THE MACROECONOMIC CALENDAR
Each month government agencies like the Departments of Labor and Commerce, and private institutions publish a variety reports addressing leading, lagging, and coincident indicators.
1. Lagging indicators, like the unemployment rate and corporate profits, are of little help in forecasting since they change only after the economy begins to shift.
2. Coincident indicators, like personal income and industrial production that move simultaneously with the business cycle are…
The Limits to Macroeconomic Policy
A country’s economy represents an equilibrium driven by the vast workings of many moving parts. Some of these parts include governments, policy makers, trade partners, international investors and banking authorities. Today’s technological advancements have made it easier than ever for monies to traverse national borders quickly and efficiently. This capability facilitates inflows and outflows of capital in response to signals. Not all of these signals are…
monetary policy to achieve a long-run view of price stability.
Monetary policy involves manipulating the interest rate charged by the central bank for lending money to the banking system in an economy, which influences greatly a vast number of macroeconomic variables. In the UK, the government set the policy targets, but the Bank of England and the Monetary Policy Committee (MPC) are given authority and freedom to set interest rates, which is formally once every month. Contractionary monetary policy…
a monetary deflation. After a long trapped period, Japan’s economy showed its first sight of recovery in 2003 with higher output growth and rising employment, wage as well as investment.
“What kept Japan down were repeated macroeconomic policy mistakes” (The New York times, 2008). In fact, the Japanese government’s action was not effective regarding the situation of their economy. The use of monetary policy did not only worsen the effect of the liquidity trap but also create a…
Kazakhstan: Macroeconomic Overview
Kazakhstan is classified as a continuous transcontinental country located in Central Asia. The country recently gained independence from USSR in 1991 and has a population of 17 million; mostly ethnic Kazakhs and Russians. Politically, the country is a unitary republic and the first (and only) President is Nursultan Nazarbaev - who rules the country in a less than democratic fashion. With an area of 1 million square miles, it is 9th largest country in the world,…
Answer: 4% real GDP per person = real GDP/population
%Δ real GDP per person = %Δ real GDP - %Δ population
11. If GDP (measured in billions of current dollars) is $5,465 and the sum of consumption, investment, and government purchases is $5,496, while exports equal $673, what are imports equal to?
GDP = Consumption + Investment + Government…
According to the Keynesian approach, there have been identified the four variables that affects the economic growth. These are investment, saving, liberalization of the trading activities, movement of the capital, policy of the exchange rate and the macroeconomic stability of the economy. The investment in the human capital and the physical capital are also one of the factors that fasten the economic growth in the country. The demography is another factor that determines the growth of the economy. However…
By 1860, Southerners owned close to $4 billion worth of slaves. Slavery remained a thriving business on the eve of the Civil War: According to Fogel and Engerman, by 1890 slave prices would have increased on average more than 50 percent over their 1860 levels. No wonder the South rose in armed resistance to protect its enormous investment.
Slave markets existed across the antebellum U.S. South. Private auctions, estate sales, and professional traders facilitated easy exchange. Established dealers…
moderate these price cycles to maintain macroeconomic stability.
According to Loungani, (2010) “Robert Shiller is well known for predicting the U.S. stock market crash of 2000–01. In 2003, he warned that U.S. house prices too contained a “bubble”; that is, they had risen far beyond what was warranted by fundamental driving forces such as income growth, interest rates, demographic change, and building costs.” (pg. 16) This is a clear example of how macroeconomic volatility affects the housing industry…
“It [Warren plan] stressed the need to move forward simultaneously in coordinating policy, and in narrowing exchange rate margins, the integration of capital markets and the establishment of a common currency and a single central bank”(Urwin )
Even though this movement was so ahead of it’s time, it created the vision of a united Europe and set the foundation for other EU developments toward European integration. The EMS was not as ambitious or as idealistic as the previous warren plan was, but…
though lead other provinces in economic growth. I believe this is due to the oil companies in Western Canada that have higher levels of production and greater resources that are being availed by a larger amount of employees.
The second major macroeconomic goal is lower unemployment/full employment. When a greater number of people are employed, it can vastly improve the production in an economy. This relates directly to the economic growth mentioned above. Lowering the unemployment rates has a number…
television stations, or radio networks to consumers via cable or direct-to-home satellite systems on a subscription or fee basis. These establishments do not generally originate programming material." NAICS (2007)
Macroeconomic variables that affect the cable industry
Some of the macroeconomic variables that impact the cable industry are gross domestic product (GDP), inflation, trade, interest…
Convenience goods are those that are distributed widely and are inexpensive and the gas oil forms one of them (Fredy, 2010). Macroeconomic covers the demographic aspect, as these goods are made available to the population. Demography represents human residents statically (Henry, 2008).
Startup capital is a needed by Edgar as he plans to buy the four gas oil station. The fund borrowed from a financial institution will be affected by the interest rate and the financial policies. The monetary policy…
Macroeconomic outlook of U.S. economy
For every four to six years U.S economy faces an economic slowdown. Thus the current market is now in forth year. The root of U.S. crisis and its economy can be traced backed to 2007, when U.S housing bubble burst which yields a financial meltdown in 2008. In average, the American trying to make ends meet in 2014, a market and a recession will probably look and feel the same. In early 2008, when the financial crisis began, then the U.S. national…
d) A casual worker who has no labour contract
This unexpectedly low inflation will help the worker, as it meant that they are cheaper to
hire. Thus, the company will continue to hire them, regardless of a labour contract,
keeping them employed.
e) A private school that has invested some of its endowment in Government
This unexpectedly low inflation will hurt the private school, as the nominal interest rate is
lower than expected. This meant that they will earn less revenue from the government…
decision maker changes the status quo if the expected marginal benefit is greater than the expected marginal cost.
Use PowerPoint slides 20-21 for the following section
Microeconomics and Macroeconomics
• Microeconomics: The study of individual economic choices (e.g., your economic behavior).
• Macroeconomics: The study of the performance of the economy as a whole, as measured, for example, by total production and employment.
• Economic fluctuations: The rise and fall of economic activity relative…
4) They have even gone as far as planning to close down their check-in desks and the possibility of charging passengers to use the on-flight toilet facilities.
Source: Ryanair Annual Reports
Ryanair is one of the largest airlines in terms of passenger numbers (REF) and has continuously grown in size and value over time as shown above. The extent of such an expanding firm is conveyed over the last eight years as Ryanair’s profits have more than quadrupled. However, there have been drops in…
While there are expectations of a yearly gain of nearly 2.3 million net new jobs, the unemployment rate is still very high i.e. around 6.5 percent. The lower-than-expected job growth is fueled by various factors including government hiring, weather, and Obamacare. Actually, similar to December, January had a lower-than expected increase in job opportunities since only 113,000 jobs were created. However, the rate of unemployment still reduced to 6.6 percent in this month despite of the growth in…
The percentage of what the bank must hold per deposit may be changed at anytime by Central Bank. This can affect the economy by changing the money supply and credit conditions.
Adjusting Discount Rate- The final tool of Monetary Policy which is defined as a central bank is a lender of the last resort. The Federal Bank will make short term loans to commercial banks in its district. Discount rate adjusting is a commercial bank borrowing from the Federal Reserve Bank and giving them an IOU drawn against…
Banks keep these reserves as cash in their vaults or as deposits with the Fed, which they are required to do. The Fed has the authority to set reserve requirements on checking accounts and certain types of savings accounts.
Discount rate is the interest rate that the Fed charges banks for short-term loans. Banks can borrow reserves directly from the Federal Reserve and the discount rate is the rate that financially solvent banks must pay for this credit. Changes in the discount rate typically…
Increased spending on investment adds to aggregate demand and helps to restore normal levels of production and employment.Fiscal policy, on the other hand, can provide an additional tool to combat recessions and is particularly useful when the tools of monetary policy lose their effectiveness. When the government cuts taxes, it increases households’ disposable income, which encourages them to increase spending on consumption. When the government buys goods and services, it adds directly to aggregate…
Soon people were paying for goods with goldsmiths' receipts, which serviced as the first kind of paper money (Brue 2004)."
"At this point the goldsmiths-embryonic bankers- used a 100 percent reserve system; they backed their circulating paper money receipts fully with the gold that they held "in reserve" in their vaults. But because of the public's acceptance of the goldsmiths' receipts as paper money, the goldsmiths soon realized that owners rarely redeemed the gold that they held in storage…
dollars into gold at $35 per ounce, has made the U.S. and other countries' monies into fiat money-money that national monetary authorities have the power to issue without legal constraints.
Money is used in all economic operations; money has a powerful effect every economic activity. The increase in supply of money put more money in the hands of the consumers and increased spending. When the money supply continues to expand…
The Company's top five medicinesLipitor, Norvasc, Zoloft, Celebrex, and Neurontineach delivered at least $2 billion in revenues in 2004, while Zithromax, Viagra, Zyrtec, Bextra and Xalatan/Xalcom each surpassed $1 billion. Changes in foreign exchange rates increased total revenues in 2004 by $1,422 million or 3.2% compared to the same period in 2003. The foreign exchange impact on 2004 and 2003 revenue growth was due to the weakening of the U.S. dollar relative to many foreign currencies, especially…
If we earn more income, we are able to purchase more goods and services. But, for this to happen, more goods and services have to be produced. The circular flow of expenditure and income, which is used to calculate the nation’s economic activity can be used to describe GDP. Households sell labour, land, capital and entrepreneurship to factor markets, which are used for production in firms. Firms then sell goods and services which the households purchased. Firms pay salaries, interests, rents and…
This model will use the following
Consumption (C) - consumption goods produced and
sold to customers i.e., the chairs.
Savings (S) - income that is not spent on
Investment (I) - production of, or expenditure
on, non-consumption goods (carried out by firms)
including expenditure on increasing stocks of
Injections - expenditure on domestic output not
originating from consumers e.g., investment.
Leakages - income not spent on consumption of
This includes national, regional, and global economies.
Depreciation + Net Investment = Gross Investment
if I rearrange it, it will say;
Depreciation – Gross Investment = Net Investment
Since capital stock of an economy only rises when net investment is positive, that is when gross investment exceeds depreciation. So naturally the capital stock falls when net investment is negative, that is when gross investment is less than depreciation. In 1933 net private domestic investment…
This means that the percentage change in real GDP is zero.
c. Did economic well-being rise more in 2009 or 2010? Explain.
Economic well-being rose more in 2009 than in 2010, since real GDP rose in 2009 but not in 2010. In 2009, real GDP rose but prices did not. In 2010, real GDP did not rise but prices did.
2. What components of GDP in this year (if any) would each of the following transactions affects? How about total GDP in this year? Explain. a. A family buys a new refrigerator
The low production means prices go up because of low quantity. When prices go up consumers and retailers are affected because it becomes a trickle affect, from the retailer down to the consumer and the savings they usually get goes out the window. It also affects households because when the prices go up leaving less money for other activities such as outings or family fun activities. It affects decreased taxes to help lower prices to drive the demand back up because if people cannot afford the…
d) none of them.
Q16) In Figure 2, the shaded area inside the curve represents...
b) an unattainable combination of goods.
c) the maximum use of resources.
d) none of the above.
Q17) In Figure 2, point ‘B’ is known as...
c) an efficient use of resources.
d) economic growth.
Q18) In Figure 2, it is _______ for an economy to be at point A.
a) impossible and inefficient.
b) impossible but efficient.
c) possible and efficient…
Considering the table above, GNP was higher than the National Income by 2,521.3. To determine National Income from GNP you have to subtract GNP. The main component would be the value of GNP and the total output of goods and services of a country. National Income also considers both domestic and international earnings.
GDP in Different Countries
(in billions of U.S. dollars) Population
(in millions) Per Capita GDP
(in thousands of U.S. dollars)
1 2 3 4=2/3
UNITED STATES 16800…
Keynes also suggested that to keep both in balance a managed monetary system should be introduced. Keynes published this book during the Wall Street crash and yet again Keynes's idea was not paid much attention to as economists as well as government officials were not aware of how serious the depression was going to be.
Then Keynes wrote his book The General Theory of Employment, Interest, and money' but the ideas in this book were inspired by the work of other economists.
It can be defined as the usage of government spending and taxation to alter the state of the economy (Weil). Fiscal policy is essential to managing the economy since it can affect the total amount of output produced or the gross domestic product. If expenditures are increased and taxes are reduced, people will have higher incomes which requires additional output, and in turn, generates more income and spending. Initial increases in government expenditures or reduction in taxes led to a collective…
22) Between a trough and a peak, the economy goes through a(n)
23) Between a peak and a trough, the economy goes through a(n)
24) Unemployment means that
A) at the going wage rate, there are people who want to work but cannot find work.
B) people are not willing to work at the going wage rate.
C) there are some people…
The two major funds represented within this area are Medicare and Social Security (there are several others included as well). This presents a very disturbing fact for several reasons. First, the money in these trusts was to only be spent for particular purposes. For example, the funds in social security should only be used for those who need social security. It should also be known that the limitations on the usage of these funds were protected by law (preventing the government from spending the…
Solar energy is a resource that can be utilized by any nation willing to invest in this natural resource. According to the research attained from the EPIA’s 2012 Photovoltaic Barometer report, and data attained from population numbers from Internet World Stats (IWS) and the GDP numbers come from the International Monetary Fund (IMF), the top countries that utilize solar energy Sources are Germany, Italy and Belgium, (Shahan, 2013) whereas the top counties that trade with the United States are Canada…
Answer the following:
a. What would shoppers see when they shopped in Wal-Mart and the other “big box” stores that sell so many imported items?
If the government enacted a special tax on imported clothing making the selling price equal to the selling price of clothing made in the United States, shoppers would see imported items with much higher prices in discount stores. If the prices of clothing made in sweatshops and in the United States were comparative, shoppers would consider the trade-offs…
e. Production possibilities curve – a graph that shows the possible combinations of 2 products that can be produced while fully employing all of its resources. The line is the constraint, if a point lies inside the line resources are not fully employed, and if its outside the line it is attainable.
f. Principle of diminishing returns – the concept that if you increase a resource, and hold all the other constant, eventually the marginal product will decline.
Example: my Micro professor demonstrated…
This was actually quite a big deal during Ricardo’s since Protectionist policies were hindering free trade, which Ricardo was a proponent of as can be seen from his Law of Comparative Advantage.
One of Ricardo’s first interactions in the economic dialogue of his time was based around the Quantity Theory of Money. At the time there was something going on in Britain that would come to be known as the “Bullion Controversy”. Basically, as a result of a potential war the British government temporarily…
More money is then borrowed as people take advantage of this, which has the effect of boosting the mortgage market as well.
According to the Council of Mortgage Lenders (CML), 132,500 house purchase mortgage transactions have benefited from the holiday; this is the equivalent of 25% of the overall 486,400 house purchase loans in the period. Buyers have saved 173 million from the holiday rather than the 600 million the government forecasted. The success is questionable as the incentive was supposedly…
This essay will be explaining that why macroeconomics stability is one of the key success factor that contributes to the tremendous economic growth in the last forty years of development in asian countries like singapore, hong kong and south korea. The objective of a government economic policy is to achieve stability. A volatile business cycle is not ideal to the economy as the rapid growth of an economy with high demand and inflation will lead to a recession as the long term inflationary growth…
money supply because the Fed pays out hard currency in exchange for accepting securities.
Monetary policy is the process by which governments and central banks manipulate the quantity of money in the economy to achieve certain macroeconomic and political objectives. The targets are usually: - economic growth, changes in the rate of inflation, higher level of employment, and adjustment of the exchange rate. Monetary policy is categorized into two types: Contractionary and expansionary…
classified in macroeconomic and microeconomic according to several recent researches. Even though there is a general consensus that remittances are positive for the economic development, some authors claim they might have negative effects (Barajas et al., 2009; Bettin and Zazzaro, 2008; Chami, Fullenkamp and Jahjahha, 2005).
When talking about their impact, some countries in which the remittances constitute a huge source of the national income we can appreciate the macroeconomic effects of the…
experiencing excess saving or excess liquidity?
In purpose of this article is to present the understanding of IS-LM model in macroeconomics by these are the convergence of two economic graphs, one representing the income and savings (IS0 and other liquidity and money (LM).
In this article, author defines the so-called IS-LM framework aggregate macroeconomic model that has the intuition use to describe money and markets. The author has also focused on the role of IS-LM model and its…
markets, keep pace with financial innovation, or take into account the systemic ramifications of domestic regulatory actions.
• Underlying factors such as inconsistent and insufficiently coordinated macroeconomic policies and inadequate structural reforms which led to unsustainable global macroeconomic outcomes. These developments contributed to excess and ultimately resulted in severe market disruption.
The main theme in (Leaders of G20, 2008) to explain the origins of the financial crisis is strongly…
need for: Promoting reforms to create a stable macroeconomic environment, conducive to investment and long term planning. Equally important is whether developing countries are able to put into place the policies and structural reforms which can provide the basis for strong growth" (World, 1). These official statements from the World Bank help to better explain their mentality. Their capitalist discourse is apparent in their aim for a "stable macroeconomic environment". Every document that I read, which…
that challenged the intellectual claims of the Monetarist controversy - bearing in mind, it were these experimental issues opposed to the theoretical issues, which divided Monetarists from Keynesians. Nevertheless, the biggest guns of Keynesian macroeconomics (Robert Solow, James Tobin, and many more) that came out to combat a single man with some very compelling ideas, Milton Friedman. Despite the fact that, at this time it would be hard to find any single economist, who did not have an opinion on…
could be vulnerable to debt-deflation and prolonged recession.
These macroeconomic concerns are compounded by concerns about income
distribution. Thus, the era of financialization has witnessed a disconnection of wages
from productivity growth, raising serious concerns regarding wage stagnation and
widening income and wealth inequality (Mishel et al. 2007).
The financialization thesis is that these changes in macroeconomic patterns and
income distribution are significantly attributable to…
growth to be sustained over the long-term there then must be an increase in potential output, i.e. the economy capacity to produce must increase.
A low stable inflation and steady growth in aggregate demand is required to produce the type of macroeconomic situation which encourages economic growth. This is the aim of the governing bodies that can control this. However, there are various effects of economic growth to economies. These can either be positive or negative.
Effects of Growth…
Macroeconomic policies are used to maintain and smooth out the fluctuation of the business cycle to keep the growth rate constant. There are two types of macroeconomic policy, Fiscal and Monitary. Fiscal Policy is a macro policy that allows the Government to increase or decrease the amount of economic growth by either increasing or reducing the level of taxation and Government spending. The annual budget is an example of fiscal policy. Fiscal policy takes a long time to implement as it can only be…