Long response question for Economics Yearly (1 Viewer)

[Simplicite]

Can i please have help !!!!!!

What is the financial sector? Why is it important that the government exercise some control over the financial sector? Explain how the Reserve Bank uses markert operations in an attempt to influence the overall level of economic activity.

Can i please get some help for this ??

 

[billbro]

Don't recall the definition of the financial sector but it would most likely be something along the lines of a market for money.

It is important that the gov't exerts some control in the financial sector because you don't want cases such as banks lending recklessly such as was the problem when I believe Bob Hawke reduced restrictions on banks. Also our society is based upon money and thus we need a governing body to monitor what is happening. The importance of this is shown in how to some degree poor management lead the the asian crisis where currency worth plummeted.

RBA uses market operations such as buying and selling bonds to tighten and loosen the financial market. Through its buying and selling it determines the 'overnight cash rate' which then in turn has effects on the level of economic activity.

Well maybe you can find more indepth info from the very slight and probably incorrect reply I've given.

 

[kaylz]

ummmmmmmmmmmmmm...

have you tried your textbook? or going to class?

 

[Huratio]

would u mean the 'financial markets'?
maybe u could try the sylabus, and try to structure the relevant topics in ur essay.

some of my notes:
Financial Markets: Play a crucial role in the operation of modern market economies. They provide return for those who have excess funds or savings while making loan finds available to those who need additional money.
Government Control: Refer to gov. economic aims: internal stability, external stability, economic growth, fiscal policy, monetary policy, oversees policy, structural policies.
RBA: refer to RBA functions

 

[nick1048]

Financial sector is the banking sector in the five figure circular flow of income. It transfers Savings into investments in the formula S + T + M = I + X + G (i.e. savings plus taxation plus imports = investment plus exportas plus government spending). When looking at the financial sector the Government has intervention, for example putting policy over the rate of interest the banks can impose on money borrowers. The RBA can raise or lower the standard levels of interest in order to increase or decrease economic activity, which is usually used to maintain a state of equilibrium. The financial sector once again is in the Five figure circular flow of income incase you want to look it up in a text book

 

[ameh]

Can anyone give a better definition of 'rate of interest' than whats in the textbook please?!

thanks