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Economics Marathon (2 Viewers)
- Thread starter Bobbo1
- Start date
krnofdrg
Mq Law Student :)
The RBA could intervene in the FOREX through the process of 'Dirtying the float'.
When the RBA feels that a large short term change in the exchange rate is needed maybe due to excessive speculation or other threatening factors in the economy, they may act as a buyer or seller in the FOREX in order to stablise the value of the Australian dollar ($QAUD).
To stop a depreciation the RBA will buy $AUD, putting upward pressure on the exchange rate.
On the other hand, by selling $AUD the rba will be able to put a downward pressure on the AUD to stop a rapid appreciation and cause a depreciation.
Yep good work lol!
i know it's my turn but .. i have some questions cos i've forgotten this ..... =\
how do you calculate simple multiplier with figures .. not MPC
Also,
Outline how the simple multiplier can affect economic activity. (2 marks)
i know it's my turn but .. i have some questions cos i've forgotten this ..... =\
how do you calculate simple multiplier with figures .. not MPC
Also,
Outline how the simple multiplier can affect economic activity. (2 marks)
krnofdrg
Mq Law Student :)
Im not sure for the first one "How do calculate simple multiple with figures not mpc" it's a bit vague
..But you just use a bit of algebra for it
... Although second question:
The simple expenditure in the economy is the extent to which an initial changes in aggregate demand is multiplied to give a larger change in the equilibrium level of national income. EG autonomous consumption or investment expenditure.
krnofdrg
Mq Law Student :)
idk what is the answer??
Didnt krnofdrg answer it? How does the multiplier affect eco activity? isnt it just govt spending?
An initial spending by the government will result in a direct, more than proportional increase in spending. Due to the multiplier theory by Keynes or w/e. Economic activity increases when spending occurs, government spending promotes further consumer spending, hence it accelerates economic activity for a short period of time.
An initial spending by the government will result in a direct, more than proportional increase in spending. Due to the multiplier theory by Keynes or w/e. Economic activity increases when spending occurs, government spending promotes further consumer spending, hence it accelerates economic activity for a short period of time.
when money is injected into the economy, the effect isnt one off, because when the money is spent on whatever, the person receiving the money doesnt save all of it. This person will save some of it (measured by MPS) and spend the rest (MPC), and the person who receives this money does the same thing, and so the process continues. (the initial increase has a multiplied effect on national income)
This doesnt continue forever though, because some of it is being saved each time, and eventually there will be nothing left to spend. The number of 'rounds' of spending an initial injection stimulates is measured by the multiplier. eg
when the multiplier increases, it means MPS is down and MPC is up (k=1/MPS - if MPS goes down k becomes bigger). then it means that each time, a small proportion is being saved while a large proportion is being spent, so the spending continues for a longer period of time.
Aindan
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You should probably be more technical in your use of economic terms, i.e. Income is the return earned from the four factors of production over a period of time.
slyhunter
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Dirtying the float - buy/sell AUD in the FOREX market
Monetary policy - increase demand for AUD by raising interest rates, vice versa
krnofdrg
Mq Law Student :)
Briefly evaluate the effectiveness of ONE stategy that has been used to promote economic development in a country other than Australia?
slyhunter
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China - Open Door Policy (1980), special economic zones created, attracts MNCs and FDI due to cheap labour, low taxes, less regulation = very effective as trade in imports/exports grew from 10% of GNP in 1978 to 36% by 1996
krnofdrg
Mq Law Student :)
Nice
...Can an export-oriented strategy by also a valid answer for this, but this is for South Korea..
South Korea used Export-oriented Industrialization in 60's-70's by opening domestic markets to foreign competition in exchange for market access in other countries this led -->> huge investment and etc in the economy -> Development
slyhunter
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Yes that's fine I believe.Nice
Can an export-oriented strategy by also a valid answer for this, but this is for South Korea..
South Korea used Export-oriented Industrialization in 60's-70's by opening domestic markets to foreign competition in exchange for market access in other countries this led -->> huge investment and etc in the economy -> Development
slyhunter
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Benefits
-decreases servicing costs on foreign debt - help reduce CAD
-inflationary pressures reduced as imports are cheaper
Costs
-valuation effect - loss of $A value of foreign assets
-loss of international competitiveness as Aus exports are more expensive