...| Inflation and Government Economic Policies | M3:A2 | 5/1/2013 | | ECO 201 M3:A2 5/1/13 1. What is inflation? Inflation is an increase in prices for goods and services (What is Inflation?). What are the causes of inflation? Inflation has a variety of possible causes, but they are between the Keynesian and monetarist theories, ranging between demand-pull, cost-push, built-in inflation, and the quantity model. With demand-pull, inflation is caused by aggregate demand being more than supply. With cost-push, inflation is caused when manufacturers and businesses raise prices due to shortages in order to balance increases in production costs. With built-in inflation, inflation occurs due to prior increases in prices caused by demand-push or cost-pull. And with quantity, inflation is caused by having too much money in the economy (What Causes Inflation?). Is inflation desirable and what can be done to control inflation in a market economy? Inflation is desirable when it is low, because low inflation represents price stability which is perfect for productive planning and investment. There are many ways to control inflation in a market economy which varies between a Keynesian and monetarist approach. Using a Keynesian approach, the government would get involved by breaking up monopolies, regulating commodity prices, and controlling wage levels, while using a monetarist approach, the government would make changes in policy in order to control the amount of money...
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...general price level. For the expansion of the early universe, see Inflation (cosmology). For other uses, see Inflation (disambiguation). Economics 2011 World GDP (PPP) per capita by country 2012 World GDP (PPP) per capita by country Index Outline Category History Types Classification History of economics Economic history (academic study) Schools of economics Microeconomics Macroeconomics Heterodox economics Methodology JEL classification codes Theory Techniques Econometrics Economic growth Economic system Experimental Mathematical Game theory National accounting By application Agricultural Behavioral Business Computational Cultural Demographic Development Ecological Education Environmental Evolutionary Expeditionary Geography Health Industrial organization Information International Labour Law Managerial Monetary / Financial Natural resource Personnel Public / Welfare economics Regional Rural Urban Welfare Lists Economists Publications (journals) Portal icon Business and economics portal v t e In economics, inflation is a sustained increase in the general price level of goods and services in an economy over a period of time.[1] When the general price level rises, each unit of currency buys fewer goods and services. Consequently, inflation reflects a reduction in the purchasing power per unit of money – a loss of real value in the medium of exchange and unit of account within the economy.[2][3] A chief measure of price inflation is the inflation rate,...
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...IB Diploma Paper 1 (SL and HL) markschemes Examples of markschemes for Exam practice: paper 1 in the Economics for the IB Diploma CD-ROM are provided below. Paper 1 section A: Microeconomics Chapter 2 Competitive markets: demand and supply SL/HL core topics Part (a) questions 2.3 (a) Answers may include: • Definitions of demand and quantity demanded. • Theory of demand: law of demand with reference to changes in demand and factors that can cause changes in demand. • Demand and supply diagram showing initial equilibrium price and quantity, and a leftward shift in the demand curve, resulting in a lower equilibrium price and quantity and showing that there is no contradiction. • Examples of demand curve shifts and movements along a demand curve. Answers may include: • Definitions of supply and quantity supplied. • Theory of supply: the law of supply with reference to changes in supply and factors that can cause changes in supply. • Demand and supply diagram showing initial equilibrium price and quantity, and a rightward shift in the supply curve, resulting in a lower equilibrium price and greater equilibrium quantity. • Examples of supply curve shifts and movements along a supply curve. Answers may include: • Definitions of normal good, excess demand, reallocation of resources. • Theory of demand and supply with reference to excess demand, the factors that can cause shifts in the demand curve and the role of price as a signal and ...
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... |Topic |Page no. |Remarks | |1 |Acknowledgements | | | |2 |Introduction | | | |3 |Effects of inflation | | | |4 |Causes of inflation | | | |5 |Controlling inflation | | | |6 |Current situation of inflation in India | | | |7 |Extracts of the Reserve Bank of India’s document released on | | | | |July 28, 2008 | | | |8 |Measures to control inflation | | | |9 |Future inflation | | | |10 ...
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...Studies INFLATION IN VIETNAM OVER THE PERIOD 1990-2007 A Research Paper presented by: Bui Thi Kim Thanh (Vietnam) in partial fulfillment of the requirements for obtaining the degree of MASTERS OF ARTS IN DEVELOPMENT STUDIES Specialisation: Economic of Development (ECD) Members of the examining committee: Dr. Karel Jansen Dr. Lorenzo Pellegrini The Hague, The Netherlands November, 2008 1 Disclaimer: This document represents part of the author’s study programme while at the Institute of Social Studies. The views stated therein are those of the author and not necessarily those of the Institute. Research papers are not made available for circulation outside of the Institute. Inquiries: Postal address: Institute of Social Studies P.O. Box 29776 2502 LT The Hague The Netherlands Kortenaerkade 12 2518 AX The Hague The Netherlands +31 70 426 0460 +31 70 426 0799 Location: Telephone: Fax: 2 Table of Content Chapter 1 INTRODUCTION 1.1 BACKGROUND AND STATEMENT OF THE PROBLEM The period 1980-1984 The period 1985-1989 The period 1990-2007 1.2 OBJECTIVE AND SCOPE OF THE PAPER 1.3 APPROACH OF THE PAPER AND DATA 1.4 STRUCTURE OF THE PAPER Chapter 2 THE THEORETICAL AND EMPERICAL FRAMEWORK 2.1 THEORETICAL CONSIDERATION 2.1.1 Demand-pull inflation 2.1.2 Cost-push inflation 2.2 APPLICABILITY OF THE THEORIES IN THE CASE OF VIETNAM 2.3 EMPERICAL EVIDENCES Chapter 3 ANALYSING INFLATION IN VIETNAM AN OVERVIEW OF VIETNAM’S ECONOMY FROM 1990-2007 VIETNAM’S INFLATION OVER...
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...University of Dhaka A Report on “Inflation: Perspective Bangladesh” Date of Submission: May 26, 2011 A Report on “Inflation: Perspective Bangladesh” Course no. & name: F-203-Macroeconomics Submitted to: Mohammad Salahuddin Chowdhury Lecturer Department of Finance University of Dhaka Submitted by: Group: Morning Stars Sec-B BBA 16th batch Dept. of Finance University of Dhaka Date of Submission: May 26, 2011 Group members are Name | Roll | K. M. Najmus Sakib | 16-020 | Mobasheera Tasnim | 16-052 | Md. Kamrul Islam | 16-090 | Rajib Kumar Deb | 16-106 | Shaykha Sultana | 16-160 | Md. Shamsul Alam | 16-172 | Letter of Transmittal May 26, 2011 Mohammad Salahuddin Chowdhury Lecturer Department of Finance University of Dhaka Subject: Submission of a report on “Inflation: Perspective Bangladesh” Dear Sir, We are presenting a report on “Inflation: Perspective Bangladesh”. In this report we have included various methodologies to explain the current scenario of inflation in Bangladesh. In making the study, we had to take help from the various sources of internet, different institutes and class lectures of our course teacher. We are grateful to them for extending generous help. We acknowledge the contribution of our course teacher heartily. We have tried to use our academic knowledge in real life. We are pleased to be granted this vital opportunity and grateful for your versatile assistance. We hope that our work...
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...revenue (taxation) and spending policy designed to: (1) counter economic cycles in order to achieve lower unemployment, (2) achieve low or no inflation, and (3) achieve sustained but controllable economic growth. In a recession, governments stimulate the economy with deficit spending (expenditure exceeds revenue). During period of expansion, they restrain a fast growing economy with higher taxes and aim for a surplus (revenue exceeds expenditure). Fiscal policies are based on the concepts of the UK economist John Maynard Keynes (1883-1946), and work independent of monetary policy which tries to achieve the same objectives by controlling the money supply. Stances of fiscal policy The three possible stances of fiscal policy are neutral, expansionary, and contractionary. The simplest definitions of these stances are as follows: • A neutral stance of fiscal policy implies a balanced budget where government spending equals tax revenue. Government spending is fully funded by tax revenue and overall the budget outcome has a neutral effect on the level of economic activity; • An expansionary stance of fiscal policy involves government spending exceeding tax revenue; and • A contractionary fiscal policy occurs when government spending is lower than tax revenue. However, these definitions can be misleading because, even with no changes in spending or tax laws at all, cyclical fluctuations of the economy cause cyclical fluctuations of tax revenues and of some types...
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...Demand (AD) Aggregate Supply Equilibrium Between Aggregate Demand And Aggregate Supply Consumption And Savings Investment Government Spending Exports and Imports Objectives Of Government Macroeconomic Policy Inflation Unemployment Economic Growth Balance of Payments Conflicts Between Macro Economic Objectives Demand Management or Supply Side? 2 4 9 11 17 25 29 31 34 50 71 80 84 87 Page 1 Unit 3 Managing the economy Steve Margetts AGGREGATE DEMAND (AD) Aggregate demand (AD) is the total demand for goods and services produced in the economy over a period of time. DEFINING AGGREGATE DEMAND Aggregate planned expenditure for goods and services in the economy = C + I + G + (X-M) C Consumers' expenditure on goods and services: This includes demand for durables & non-durable goods. I Gross Domestic Fixed Capital Formation - i.e. investment spending by companies on capital goods. Investment also includes spending on working capital such as stocks of finished goods and work in progress. G General Government Final Consumption. i.e. Government spending on publicly provided goods and services including public and merit goods. Transfer payments in the form of social security benefits (pensions, jobseekers allowance etc.) are not included as they are not a payment to a factor of production for output produced. A substantial increase in government spending would be classified as an expansionary fiscal policy. X Exports of goods and services - Exports sold overseas are an inflow...
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...INTRODUCTION TO MACROECONOMICS E202 $ ¥ Dr. David A. Dilts Department of Economics Doermer School of Business and Management Sciences Indiana-Purdue University-Fort Wayne June 1, 1993 Revisions: May 1994, December 1995, July 1996, November, 2000, May 2003, May 2006 PREFACE This Course Guide was developed in part because of the high cost of college textbooks, and in part, to help organize students’ studying by providing lecture notes together with the reading assignments. This Guide is provided to the student online at the Department of Economics website. Jayla Heller, the Department’s secretary has been kind enough to go through all of the frustration and hard work to put the guide in the appropriate format and put it online. To her goes my gratitude. The department, neither school, nor the professor make anything whatsoever from this Guide. In fact, the department’s budget and the professor’s own resources are used in the writing of the Guide, and the numerous draft copies that are produced in the revisions of this document. Like the sign in the Mom and Pop bait shop on Big Barbee Lake says, “This is a non-profit organization, wasn’t planned to be – it just worked out that way.” Well, actually it was planned to be a non-profit enterprise in this case. The professor also wishes to acknowledge the fact that several students have proposed changes, improvements, caught errors, and helped to make this document more useful as a learning tool. Naturally, any errors of omission...
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...Economics Project Effect of Inflation on Household Budget Submitted by- Chander Prabh Jain (14109035) Vasu Singla (14109050) Vikrant Das (14109007) Arpit Dhiman (14109006) Dhruva Gupta (14109010) Branch-Production Contents Pg 3…………………………………………………………….Abstract Pg 4……………………………………………………………..What is inflation? Pg 4 – 6………………………………………………………….Types of inflation Pg 6 -7 ………………………………………………………….Causes of inflation Pg 8………………………………Measurement of inflation and issues encountered Pg 10-11……………………………………………………………Factors affecting demand Pg12 - 13……………………………………………………………..Factors affecting supply Pg 14-15………………………………………How Can Government Control Inflation? Pg 16-19…………………………………………………Effect of inflation on various sectors Pg20-21…………………………………………………………..Literature review Pg22-23………………………………………………Needs, Objectives and Methodology Pg24……………………………………………………………...
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...Contents Inflation, Stagflation, Disinflation, Deflation, CPI and WPI ........................................................................... 2 Policy Rates and Reserve ratios .................................................................................................................... 4 GDP and GNP ................................................................................................................................................ 5 Classical and Keynesian Theory .................................................................................................................... 6 Purchasing Power Parity ............................................................................................................................... 7 FDI and FII ..................................................................................................................................................... 8 Currency exchange rate and different exchange rate regimes .................................................................... 8 Fiscal and Monetary Policy ........................................................................................................................... 8 Microeconomics............................................................................................................................................ 9 Types of Industry.......................................................................................................................
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...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 will boom and that firms will be hiring. Because...
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...CONTENTS 1. Introduction 3 2. Literature survey 4 2.1 The nature of inflation 4 2.2 Methods of measuring inflation 6 2.3 Reasons and consequences of inflation 9 3. Practical rationale for analysing price dynamics in Latvia 13 3.1 Research into the causes of price changes in Latvia 14 3.2 Overall analysis of price dynamics in Latvia 18 3.3 Examination of price dynamics in relation to particular group of products in Latvia 22 4. Conclusions 25 5. Recommendations 26 6. Bibliography 27 7. Appendices 28 LIST OF TABLES, FIGURES AND FORMULAS Formulas Formula 2.1: GDP deflator 7 Formula 2.2: Inflation Rate Equations Formulas Calculator 7 Tables Table 3.1: Compliance with Maastricht criteria 12 Table 3.2: Government deficit 14 Figures Figure 3.2: Nominal and real household consumption 15 Figure 3.3: Household savings 16 Figure 3.4: Inflation in Latvia 1991 - 2012 17 Figure 3.5: Harmonized consumer price index of the EU Member States 18 Figure 3.6: Private consumption and consumer price index 19 Figure 3.7: Changes of producer prices 20 Figure 3.8: Consumer prices, producer prices and deflator's value changes 21 Figure 3.9: Consumer price changes by commodity groups 23 1. Introduction In the end of 2012 Latvia has fulfilled the Maastricht criteria regarding an establishment of the single European currency. One of the potential risks of that is the inflation criterion...
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...TASK 1 1.1 Identify the purpose of different types of organization The most basic objection of any business is to undertake endeavors for the profit of the owners/stakeholders. All business activities are undertaken for the benefit of its stake holders. Business undertakings are selected by organizations based on the nature, size and purpose of the organization. A brief over view of different types of organization are as follows: Sole Proprietorship: Sole proprietorship is one individual or married couple in business alone. Sole proprietorships are the most common form of business structure. This type of business is simple to form and operate, and may enjoy greater flexibility of management, fewer legal controls, and fewer taxes. However, the business owner is personally liable for all debts incurred by the business. Partnership: Partnership comprises of 2 or more persons who mutually agree to contribute money, labor, or skills to a business. Each partner shares the profits, losses, and management of the business and each partner is personally and equally liable for debts of the partnership. Formal terms of the partnership are usually documented in the Partnership Deed. Private Limited Company: Private Limited Company is whereby shares of the company are issued to a limited number (usually within a family of friends) of individuals. These share holders are owners of the business and their liability is limited to the extent of the investment in the business. Since the...
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...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 will boom and that firms will be hiring. Because...
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