Macroeconomics Assignment: Oil Prices, Interest Rates, and Crisis

This macroeconomics assignment solution addresses key concepts including the impact of rising oil prices on Short-Run Aggregate Supply (SRAS), theories explaining the upward slope of the SRAS curve, and UK bank policies to control money supply and interest rates. It further analyzes the effects of rising interest rates on the economy. The assignment also explores the reasons behind the 2007-2009 global financial crisis, examining excessive risk-taking, regulatory failures, and the collapse of the housing market. Finally, it details the UK financial institutions' actions to stimulate the economy during the crisis, including liquidity injections and credit guarantee schemes. The solution provides a comprehensive overview of macroeconomic principles and their practical applications, supported by relevant references.

Macroeconomics

TABLE OF CONTENT
TABLE OF CONTENT.............................................................................................................2
QUESTION 6.............................................................................................................................3
(A) Rising oil prices and impact on SRAS........................................................................3
(B) Theories explaining SRAS curves slope and its impact on wokring upwards............4
QUEST. 7...................................................................................................................................4
(A) UK Bank policies to control money supply and interest rates....................................4
(B) Interest rates rise and its affects on economy..............................................................4
Question 8..................................................................................................................................4
(A)Reasons behind global financial crisis in 2007-2009.......................................................4
UK financial banks policy and its actions to stimulate economy while facing global
financial crisis.........................................................................................................................5
REFRENCES.............................................................................................................................5

QUESTION 6
(A) Rising oil prices and impact on SRAS
Oil prices rise has been analysed to be an essential factor which created inflation rate rise,
and reduced economic growth within world where prices have further directly worked on in
impacting prices of goods, where products made of petroleum. In terms of rising inflation,
oil prices in economy has further impact on decrease within supply nature within varied
goods because they increase prices of various services and create decline within supply curve
(Simsek, 2021.
).

(B) Theories explaining SRAS curves slope and its impact on wokring upwards
Short run aggregate supply curve has upward sloping because the aspects of quantity supllied
increase when the price rises fundamentally, where positive correlation between price level
and outputs. This further also exceeds on wider scale expansion within supply chain heads on
with change among resources prices , where price of oil and other factors of production arre
analysed actively. Technology changes and expectations of rise within future prices are also
essential aspects bringing wider scale rise among working goals within macroeconomics.
QUEST. 7
(A) UK Bank policies to control money supply and interest rates
The globally renowned UK Bank has specific focus on controlling money supply and interest
rates where itb further charges banks to borrow money from customers, which is analysed to
be bank rate. This further heads on focus towards creation of money digitally to but
corporate and government bonds which further enhances purchase or quantitative easing.
Money supply and interest rates involves keeping banking system short of money where
lending of money creates rise on interest rates, which further determines national money
supply.
(B) Interest rates rise and its affects on economy
Higher interest rates further tend to create moderate economic growth rise, where it further
enhances cost of borrowing among people which further establishes profound engagement
within social standards and towards increasing wider scale consistency. This further heads
on profound rise among parameters within disposable income and therefore limit the growth
within customers spending and larger productive rise functionally. It can be also analysed that
higher interest rates tends to further reduce inflationary pressures and causes rise within
exchange rates which shows macroeconomics role within economy.
Question 8
(A)Reasons behind global financial crisis in 2007-2009
The reasons behind most globally known financial crisis in 2007-2009 were the
excessive risk taking aspects by company in macro environment, with increased borrowings
by financial bodies such as banks and investors where regulation and policy falts were also
major reason. US house price fell and borrowers missed repayments had also created stress

within financial system, with spill over to other countries as major reason functionally.
Globally financial crisis has been found to be also essential aspect which further created
major downfall, and shutdown of various companies (Phuc and Duc, 2021.).
UK financial banks policy and its actions to stimulate economy while facing global financial
crisis
UK financial institution also further had taken up immediate steps to further increases further
liquidity within banks by further bringing on changes, within some of the dodgy mortgages
that were held for Treasury bills, whcih further enabled to create stability among economy
and also larger productive consistency. UK policy designed credit guarantee scheme to
restore confidence fundamentally, which also further established larger vivid expansion
goals.
REFRENCES
Books and journals
Phuc, N. V. and Duc, V. H., 2021. Macroeconomics determinants of exchange rate pass-
through: new evidence from the Asia-Pacific region. Emerging Markets
Finance and Trade. 57(1). pp.5-20.
Simsek, A., 2021. The macroeconomics of financial speculation. Annual Review of
Economics, 13.