BUS 475 Week 2 Knowledge Check Assignment

One of Keynes theory was to boost aggregate demand (the total demand for final goods and services in an economy at a given time) and increase spending.

This can be done through purchases of government bonds. When the bank purchases such securities, money originally held by the bank must be used in these purchases and thus increase money supply. With more possible funds for financial institutions to loan, interest rates would decrease, with similar effects as lowering the prime rate. The corresponding stimulation of aggregate demand will once again increase output.

In this week's lesson we learn about the three primary concerns when analyzing macroeconomics inflation, unemployment and gross domestic product (GDP). When discussing inflation in the economy we understand that it is a major factor that it plays in today's economy. For example, when the price of a specific item or service is inflated the less your money will allow you to buy. Little inflation is good for the economy because this will allow companies to raise their employee's hourly wages. Too much inflation could be caused by the high demand for goods or service. Therefore, if the demand is high and the production is the same the price of the supply will increase. Consumers will continue to spend their money because they

Discuss outlining Keynes’s analysis of the stock market and identifying the related policy conclusions he reaches.

As mentioned, Keynes believed aggregate demand was an integral driver within any economy. An increase in consumer spending also increases aggregate demand. Keynes understood that consumer’s confidence within and expectations about the economy will drive an individual's decision to spend or to save. David Dequech argues that Keynes’ theory concerning uncertainty and expectations is one of the most significant contributions to the discipline of macroeconomics. In his article, “Confidence and Action,” Dequech explains certain aspects of Keynes’ theory of confidence, uncertainty and expectations. Dequech argues that Keynes believed expectations are the prediction people make about the coming future. Confidence, on the other hand, is the probability one weighs out that an event will turn out different than they imagined (Dequech 505). Therefore, when economies experience periods of depression, consumer confidence tends to decline, and their uncertainty causes individuals to save rather than spend. When consumers tend to save, rather than spend, businesses also have to reduce expenditures (Sarwat 53). This theory is confirmed by the basic laws of supply and demand, that when demand is lower for products from a certain business, the business responds by decreasing investment spending. This phenomenon prevents the market from benefiting from the resources necessary

As part of our term project for the Topics in Macroeconomics class we were assigned the topic of linking the Keynesian view with the Great Depression of the 1930s as well as using it to explain and critically evaluate the United States Federal Reserve’s Quantitative Easing policy, which was employed in an effort to combat the downfall of the world economy in the wake of the financial crisis of 2008.

Describe three (3) ways we can use macroeconomic analysis, with one (1) original example for each way.

In economic theory, Keynes proposed that an increase in public spending could keep economic activity at an acceptable level. The resultant increase in Equilibrium GDP of government expenditure has a resultant stimulus in economy and aggregate expenditure. (Jackson & McIver, 2001)

7. "Washington Consensus" Macroeconomic Policies- Control in the interest rates within the federal reserve, aimed to managing spending, goal is to reduce social welfare

Compare Keynesian and classical macroeconomic thought, discussing the Keynesian explanation of prolonged recessionary and inflationary gaps as well as the Keynesian approach to correcting these problems.

LEAR N I NG OBJ ECTIVE S 1. Discuss why the classical economists believed that a market economy would automatically tend toward full employment. 2. Explain why Keynes rejected the views of the classical economists. 3. Compare the views of Keynes and the classical economists with regard to the proper role of government.

| Advocates of active monetary and fiscal policy view the economy as inherently unstable and believe that policy can manage aggregate demand, and thereby, production and employment, to offset the inherent instability. When aggregate demand is inadequate to ensure full employment, policymakers should boost government spending, cut taxes, and expand money supply. However, when aggregate demand is excessive, risking higher inflation, policymakers should cut government spending, raise taxes, and reduce the money supply. Such policy actions put

Marketing is usually understood as a bridge between the companies (offering products and services) and ultimate customer or consumers. Through marketing sales of goods and services take place between customer and a company in exchange of money. Companies generally use typical or traditional selling approach for their offerings. Traditionally company gather knowledge of and target the needs and wants of a particular group of people and then market their products and services to that targeted group and then through their sales professional sell their goods and services to the people of targeted group (William, 2011). This is the general practice of all most all the companies and it is referred to as typical selling.

Marketing concept is management philosophy according to which a company 's goals can be best achieved through determination and satisfaction of the customers ' stated and unstated needs and wants. The economic environment is difficult and with many challenges, and marketing is the tool of business methods to deal with those challenges in business. Marketing is also the tool of helping companies to recommend new products and services.

Money, the availability of money, and the cost of money or rate of interest, in order to attain a set of objectives oriented towards the growth and stability of the economy. Fiscal policy induced “demand management” approach as propagated by Keynes, which was popular in the post‐Great Depression period, later made way to monetary policy led “stabilization” approach in the period of high inflation of 1970s. While traditional fiscal policy solutions were useful in confronting unemployment by increasing spending and cutting taxes, counter‐acting inflation entailed reducing spending or raising taxes.