Causes of Inflation: Demand Pull initiated by MD?
Cost Push/Supply-Side caused by ?Costs and ?Supply
Stagflation- Causes both Y? P? - BAD NEWS
Expectations: Of price increases cause companies to collectively pre-empt by increasing prices causing the real price to rise
Monetary/ financial: Expansionary monetary/Fiscal policy at capacity pass on also push up AD causing inflation
Lags: Recognition, slaying -much longer for Fiscal Policies, Response - time it takes for the economy to fructify after implementation- much longer for Monetary Policies)
Deficit Tar set outing: Unsuccessful. automatic Destabilizing effect When T low, a lowering on G just exaggerates the bad situation further pushing floor T. Deficit Response Index (DRI) Is the amount the deficit changes with $1 change in GDP. Generally ?GDP ?Deficit
Absolute good: can produce using fewer resources than another
Comparative advantage: When the opportunity cost of making a good in their economy is less than the cost of another (specialization)
Terms of alternate: The ratio that domestic goods are make dod for imports.
Exchange rates: for all 2 countries there is a range of rate that impart lead to both realizing the gains of specialization.
Protectionism: Tariff: tax on imports
($1 tariff, shaded area=Govt. Revenue)
Quota: limit of imports
Export Subsidies: ? exports
Dumping: selling at below cost of production to drive out competition.
The circumstance for Protection: saves jobs, Some countries engage in unfair trade practices, Cheap foreign labor makes competition unfair, safeguards national security, discourages dependency, safeguards child industries
Balance of trade: is difference between exports and imports in country. sight have Trade Deficit or Surplus
Marginal trend to Import (MPM): Determines how much income is spent on imports IM= mY (m=mpm)...If you want to get a full essay, order it on our website: Ordercustompaper.com
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