This strengthening of the US dollar will cause exports to go down and imports to go up. This will cause the GDP to go down due to less production happening. This is one of the only things stated in the letter that could possibly hinder the growth of the economy. Overall, this Fed memo says that the economy is still on a rise since the recession with slack in many different markets.…
If you bought a house for $150,000 with an annual inflation rate of 4 percent, it would take about 18 years for the house’s worth to double based on the Rule of 72. b. If you bought a Picasso painting at last week 's auction for $200,000 and the annual inflation rate is 10 percent, how long would it take to double your money? If you bought a painting by Picasso for $200,000 with an annual inflation rate of 10 percent, it would take around 7 years for the painting’s worth to double. c.…
Monetary policy is used to alter interest rates to manipulate economic activity in the UK, in this case the Bank of England would reduce or increase the interest rates dependent upon their strategy for improvement in the economy. In this case, according to source F, consumers are encouraged to save due to the unhealthy economy being a result of massive amounts of consumer debt. For example “we are suffering the consequences of a decade of growth fuelled by debt.” And “politicians are encouraging us to save rather than spend money we do not have.” This increase in saving is a contractionary monetary policy designed to reduce consumer spending, an impact upon the economy would be a reduction in inflation, due to decreased demand pull inflation as there is not enough supply for the firms to match the needs of demand that is fuelled by excessive borrowing.…
Communicating this inflation goal clearly to the public helps keep longer-term inflation expectations firmly anchored, thereby fostering price stability and moderate long-term interest rates and enhancing the Committee's ability to promote maximum employment in the face of significant economic disturbances. It has been determined that inflation…
During this expansion of the market Federal Reserve Chairman Alan Greenspan was worried that the country could face a recession or server downturn in the economy. From this information the Federal Reserve began cutting interest rates down to as low as 1%, and kept them at this low rate until 2004. This was a policy taken by the Federal Reserve to keep money in the economy through cash and savings. The interest rate was also kept low, because those with the adjustable mortgage rates, which fluctuate with the market. This also kept more spending in the economy to keep the economy afloat according to the economic principals behind this decision.…
In fact, the government needs to consider implementing another contractionary monetary policy. This time, they should decrease the money supply in the economy. If the Bank of Canada, decreases the money supply, it will raise interest rates and will decrease the spending in the economy (pg 158). The reason why interest rates will rise when the money supply decrease is due to the fact that the money demand curve is downwards sloping. This means that as more money is taken out of the economy, the interest rate will slowly increase.…
The 1970’s economic growth was characterized as one of stagnation. Varying events contributed to the lack of grow. The any growth in the economy of the decade was overshadowed by the recession of 1973-75. Several things contributed to this decline. The most obvious and well known was the Oil Crisis in 73, which saw sharp declines in the availability of gasoline.…
Five years ago the median house price in Epping is around $700,000.00 whereas currently the median house price in Epping is around or just over the $1,000,000.00 mark. The median house price in Epping has risen roughly by more than 40% within the last 5 years, which illustrates that demand is definitely high. 2. Recent and future trends in Epping housing market…
This article discusses the contradictory role and place of finance in the post-1990 Canada economy. A central argument advanced is that the relationship between the real economy and finance economy(paper economy) has become increasingly more complicated and contradictory. Therefore, the distinction made between “real” and “financial” problems of the economy needs to be better qualified by taking into account the dynamics between the two. This article talks about the over development and over importance of the financial sector (the “paper economy”) relative to the real economy.…
After that, inflation will cause increased supply costs and this will encourage McDonald's raised prices of their food. In…
In these country, real wages have continued to grow by raising…
Additionally, the target inflation rate is at 2.2% and has fluctuated slightly since the beginning of the 2016 calendar year ("Databases, Tables & Calculators by Subject", 2016). Additional causes of inflation may be linked to three specific causes of demand-pull, cost-push, and monetary expansion.…
An economy can usually be understood and judged on efficiency through a number of different statistics, one of these is the GDP or the Gross Domestic Product. The Gross Domestic Product is the sum of four different components: Consumption, Investment (business and personal), Government Purchases, and Net Exports. The anticipated cost of living in an apartment will eventually prevent people from moving out. This is because with a shortness in the labor force the supply for apartments goes down so the demand goes up causing the price of renting that apartment to skyrocket accordingly. With a spike in price going up that leaves people less money to save up and move out, which lowers the overall total of the Investments component of the Gross Domestic Product, thus lowering the GDP itself.…
3. Rationale/Executive Summary 3.1 Background of my division The Mr Price Group Limited division that I have chosen is the apparel retail division, also known as the clothing division of Mr Price. My reason for choosing the apparel division of Mr Price instead of the Home or Sport division is because the apparel sector is a fast fashion retailer and has generated a strong brand with well-known corporate social responsibility programmes. The target market of the apparel division is young and vigorous customers, mostly females between the ages of 15 – 35, who are in the LSM income groups.…
. What is inflation risk? Inflation is the rise or fall of a price by a certain time. It could something right now then be raised tomorrow or fall tomorrow.…