Assignment on Macro Economic

Added on - 21 Feb 2021

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MACRO-ECONOMICS
TABLE OF CONTENTSINTRODUCTION...........................................................................................................................1QUESTION 3...................................................................................................................................1a. Difference between demand pull and cost push inflation......................................................1b) Two causes of Inflation.........................................................................................................3QUESTION 4...................................................................................................................................4a. Macro economics policy to achieve unemployment rate of zero............................................4b. Classical economists interpret long-run unemployment.........................................................4c. Difference between structured and cyclical unemployment.................................................4QUESTION 5..................................................................................................................................5a. Improvement in marketing and selling skills of firm managers.............................................5b. Increases in personal income tax.............................................................................................6C & d Explaining the effect on the economic activity and the price level due to the increase inthe export and the destruction in the capital stock of the economy because of the war.............7Question 6.......................................................................................................................................8a. Evaluating the advantages and the disadvantages of the consumer price index.....................8b. Explaining lose and win situation of the people at the time of inflation................................9Question 7........................................................................................................................................9Explaining the major causes that results for the growth in the money supply...........................9CONCLUSION..............................................................................................................................10REFERENCES..............................................................................................................................11
INTRODUCTIONMacro economics is related to the large scale economic factors as a whole that includesunemployment, growth rate, gross domestic product etc. This assignment will include thedifference between demand pull and cost push inflation. Also, It will provide understandingabout the macroeconomics policy in order to measure the unemployment rate of zero.Furthermore, it will include the information regarding consumer price index.QUESTION 3a. Difference between demand pull and cost push inflationInflation is the rate at which the prices of the goods and services which are being suppliedin the economy increases at the higher rate due to which purchasing power of the consumerdecreases.Point of differenceDemand - pullcost - push inflationDefinitionWhen there is increase in thedemand at a faster rate than thesupply (Fontana and Sawyer,2016).when there is increase in theprices of the input which resultinto decrease in the supply ofoutputs.ReasonIt is caused by monetary andreal factors . Monetary factorssuch as increase in moneysupply. real factors includesincrease in exports, investmentetc.It is caused by monopolisticgroup of societyoccurrenceIt occurs when aggregatedemand of the product andservices is higher thanaggregate supply due tomonetary and real factorsIt occurs due top rise in thefactors of productionrecommendation for the policymonetary and fiscal policycontrol on price and incomepolicy1
Demand - Pull inflation: It is the inflation which arise when the demand of the productsand services is higher than the supply of out-put due top which the economy have lessproduct to supply which result into increase in the price level of the product and services(Myers, 2018).Cost- push inflation :It is the rise in the price due to rise in the prices of the factors ofproduction and thus there is reduction in the supply of output.2Illustration1: Demand pull inflation
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