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... growth. While aggregate demand in neighbouring countries such as Japan and South Korea profits most from trade with China, aggregate demand in other countries and regions, including Europe, also benefits.5 As China’s imports increased again more than its exports, its current account surplus declined ...
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... others. Their business is to transmit the flows of funds from those who have more funds to invest to those with a shortage who must pay for their use. Intermediation is a two-step process. First, an intermediary, say a bank, obtains funds from savers in the form of deposits. In exchange, the bank is ...
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... International substitution effect A rise in the price level, other things remaining the same, increases the price of domestic goods relative to foreign goods, so imports increase and exports decrease, which decreases the quantity of real GDP demanded. Similarly, a fall in the price level, other thin ...
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... meeting released this week, two of the nine policymakers dissented on the decision to keep rates on hold, preferring to increase the target lending rate 25 bps. In this context, the modest slowing in GDP growth during the third quarter may diminish some of the eagerness to begin raising rates or at ...
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... employment level—i.e. at something approaching full employment—this creates as a matter of course a high level of overall purchasing power in the economy, since people will have more money in their pockets to spend. This means more buoyant markets, greater business opportunities for both small and l ...
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... 1. The actual GDP price index in the U.S. is called the chain-type annual weights price index, and is more complex than can be illustrated here. 2. Once nominal GDP and the GDP price index are established, the relationship between them and real GDP is clear (see Table 7.7). 3. The base year price in ...
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... clients may start mispricing the risks associated with their decisions or may even be incentivized to increase the extent of risk taken. • In such periods, access to external sources of financing improves significantly such access is more dependent on current risk perceptions on the side of both ban ...
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...  reduce capital gains tax, corporate income tax, estate tax as they discourage saving.  replace federal income tax with a consumption ...
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... in the $NZ exchange rate results in less exports to be sold / produced and an increase in imports. Because there could be more unemployment and, therefore, less income, there will be less spending / production of consumer goods. Investment may decrease, because of lower business expansion due to low ...
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... is a shortage and pressure on buyers to offer higher prices. In a market economy, prices provide information, allocate resources and act as rationing devices. It is important to know how to illustrate situations with supply /demand . Price elasticity of demand refers to how much the quantity demande ...
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... policymakers should try to stabilize the economy. Some argue that the government should use fiscal and monetary policy to combat destabilizing fluctuations in output and employment. Others argue that policy will end up destabilizing the economy, because policies work with long ...
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... Welcome to the sixth edition of the ICAEW Economic Forecast, based on the views of the people running UK PLC; ICAEW Chartered Accountants working in businesses of all types, across every economic sector and across all regions of the UK, surveyed through the quarterly ICAEW/Grant Thornton UK Business ...
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... A. The aggregate supply curve describes the relationship between the quantity of output supplied in the short run and the price level. B. The aggregate supply curve shifts leftward when costs of production increase. C. The aggregate supply curve shifts rightward when costs of production decrease. D. ...
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... distribution of resources in the US Identify the elements of private enterprise and the various degrees of competition Explain how to evaluate an economic system Describe the key projections for the US economy Copyright ©2003 Prentice Hall, Inc. ...
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... (Rudebusch and Wu 2003) model has some advantages over a VAR for forecasting long-term interest rates, such as allowing the market’s longrun expected rate of inflation in the economy to vary over time, which is likely to have been a very important factor in the 1980s and which some studies (for exam ...
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... GDP, and Employment 1. Why is the Keynesian aggregate supply curve a horizontal line up to the fullemployment level of real GDP? • It reflects the Keynesian view that the price level does not rise as long as there is any unemployment. Gottheil - Principles of Economics, 4e © 2005 Thomson ...
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... A. The aggregate supply curve describes the relationship between the quantity of output supplied in the short run and the price level. B. The aggregate supply curve shifts leftward when costs of production increase. C. The aggregate supply curve shifts rightward when costs of production decrease. D. ...
Macroeconomics
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instructional objectives
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... When Fed buys, it raises demand and price of bonds, which in turn lowers effective interest rate on bonds. The higher price and lower interest rates make selling bonds to Fed attractive. ii. When Fed sells, the bond supply increases and bond prices fall, which raises the effective interest rate yiel ...
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Business cycle

The business cycle or economic cycle is the downward and upward movement of gross domestic product (GDP) around its long-term growth trend. These fluctuations typically involve shifts over time between periods of relatively rapid economic growth (expansions or booms), and periods of relative stagnation or decline (contractions or recessions).Used in the indefinite sense, a business cycle is a period of time containing a single boom and contraction in sequence.Business cycles are usually measured by considering the growth rate of real gross domestic product. Despite being termed cycles, these fluctuations in economic activity can prove unpredictable.A boom-and-bust cycle is one in which the expansions are rapid and the contractions are steep and severe.
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