Current Macroeconomic Situation in US and Prospects for Automotive Sector The U.S. automobile industry is large and dynamic sector contributing significantly to the nation’s output and employment. Auto industry provides the basis for a mass of related service and support industries. The industry is highly volatile and sensitive to global and domestic economic changes. During the 1960’s & 1970’s the big three accounted for 90% of automobiles purchased in U.S. However, since 1980’s foreign
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Chapter 25: Aggregate Demand, Aggregate Supply and Modern Macroeconomics Questions for Thought and Review 1. The central difference between activist and laissez-faire economists is their differing views about whether the economy is self-regulating. Laissez-faire economists (Classicals) believe the pricing mechanism will bring the economy to an equilibrium (potential output and full employment) while activist economists (Keynesians) do not share that belief. 2. Classicals felt that if
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Analysis of the Macroeconomic Environment within the Health-Care and Automobile Industries Abstract This report discusses macroeconomic factors that impact both the automotive and health-care industries. Interest rates, consumer price index (CPI), consumer confidence, Gross Domestic Product (GDP), wage rates, and inventory levels impact the macroeconomic environment to influence these industries in the short run. Consumption as a percentage of the GDP depicted in table 1 indicates a continuous
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1. Critically examine the effectiveness of various approaches that may be used to reduce macroeconomic instability. According to Mc Vaish (Macroeconomics theory, p123) Macroeconomics can be defined as the analysis of the economy wide aggregates such as the analysis of the total output and employment, total consumption, total investment, total saving and national product. Macroeconomic theory employs technique of general equilibrium in order to study the determination of the general price level
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Discuss how rising oil prices might affect the macroeconomic performance of an economy. (25 marks) There are four main macroeconomic objectives of the government it wishes to achieve in order to maximise the welfare of the society, they are: low and stable inflation, a favourable current account position on the balance of payments, low unemployment and sustained economic growth. One macroeconomic objective that might be affected by rising oil prices is the current account of the balance of payments
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One policy that this essay will cover as a way to reduce the unemployment level is monetary policy. Monetary policy is the manipulation of interest rates and more recently quantitative easing to control the economy. For the UK, this is run by the ‘Monetary Policy committee’ within the Bank of England. At the moment, interest rates are at 0.5%, which is very low and the committee intends to make the most of this by using this to create an increase in consumption. If interest rates are low then it
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two determinants of aggregate demand that you believe have the greatest impact on macroeconomic performance, and do the same for aggregate supply. Justify your choices with examples for each. When speaking about AD/AS we must take in consideration the involvement of these two in the long run and short run. The two determinants of aggregate demand and supply that I believe have the most impacts on Macroeconomic performance are: 1) Fiscal policy: Increase or decrease of government spending
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Does the current institutional framework of the Euro-zone favour the maintenance of macroeconomic stability in that area? The Euro-zone is an economic and monetary union that currently has 17 members. These 17 members have established the Euro as their official currency, which has as main consequence that the monetary policies are under the command of the European Central Bank. The main advantage of this is that they have a fixed exchange rate, so they don´t have to face the international
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Discuss how rising oil price might affect the macroeconomic performance of an economy (25 marks) In economies, oil is a highly desired resource that plays a key role in the production of goods and services and in the provision of energy, meaning that even small fluctuations in its price can lead to supply side shocks for nations as well as lower demand for imports as a component of aggregate demand. A supply side shock is a shock that will shift the Aggregate supply curve and in the case of oil
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of the financial crisis, the impact was experienced more speedily and more severely. South Africa had very limited exposure to these debt instruments, so the impact on their economy lagged other economies such as the USA. a) South Africa’s macroeconomic performance before, during and after the global financial crisis of 2007-2008 As indicated by the figures in Table 1 below, production and the utilisation of production capacity began tapering down in 2008 as the financial crisis took hold
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