INTEREST RATES AND ECONOMIC GROWTH
DHRUV DHINGRA
18192804
Principles of Economics Term Assignment
Index
Title No. Particulars Page No.
1. Introduction/Significance of the Problem 3
2. Analysis 4
2.1 Illustration on the basis if analysis 6
3. Conclusion 9
4. References 10
Title 1
Introduction and Significance of the problem
Economic growth of any country reflects its capacity to increase production of goods and services. The simplest definition of economic growth can be stated as the increase in the Gross Domestic Product (GDP) of that country that is the amount of goods and services produced within a country. Interest rate is one of the macroeconomic growth factors to economic growth, with its up’s and down’s the Interest rates
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Depending on the credibility of the borrower, the fixed payback period is stated. While determining the interest rates, the payback period, the payback currency, and many more determinants of a loan are considered before the loan is given. For example, a company borrows capital from a bank to buy new assets for its business, the bank would grant the loan at a certain interest rate that would be paid in instalments by the company over a fixed period of time decided, whereas during the time of the loan, the bank would in return receive rights on the new assets as collateral till the loan is paid back in full with interest. A commercial bank can usually borrow at much lower interest rates from the central bank that companies can borrow from the commercial bank, the difference at which the bank borrows from the central bank and to which it lends to its customers is where the bank earns its profit.
There are two types of interest rates the Nominal Interest Rate and The Real Interest Rate, the nominal interest rate is the rate that we see in daily lending, it is the amount, in percentage terms of the interest payable example: Dhruv deposits 100$ in his commonwealth bank account for one year and then receives interest of $10, at the end of the year Dhruv’s balance is $110. In this case, the nominal interest rate is 10% per annum
Economic Development: Growth is associated with structural, social change and change in the important institutions of the economy.
Economic growth is an increase in the capacity of an economy to produce goods and services from one period of time to another. In simple terms, it refers to an increase in aggregate productivity.
Economic growth refers to the output of goods and services produced per capita in a nation over time. It is measured as the percent rate of increase in Real Gross Domestic Product(GDP) which is the value of total productions produced by an economy in
Economic growth is a common term used by economists to describe in increase in production in the long run. According to Robinson (1972) economic growth is defined as increases in aggregate product, either total or per capita, without reference to changes in the structure of the economy or in the social and cultural value systems. The basic tool of measuring the economic growth includes the real GDP. It provides some quantitative measures in terms of the production volume.
In the article, “Net neutrality hits a nerve, eliciting intense reactions”, Cecilia Kang discusses how the pending repeal of Net Neutrality by the FCC and Chairman, Ajit Pai, is adamantly contested by most of the Internet community and most companies, big or small. To develop her argument, Kang uses a wide variety of appeals from established and startup companies, statistics and evidence related to the reaction to the repeal, and demonstrations on how polarizing the issue is, and the repeal’s effect on solving the problem of Internet regulation. Kang cites a multitude of Internet-based companies or organizations, such as Mozilla, Google, Netflix, and Free Press, to demonstrate their concern and clarify their resentment of the repeal. For instance, Google and Netflix argued that “telecom companies should not be able to split sites because that would allow them to become a sort of gatekeeper.” These responses better clarify companies’ concerns about the repeal and its effect on their business, while also aiding Kang in developing her article on explaining the concern and the response it has elicited. According to Kang,
Economics growth is, it the short run an increase in real GDP and in the long run an increase in the productive capacity of an economy (the maximum output that the economy can produce). GDP stands for Gross Domestic Product which is the country’s production of goods and services valued at market price in a given time period. Real GDP is when these figures are corrected for inflation using a base year (The UK uses 2003 as its base year). It can be measured in three different ways; the output measure is the value of the goods and services produced by all sectors of the economy; agriculture, manufacturing, energy, construction, the service sector and government. The
16. If the nominal interest rate on an account is 1% and the inflation rate is 2%, the real interest rate is:
People have been obsessed with celebrities for a long time now, but not as much as we do now. Colin Palmer wrote a short essay and said that it is harmless fun to have a slight obsession with a celebrity, and that he disagrees with Deborah King because she says that it could be unhealthy to have an obsession with a celebrity. Therefore, I agree with Palmer because people could be going through a tough time in their life, so watching a celebrity on social media so it could bring a smile to their faces.
Economic growth is best defined as a long-term expansion of the productive potential of the economy. Sustained economic growth should lead higher real living standards and rising employment. Short term growth is measured by the annual % change in real GDP.
Economic growth can be defined as the Gross Domestic Product (GDP) of a country increasing. Economic growth in Australia is a reflection of its capacity to intensify it production of goods and services and its nominal GDP is typically attuned for inflation
How could bullying effect children? Bullying is a form of aggression. When it comes to
Economic growth refers to the rate of increase in the total production of goods and services within an economy. Economic growth increases the productivity capacity of an economy, thereby allowing more wants to be satisfied. A growing economy increases employment opportunities, stimulates business enterprise and innovation. A sustained economic growth is fundamental to any nation wishing to raise its standard of living and provide a greater well being for all. Gross domestic product (GDP) is the monetary value of all final goods and services produced over a year. It is the total value of production within the economy. The total value of production is the total value of the final goods or services less the cost of
The validation procedure of the aforementioned five theories and their relationship begins with the description of ‘Interest rate’. Interest rate is the amount charged by a lender from the borrower for the use of assets such as cash or goods and is represented in the form of percentage typically noted on an annual basis. There are two types of Interest: Simple Interest and Compound Interest. Values of both can be calculated by the formulae written below:
Economic Growth refers to a nation’s outputs of goods and services over time. It is measured in terms of Gross Domestic Product (GDP) which is a valuation of a country’s total production in a year. In 2007-08, Australia had a GDP growth rate of 3.7%. By 2012, this growth rate had dropped to 3.1% despite the 20 years of continual economic growth in Australia averaging 3.5% up until 2012. Recent economic growth has been largely supported during the global resources boom where there was strong demand and increasing commodity prices of Australia’s mineral resources such as iron ore, coal, aluminium, copper and zinc. However, even though Australia has a very dynamic and developed economy there are still
Reports by Fry (1997) suggests that measuring financial distortions with black market exchange premiums rates and real interest rates squared lowers investment ratios eventually leading to a reduction in growth output. In the same vein, Roubini and Sala-i-Martin (1992) also revealed that financial repression is negatively related to growth while controlling other growth determinants; hence interest rates (bank-reserve requirements) correlates inversely with growth.