Applied Economics - Essay Example

Only on StudentShare

Extract of sample
Applied Economics

There is a positive correlation between the aggregate demand and the changes in monetary policy. 'If the government wants to increase the quantity or the supply of money in its economy then it undertakes an "expansionary monetary" policy and similarly if it wants to reduce the quantity of money in the economy it adapts a "contractionary monetary policy. (Case & Fair, 2002)"'3 This means that if the quantity of money increases in the economy then the aggregate demand shifts outwards or to the right, i.e. more output is demanded at the same price. Conversely, if the supply of money shrinks in the economy then the aggregate demand shifts inward or to the left as a result of a decrease in demand of output at all the various levels of price in the economy. Graphically it can be as follows:
'Case & Fair (2002) explain that when the quantity of money increases in the economy then the interest rates fall due to which the cost of carrying out planned investment decreases and therefore there is higher investment expenditure. This in turn increases the output at each price level and the opposite happens when the quantity of money decreases in the economy.'4
The government also demands the output in terms of goods and services. ...Show more


4. Examine the ways in which monetary and fiscal policy can influence aggregate demand. Giving reasons for your answer and indicate which policy is likely to be most effective in boosting aggregate demand in the current economic situation in the UK.
The demand for goods and services in a country broadly comes from its national consumers, government and overseas demand…
Author : lenna35
Applied Economics essay example
Read Text Preview
Save Your Time for More Important Things
Let us write or edit the essay on your topic
"Applied Economics"
with a personal 20% discount.
Grab the best paper

Related Essays

Applied statistics for economics
Analysis of time series data and forecasting has been used in many fields and most commonly in the stock market prediction using the past data. Time series analysis is a form of statistical data analysis on a series of sequential data points that are usually measured at uniform time intervals over a period of time.
10 pages (2500 words) Essay
Federal government uses macroeconomics to assess and analyze the alterations in rates of taxation and supply of money which in turn influence the economic parameters like inflation and unemployment. John Maynard Keynes developed Macroeconomics in order to build theory and policies in order to ensure Great Depression of the 30s does not happen again.
6 pages (1500 words) Essay
Applied Economics
The bank obtained operational independence to set the UK monetary policy in the year 1997. In April 2013, key operational changes were enacted on the bank since the financial crisis displayed the necessity for a novel approach to financial regulation (Conaghan, 2012).
8 pages (2000 words) Essay
Behavioural Economics: The New Era
This approach has attracted various criticisms over time which had spurred wide debate among academicians. The recent global financial markets turmoil bears testimony to the fact that economic agents do not always behave in a way, which is predicted by the mathematical model of probability.
7 pages (1750 words) Essay
Gasoline Economics
power and its regulation (Holdich, & Chianelli, 2008). Equilibrium price is determined more or less by some of the same above factors in addition to the level of supply and the elasticity of supply. In other words the supply of gasoline is relatively inelastic.
7 pages (1750 words) Essay
Applied Theory of Economics
That is why to capitalize on far cheaper labor in the developing world; production has been increasingly shifted to the developing world to drive costs down. And the very practice has served as the engine of growth for this era of globalization. At no point has the world economy in total been so huge .And both the developing and the developed world has reaped the benefits of such prosperity.
4 pages (1000 words) Essay
The Principles of Economics Applied in Real Life
The unemployment rate in the United States used had been hovering below 5% for the past few years. During the past year the unemployment rate in the United States has nearly doubled to reach the mark of 9.4% as of June of 2009. It seems
2 pages (500 words) Essay
Business Economics
Moynihan and Titley (2001) have said that United Kingdom was the first country to revolutionize. It is the first industrialized country. However, these days the same country has been undergoing de industrialization. These days it has been
10 pages (2500 words) Essay
Applied economics
The human capital, as an investment, requires a cost and, at the same time, payment for any return over the monetary or non-monetary lifetime. According to Harmon et al (2003), extensive research works and literature have been
4 pages (1000 words) Essay
Applied Economics
In this case, this can be achieved through looking at data involving four major economic factors of a country namely: Inflation, money at its local currency unit (LCU), revenue collected form tax and the gross domestic product of a given country. The following
1 pages (250 words) Essay
Get a custom paper written
by a pro under your requirements!
Win a special DISCOUNT!
Put in your e-mail and click the button with your lucky finger
Your email