Increase in Services and Cost of Oil Related Items

Added on - 13 Sep 2019

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MACRO ECONOMICS
MACRO ECONOMICS1Table of ContentsSummary of the Article 1................................................................................................................2Economics Concepts related to article.............................................................................................2Economics Analysis.........................................................................................................................4Conclusion.......................................................................................................................................9Summary of the Article 2..............................................................................................................10Economics Concepts related to article...........................................................................................10Economics Analysis.......................................................................................................................12Conclusion.....................................................................................................................................17
MACRO ECONOMICS2Article 1)Singapore consumer prices rise for 2nd straight month in January onrecovering oil prices.Summary of the article 1Singapore oil prices are recovering from a recession period and gradually showing positiveinflation in the month of January 2017. According to figures released by the Singaporedepartment of statistics on February 23 2017. The base for measuring the inflation is CPI:consumer price index which rose 0.6 percent from last month compared with the same month ayear ago. This scenario is seen after 2 years of recession from November 2014 to October 2016,and a flat CPI in November. Finally, in December this data turned positive and increased 0.2percent gradually. Recession in the oil market and car market ultimately affect the wholeeconomy and main drivers behind that long session of negative inflation. In the oil market, asudden increase in services and cost of oil-related items leads to increase the price of oil inJanuary. Overall inflation is predictable to pick up to 0.5 to 1.5 % this year, from negative 0.5 %in 2016. This mainly reflects the positive contribution of energy-related components as well assome administrative price increases.Economics Concepts related to articleReal gross domestic products: during a given period of time, the quality of all the productsproduce inside the border of a nation is known as RGDP.Inflation: a rate at which prices of goods and services increase consistently, as inflationprevailing in an economy, every currency an individual holds can buy small percent of goods andservices he can buy before.
MACRO ECONOMICS3Cost-push inflation: when the prices of inputs like labor, raw material, etc. lead to increase thecost of production; as a result price of that product increases as well, known as cost-pushinflation.Recession: consistent fall in prices and output in two successive quarters which leads to fallingin RGDP and a period of temporary decline of trade and production activities.Aggregate demand: at a given period of time, the final demand of goods and services from allthe individuals in an economy is referred as aggregate demand.Aggregate supply: during a specific period of time, the total quantity of goods and services aneconomy is planning to supply is refers as aggregate supply.Unemployment– workforce those are willing to work and looking for work but not able to findany work are refers as unemployed and percentage of them with reference to total population isunemployment.Expansionary fiscal policy: It is a policy by the government which is adopted so that themoney supply in the economy gets increased and the rate of inflation is raised. This is done bydecreasing the rate of taxes and increasing the expenditure of the government (Hansen, 2013).Thus, this helps in fighting the recessionary pressures of the economy. When the taxes arereduced, the disposable income of the people gets increased. Thus they spend more and consumemore. When the goods and services are invested into, and the people spend more, the GDP of thecountry gets improved.Full employment: It is a condition where all the people who can work and they are willing towork are employed in the economy at a particular time (Beveridge, 2014).
MACRO ECONOMICS4Economics AnalysisDetermination of price in the economyAt a given period of time, the final demand of goods and services from all the individuals in aneconomy is referred as aggregate demand. Aggregate demand is a combination of consumption,investment , government and net export.AD = C+ I + G + (X-M)Where,AD is aggregate demandC is consumptionI is investmentG is government expenditureX is exportM is importDuring a specific period of time, the total amount of products and services an economy isplanning to supply is refers as aggregate supply. Aggregate supply is different in the long andshort run, in short run aggregate supply is upward sloping because an economy is below full
MACRO ECONOMICS5employment and able to achieve full employment gradually. On the other hand, in long runaggregate supply is vertical, and economy ultimately reaches full employment level. In aneconomy, the price of all the goods and services are determined by the intersection of aggregatedemand and aggregate supply. As shown in below diagram:Determination of price by intersection of AD & ASIn the above diagram, the prices of goods and services are determined at point ‘e’ when theaggregate demand (AD) curve intersects aggregate demand (AS) curve. This is the level at whichthe optimal level of price and output of the economy can be determined.Due to fall in oil prices in, the whole economy gets affected, Recession in the oil market, and carmarket ultimately affects the whole economy and main drivers behind that long session ofnegative inflation.
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