Inflation rate

India as a developing country has a high inflation rate and a high interest rate. The inflation has been taking place due to an increase in demand of products without an increase in the supply- as India imports much of their produce, the limitations put up upon the amount of produce they purchase and the limitation of the produce they can afford to purchase from their weak currency has made the inflation increase and decrease drastically over the years. The decreased amount of supply that…

“The Federal Reserve plays a major role in controlling unemployment and inflation. They rely on economists to give them data in order to control these areas. The economists use data to determine if the economy is growing or shrinking in size, the measure of total output calls the real gross domestic product is used. The real gross domestic product (Real GDP) is the market value of all final goods and services produced within a country in a giving period. Every legal goods and services paid for…

changes in interest rate taken by RBA in 2011-2015 (Tradingeconomics.com, 2016) In 2011 the reserve bank of Australia decided to cut interest rates and continued to reduce them over the next 5 years. The RBA did this in response to a slowdown of the Australian economy as shown by the downward trend in monthly GDP growth, decreasing trade scale and lowering of commodity prices. The factors driving the decisions made by the RBA would be the high currency rate and low inflation rate. 1.…

Assignment Question 1 (a) A reduction in interest rates is an expansionary move in the sense that it makes borrowing cheaper. A decrease in interest rates, therefore, will lead to an increase in investment but in the process leading to a reduction in the levels of saving since there will be a reduction in the incentive to save. The effects of this action will affect both the consumer and the producer as follows: The Consumer: Lowering interest rates chips at the incentive to save thus…

As I suggested previously, Phillips Curve emphasizes the modification of the unemployment rate and its influence on the price inflation. It also impacts on the labor demand because of the government increased spending. Nash also advocates for an accurate fall of unemployment pool. Consequently the corporations or businesses contend for smaller number of workers by uplifting ostensible remuneration. Added to that, employees have better agreement options to demand an increase in nominal wages…

required reserve ratio, discount rate, and interest rate. At the beginning of 1991 unemployment was an issue that needed addressing. To address this issue the Fed implemented a monetary policy which reduced the federal funds rate. The 1990 Gulf War led the U.S. to a recession lasting from July 1990 to March 1991. During this recession, the unemployment rate rose to 6.8% eventually peaking at 7.8% in 1992. “The Fed reacted by steadily reducing the federal…

interest rates that individuals and institutions pay. The government in charge usually appoints the central bank head to achieve their goals. On the other hand, fiscal policy is controlled by the government more specifically the minister of finance in Canada. A government uses fiscal policy to manage the economy by deciding when to tax and spend revenue or borrowing more money to cover the shortfall. - Describe how the government uses each policy if the economy is too hot and inflation is…

Ecuador’s economic crisis was extensive, but the move to dollarization reduced the inflation rate significantly from 96.1% in 2001 to 3.76% in 2015. With a lower inflation rate came an expectation of higher investment and a faster rate of economic growth. Full dollarization also benefits Ecuador by eliminating the exchange rate risk which offers advantages in the exporting and importing division of a country. With the elimination of domestic money, there…

consumption and investment, unemployment rate, and debt. Initially, the author clams that deflation drives a fallen price in consumer market which causes of “hoarding cash”, and “delaying purchases”. For instance, despite the fact of the cut-price fuel benefits consumers, deflation causes some negative effects in the economy. Also, the falling price boosts the purchasing power in short run which causes the part-time worker raises in the labor force, and leads unemployment rate fall. At the end…

that is purchased must sum up to the value of what is sold. Hence, an individual’s opportunity cost for holding money would be the income that would be generated from interest rates that would be forgone, therefore an increase in the interest rate would lead to higher savings, for a higher return and a decrease in interest rate would lead to a decrease in savings and increase in consumption. Mathematically, the total value of money required for purchases must be equal to the value of what is…