Distinguishing Between Fiscal and Monetary Policy Doc
Added on 2021-02-19
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Economics
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Table of ContentsINTRODUCTION................................................................................................................................3MAIN BODY.......................................................................................................................................31............................................................................................................................................................3a. Defining.......................................................................................................................................3b. Distinguishing between movement along and shift of demand function with proper diagram..3c. Calculation of Price elasticity of demand. ..................................................................................52. Comparing market structures of monopoly and perfect competition with the help of diagram. .....63............................................................................................................................................................7a. Distinguishing between Fiscal and Monetary policy. Which one is carried out by the European Central Bank?..................................................................................................................................7b.......................................................................................................................................................81.......................................................................................................................................................84. Inflation causes & measures adopted by government for controlling inflation type........................8CONCLUSION....................................................................................................................................8REFERENCES.....................................................................................................................................9
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INTRODUCTIONEconomics is defined as study of terms such as production, manufacturing, distribution,consumption of different types of goods and services related to a particular business firm which arehaving capacity of influencing market demand and forces. The present report will define meaningof terms demand, supply and market. Also, explanation will be made related to shift and movementin demand function. Further, description about monopoly and perfect competition structure will beprovided. At last, focus will be made on specifying difference between fiscal and monetary policy. MAIN BODY1.a. Defining1.Demand - As per the economic principle, demand is known as consumer willingness, desireas well as ability to make purchase or consumption of particular good and service as perneeds with the willingness of consumer to pay for it. Demand for a specific good or servicewill decrease with increase in its price remaining other factors constant.2.Supply – It refers to goods and services amount which supplier is willing to offer todifferent consumer at given level of price in a specific time period (Cooter and Ulen, 2016).Supply function depends on price of good and services i.e. with low price supply level alsodecreases and vice versa.3.Market – A place where both the buyers and suppliers enters into transaction forexchanging goods, services and information of any type. It allows distributors as well assellers to sell product or service and buyers, consumers buy with exchange of price asdefined by seller.b. Distinguishing between movement along and shift of demand function with proper diagram.Normal goods are those goods for which demand increases with the increase in consumeincome level for example wheat, rice etc. The rate at which demand increases is slower than the rateat which income of consumer increases (De Grauwe, 2018).Movement along demand curve happens when changes takes place in quantity demanded for aparticular good or service as a result of change in the level of price remaining other factors constantsuch as taste and preferences, income of consumers etc.For example -
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