was established at the end of 1959, under the Reserve Bank act of 1959, but became effective in 1960. It assumed the central banking functions, which previously were a responsibility of the Commonwealth Bank of Australia. The bank’s main responsibility is setting the monetary policy of the country, besides other responsibilities. The bank is owned by the government of Australia (rba.gov.au).

Body

The bank has two boards; the Reserve Bank Board (deals with the bank’s monetary and banking policy), and the Payments System ...

Biography for Janet Yellen

Janet Yellen was born on August 14, 1946, in Brooklyn, New York. Her mother was a teacher and the father a doctor. She attended Fort Hamilton High school. She excelled in many subjects and became the editor of the institution's newspaper and graduated as a valedictorian in 1963. She then attended Brown University and obtained a bachelor’s degree in economics in 1967. She proceeded to Yale University and received a Ph.D. in 1971. She married George Akerlof, a professor at the University of California at Berkeley and an economic noble prize winner in 1978. Yellen has one adult ...

Abstract

The current paper explores the main differences of the Great Recession in 2007-2009 from other economic collapses in the history if the United States. Section I discusses the general features of a recession and describes the main responsibilities of the National Bureau of Economic Research. Section II is devoted to the comparison of the Great Recession with the recession of 1980s. The section is divided into four subsections. Subsection A presents the basic comparison of recessions in the U.S. history and explains the choice of the 1980s period for the further comparison. Subsection B explores differences in unemployment in ...

The question of minimum wage introduction for low-skilled workers offers conflicting research findings. Some theorists suggest that the introduction of minimum pay for low-skilled labor may affect the whole employment. However, the general model of competitive market for labor assumes that the introduction of minimum wage will cause job loss among the low-skilled employees. This report is dedicated to the economic analysis of this model.

What Economic Theory Predicts Will Happen

The simplest approach includes the analysis of one separate labor type. In such market, the minimum wage that overshoots the competitive equilibrium in the market causes harm to employment from two standpoints. First of ...

The economies of Canada and the USA are the most developed ones in the whole American continent. The two nations have very intensive economic ties. Furthermore, the whole scope of relations between Canada and the USA is at such intensive level that these two countries will inevitably cooperate, and to understand the possible ways of the development of their economies we should figure out their current situation in financial sector.
Canada is a developed market economy with less government regulation than in Europe, but slightly higher than in the United States. Canada is a member of the Organization for ...

Article Review

In spite of the good performance of the housing sector and creation of considerable number of new jobs in the US economists have expressed apprehensions that the economy is approaching a recession . This fear is based on some indicators that have shown weakness in recent times. The growth rate has stagnated in the last quarter of 2015 are quite a low rate. It has become more difficult for the large businesses to take loans from the banks as the norms for taking loans have tightened. Profits of the corporate sector are sinking. Both the manufacturing and the non-manufacturing index ...

Article Review

Article: Unfamiliar Ways Forward, The Economist, Feb 20, 2016
Question 1:

Answer:
In spite of the job growth and favorable performance of the housing sector in the US the growth has been sluggish. In fact growth seems to have stagnated at a low level as indicated from the last quarter of 2015 . Activities in both the manufacturing and the non-manufacturing sector have slowed down as indicated by the Institute of Supply Management (ISM) indices for the manufacturing and non-manufacturing sector performance. Both the indices have some down. Profits in the corporate sector have come down. Taking bank loans have ...

THE ROLE OF GOVERNMENT IN A MARKET ECONOMY

Introduction 2
What is Different Happened in 2008? 3
The Monetary Policy’s Contribution 6
Looking for Guilty Agents or Guilty Ideas in the Economies 7
An Important Example for the Developing Countries: the Egyptian Economy? 8
Conclusion 9

References 12

THE ROLE OF GOVERNMENT IN A MARKET ECONOMY
Introduction
The first economist believed in the full competition. Adam Smith expressed that there is a perfect system in the economy similar to the perfect system in the universe. As the God does not intervene the system in the universe after the creation, the state or ...

Forecasting a Speedup in Growth, the Fed Again Cuts Bond Purchases

Quantitative Easing Program of Federal Reserve Bank:
The article discusses the decision of the Federal Reserve Bank to taper the bond buying program and its effect on the US economy recovery and its other macro-economic decisions. The Federal Reserve took the much expected decision to cut down the bond buying program by another $10 Billion a month, restricting the bond purchase activity to $45 Billion a month from May, 2014. In response, the Federal Reserve declared that it was looking past the economic slowdown during an unusually cold winter because growth already was rebounding and with growth activity picking up ...

A review of 'Trends in the Funding and Lending Behaviour of Australian Banks', Reserve Bank of Australia, Research Discussion Paper, RDP 2013-15, December 2013.

In their article 'Trends in the Funding and Lending Behaviour of Australian Banks', Reserve Bank of Australia, Research Discussion Paper, RDP 2013-15, December 2013; Stewart, C., Robertson, B. and A. Heath, discusses the lending and funding behavior of Australian banks. They acknowledge banks as the foremost intermediaries between the numerous agencies of the economy. In a specific term, banks allow for transactions between the stake holders in the economy of Australia by either offering loans and ...

Nation-States

A nation-state is also known as a country. It is crucial to note that that the term state, nation, and country are used interchangeably but technically have different meaning. A nation is used to refer to a group of people of a given ethnicity despite not owning a country. This means that a nation referred to a given cultural identity of a group of people (Hansen, 2012, p.25). A state can be classified as a form of political authority that is part of a country and constitutes a given political authority. Thus, the term nation-state is functional because it gives people a sense of nationalism. All nation-states around the globe ...

Foundation Course

Inflation in the United States
Before the Second World War, the price level in the U.S. has been relatively stable, with the exception of episodes of hyperinflation associated with the financing of the U.S. War of Independence (1775-1783) and the Civil War (1861-1865). Typical were also periods of negative inflation (deflation) during the economic crisis, in particular 1840-x, 1870-x, the Great Depression. After the Second World War has been a steady increase in the price index. The period of significant inflation lasted from 1973 until the early 1980s. Usually it is associated with an oil embargo by OPEC countries. ...

1.
a) Find the U.S. inflation rates between 2002 and 2007 from the IMF website and calculate the Purchasing Power Parity (PPP) exchange rates for Countries A, B, C and D in the case study. (The inflation rate in each country in the case can be calculated from the Consumer Price Index. For Example: inflation rate for country A=14.7%= 132.9 – 115.9 /115.9
[20 marks]
b) Did Purchasing Power Parity theory hold in these countries? Which currencies are over- or under-valued against the US dollar?
[4 marks]
c) Find the U.S. dollar lending rates (prime rate) between ...

The Eurozone crisis began as early as 2005. The problems were mostly related to internal economic problems mainly low productivity. The crisis took a plunge in 2008 as many financial institutions in the US—like Lehmann Brothers—collapsed. Many governments and banks lost their investments in these institutions. In turn, these governments and banks began to fail in paying for their own loans. Because they were unable to pay their debt, they could not find any source of funding so entire economies.
The economic crisis was not solely the result purely of the collapse of financial institutions. Some economies— ...

Europe fell in a deep recession together with the entire globalized world due to the so called subprime mortgage crisis. However, while the US is managing to recover its economy and it’s now growing at a sustainable rate, Euro Union is somehow struggling in returning at a pre-crisis level and it is actually facing a second recession (so called “double dip”) that is affecting mainly the countries of the South Europe. Since 2010 thus, Greece is having major problem in rolling over its sovereign debt and it had to obtain a bail-out from the other European countries. Similar destiny has occurred to Portugal ...

Introduction

Bank typology has grown more complex as more formerly niche banking services gain greater customer bases, encouraging different banks to shift focus from the traditional retail banking format to a more complex and specialized arrays of banking services. Moreover, large banks, particularly multinational companies, maintain their retail operations while serving non-retail accounts, such as businesses, investors, and purely online customers (Pritchard, 2016). Further, certain organizations offer banking-like services to its members, such as credit unions and savings and loans associations (S&Ls). Thus, to manage this typological complexity, this explorative paper covers only primary forms described in its most typical ...

The development of financial markets in a country does increase its productivity. A financial market is a venue for the transfer of funds from those with excess capital or funds to those who are in need of the same. A developing financial market may help an economy prosper and become more productive in several ways. In the capital markets, enterprises wishing to secure more funds for operations and expansion can obtain funds by holding an initial public offering or an “IPO”, thus becoming a public organization. It is then bound by the designated financial and commercial laws of the ...

Abstract

In most economies, the resources are scarce and limited which calls for proper planning and allocation of the limited resources. Economic operations of a particular region are represented in the circular flow of income, whereby various sectors of the economy are represented. In the flow, all the players have their specific roles to enhance the optimization of the resources available. As enterprises and firms are going global, there are benefits and costs associated with the move, which calls for planners and economists in the enterprises undertaking the move to analyze the world market consciously.
In this article, various economics ...

Question 1

Financial markets are the channels dealing with funding of money in case of a deficit on the borrowers in the enterprise by direct financing such as selling them as securities. Central bank regulations and government intervention help in the control of monetary policy and interest rates in the economic markets. Having full control over monetary policies will ensure that inflation rates are reduced. As discussed in class, a reduction in monetary policy sinceJanuary 2016 had a great impact on the euro zone currency as investors in the foreign market increased their purchases due to the currency protection not to ...

Q1. Identify two strategies based on the fiscal and monetary policy that would encourage people to spend money in order to create economic growth.
Fiscal and monetary policies are demand side policies that can be strategically employed for realizing economic growth by motivating consumers to spend money. It can be made possible by brining an increase in aggregate demand (AD) if the economy is passing through recession or growth is below the expected level (Pettinger, 2012).
Monetary policy can be the most randomly used tool for impacting economic activity. To encourage AD, the Central Bank of a country can ...

The main objectives of any government include attaining a high level of growth rate, keeping the level of unemployment low, maintaining a robust balance of payments, and controlling the inflation. In 2015, the Canadians changed the country’s leadership by electing a new liberal government. One of the reasons that made them do this was poor economic performance. In particular, the Canada’s economy fell into a recession due to the crash in the international oil prices in 2014. The new government has promised to resuscitate Canada’s economic growth by heavy spending in the infrastructure. The Canadians have ...

Introduction

Full employment is defined as the stage at which all the resources of an economy are engaged in the production of output. Generally, an economy is said to be at full employment when the rate of unemployment is in the range of five to five and a half percent and the capital utilization capacity is at 85 percent (Mathews, 2015). Full employment is beneficial to the economy since the resources are used to produce goods that satisfy the needs of the users thus reducing the problem of scarcity. There is a correlation between full employment and natural unemployment. The ...

Abstract

Inflation more often than not is regarded as a bad economic occurrence where prices of commodities and the general cost of living rise. However, inflation also brings positive economic growth and development. Analysts argue that inflation that is regulated presents several benefits for economic growth and development on one hand while on the other factions have refuted claims to the fact that inflation can be utilized to provide any benefits for the economy. Based on an article by Kenneth Rogoff the paper argues for and against the viewpoints of various authors in regard to the benefits visa-vis the disadvantages of ...

Chapter 10

Question#1: Use Keynesian cross to explain why fiscal policy has a multiplied effect on national income.
Answer: The equation for calculation of national income under Keynesian model is Y=C+I+G+(X-M). In this formula, the Y denotes national income, C denotes level of consumption, I denote level of investment done in the economy, G denotes government’s expenditure, X denotes imports, and M denotes imports of an economy. With the help of this formula, the governments drive fiscal policies for the economy. With the help of this equation, it has been said by Keynes himself that when the ...

Introduction

Economic growth an increase in the country’s national income measured over a period. Gross National product and Gross Domestic product are the key measuring indicators that define a country’s growth status based on utilization of resources by the population for productivity. Increase in technological infrastructure facilitates quality production, minimizes waste and costs. According to economic theorists, a country is presumed to attain economic growth when their resources are fully employed in sustaining the social and economic welfare of every citizen (Jones 2002). As result, the role of every rational government is to maintain its citizens through allocation of scarce resources ...

Chapter 10:

Question1.
As government expenditure increases, the income increases. This increase in income leads to a rise in consumption expenditure. A 1 unit rise in income leads to a rise in consumption by the marginal propensity to consume. As consumption expenditure increases, this induces further increase in output in the economy. So income increases. The increase in government expenditure creates a multiplier effect. This multiplier depends on the marginal propensity to consume (MPC). Higher the MPC higher is the multiplier effect.

The money market is at equilibrium when the demand for money equals the supply of money. The demand for money has ...