discussion the types of policy tools‚ its effectiveness of each policy applied in both events and ultimately useful lessons for Vietnam. Part A 1 Causes of Great Depression The 1920s witnessed an economic boom in the US. Industrial output expanded very rapidly. Money supply is expanded as the result of economic growth‚ or the speculator policy of the bank. Additionally‚ the social attitude of American are over-confident‚ consuming more than saving‚ and borrowers are consistent with the belief that price
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6B: Classical and Neoclassical Theories of Money Business cycles tend to be relatively minor and are quickly and automatically cured so that the economy will return to its original full employment equilibrium according to: (a) the population dynamics theory. (b) psychological theories of the business cycle. (c) Joseph Schumpeter’s theory of creative destruction. (d) classical macroeconomic theory. (e) external shock theory. A graph showing a positive relationship between the interest rate
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INTRODUCTION TO UNEMPLOYMENT Unemployment is a situation where people have no job whether they are quitted or being fired and they are actively searching for it. There are two theories that were explained about unemployment that is Classical theory and Keynesian theory. 2.0 THEORIES THAT EXPLAIN UNEMPLOYMENT 2.1 CLASSICAL THEORY The first theory is Classical theory. It was first developed by Karl Max. From this theory it state that the level of unemployment will increase if there is government intervention
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this paper‚ we will argue that until now all the solutions that have been agreed on the European level do not help to solve the root causes of the Greek financial problem. The national governments of the European Union do not follow any of the Keynesian ideas to overcome the crisis. The European leaders seem to have forgotten their role to act as a policy makers. Under these conditions‚ even if the Greek financial problem can be moderated‚ it cannot be solved. The above observation is highly
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dignity‚ too little regulation is unreliable and can be dangerous to an economy as seen in many events of the past. On the other hand‚ too much government control can be detrimental to an individuals pride‚ as it renounces principles of freedom. Keynesian economic principles contradicts those of Milton Friedman‚ as he believes that in times of inflation or recession‚ intervention is necessary to preserve stability within society.. Balance is necessary in a economy to avoid fluctuations and increase the
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Parkin and Bade’s text "Economics" gives the following definition of the business cycle: The business cycle is the periodic but irregular up-and-down movements in economic activity‚ measured by fluctuations in real GDP and other macroeconomic variables. If you’re looking for information on how various economic indicators and their relationship to the business cycle‚ please see A Beginner’s Guide to Economic Indicators. Parkin and Bade go on to explain: A business cycle is not a regular‚ predictable
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Short-Answer Questions for Tutorial Tests Explain the three different approaches that can be used to calculate GDP. Briefly indicate why all three approaches should give the same estimate for GDP. (3 marks) Is GDP a good measure of a country’s economic welfare? Discuss. (5 marks) Consider the following National Accounts data for the calendar year 2010. $Bill Private Consumption 1200 Imports 600 Government Purchases 600 Gross Taxation Receipts 800 Exports 500 Government Transfer Payments
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economy. * d. both a and b but not c. 143. Expansionary fiscal policy financed by government borrowing can lead to a. higher interest rates and lower private investment under the crowding-out view. b. an increase in aggregate demand under the Keynesian view. c. no change in aggregate demand under the new classical view. * d. all of the above. 144. A balanced budget means that a. aggregate consumption is in balance with aggregate saving. b. government spending is constant from year to year
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reading guide. 1. In the Keynesian theory of output what is mechanism that brings about the equilibrium level of output determined by aggregate demand? 2. ‘The stance of fiscal policy cannot be measured by the size of the actual budget deficit.’ Why not? Can the stance of fiscal policy be measured? 3. What are automatic fiscal stabilisers and what role do they play in the economic system? What factors influence these stabilisers? 4. In an economic recession why is it that an increase
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been developed based on The Circular Flow of Income. The Circular Flow of Income consists of two parts‚ the inner circular flow and injections and withdrawals. In the inner circular flow there are two basic economic institutions‚ these are firms and households and these have an economic interaction. The following diagram shows the inner circular flow of income: The model shows that firms pay money to households in the form of factor payments. In other words‚ they pay households wages‚ dividends
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