This document provides information on economic concepts such as inflation, deflation, multipliers, and examples from history. It discusses:
1) What inflation and deflation are, examples from Zimbabwe and Germany, and problems high inflation can cause like worsening poverty and reduced savings incentives.
2) What multipliers represent and examples from economic history like Quesnay's formulation in the 18th century.
3) Examples of inflation drivers like the oil crisis of 1973 which led to recessions, energy shortages, and a move to more fuel efficient vehicles and alternative energy sources.
4) Keynes' views on preventing booms and recessions through countercyclical fiscal policies like increasing taxes during bo
- Keynesian economics believes that free markets are volatile and not always self-correcting, leading to lengthy periods of recession and depression without intervention. Keynes argued for state intervention through fiscal and monetary policy to boost aggregate demand and lift the economy out of stagnation.
- The fiscal multiplier measures the impact of changes in government spending or taxes on GDP. According to the IMF, spending multipliers tend to be larger than tax multipliers. The size of the multiplier also depends on the state of the economy and spare capacity.
- Infrastructure spending can have large multiplier effects by boosting aggregate demand and jobs. Well-targeted government investment in areas like transportation and utilities increases the capital stock and productive potential of the economy
The presentation summaries the hyperinflation in Zimbabwe, its causes, and possible remedies. The original presentation has a lot of animations which i don't think will work here.
The document provides definitions for various macroeconomic key terms:
- AAA credit rating refers to the best credit rating given to bonds, indicating negligible risk of default.
- Aggregate supply shocks reduce output and can increase inflation by affecting potential output or causing inflation.
- Austerity aims to reduce government deficits through tax increases and/or spending cuts.
- Bank runs occur when depositors lose confidence and withdraw funds due to fears the bank may collapse.
- Bond markets allow governments and firms to raise money through issuing new debt.
- The BRIC economies refer to the rising emerging markets of Brazil, Russia, India, and China.
- Bubbles occur when asset prices
This document provides an overview of inflation and deflation for an AS Macroeconomics course. It defines inflation and deflation, and how they are measured. It discusses demand-pull and cost-push inflation using AD-AS diagrams. It also examines the causes of inflation, the impact of high inflation, and policies to control inflation such as monetary and fiscal policy. Deflation is also discussed, including its potential economic consequences and policies to avoid it, using the example of Abenomics in Japan.
AS Macro Revision National Income and Standard of Livingtutor2u
This document provides an overview of key concepts related to measuring national income and standards of living, including:
1) National income measures the monetary value of goods and services produced in an economy over a period of time, usually one year. It is used to track economic growth, changes in living standards, and income distribution.
2) Gross domestic product (GDP) is the total value of national output and can be calculated in three ways: expenditure, factor incomes, or value of output. GDP per capita is used to measure standards of living.
3) Other indicators like the Gini coefficient and Human Development Index provide alternatives to GDP per capita by incorporating additional economic, social, and environmental factors.
This presentation covers some aspects of topical issues in trade and economic development. Designed for A2 economics students - links to some Financial Times videos with special reference to the work of Hidalgo and Hausmann and their index of economic complexity
AS Macro Revision: Multiplier, Accelerator and Keynesian Economicstutor2u
The document discusses key concepts in macroeconomics including the multiplier effect, accelerator effect, and Keynesian economics. It provides the following information:
1. The multiplier effect occurs when an initial change in aggregate demand leads to a multiplied change in GDP as each new round of spending generates income and further spending.
2. The accelerator effect describes how investment spending responds positively to changes in consumer demand as firms expand capacity to meet sustained changes in demand.
3. Keynesian economics holds that free markets are unstable and governments need to intervene through fiscal and monetary policy to stabilize output and employment over the business cycle.
- Keynesian economics believes that free markets are volatile and not always self-correcting, leading to lengthy periods of recession and depression without intervention. Keynes argued for state intervention through fiscal and monetary policy to boost aggregate demand and lift the economy out of stagnation.
- The fiscal multiplier measures the impact of changes in government spending or taxes on GDP. According to the IMF, spending multipliers tend to be larger than tax multipliers. The size of the multiplier also depends on the state of the economy and spare capacity.
- Infrastructure spending can have large multiplier effects by boosting aggregate demand and jobs. Well-targeted government investment in areas like transportation and utilities increases the capital stock and productive potential of the economy
The presentation summaries the hyperinflation in Zimbabwe, its causes, and possible remedies. The original presentation has a lot of animations which i don't think will work here.
The document provides definitions for various macroeconomic key terms:
- AAA credit rating refers to the best credit rating given to bonds, indicating negligible risk of default.
- Aggregate supply shocks reduce output and can increase inflation by affecting potential output or causing inflation.
- Austerity aims to reduce government deficits through tax increases and/or spending cuts.
- Bank runs occur when depositors lose confidence and withdraw funds due to fears the bank may collapse.
- Bond markets allow governments and firms to raise money through issuing new debt.
- The BRIC economies refer to the rising emerging markets of Brazil, Russia, India, and China.
- Bubbles occur when asset prices
This document provides an overview of inflation and deflation for an AS Macroeconomics course. It defines inflation and deflation, and how they are measured. It discusses demand-pull and cost-push inflation using AD-AS diagrams. It also examines the causes of inflation, the impact of high inflation, and policies to control inflation such as monetary and fiscal policy. Deflation is also discussed, including its potential economic consequences and policies to avoid it, using the example of Abenomics in Japan.
AS Macro Revision National Income and Standard of Livingtutor2u
This document provides an overview of key concepts related to measuring national income and standards of living, including:
1) National income measures the monetary value of goods and services produced in an economy over a period of time, usually one year. It is used to track economic growth, changes in living standards, and income distribution.
2) Gross domestic product (GDP) is the total value of national output and can be calculated in three ways: expenditure, factor incomes, or value of output. GDP per capita is used to measure standards of living.
3) Other indicators like the Gini coefficient and Human Development Index provide alternatives to GDP per capita by incorporating additional economic, social, and environmental factors.
This presentation covers some aspects of topical issues in trade and economic development. Designed for A2 economics students - links to some Financial Times videos with special reference to the work of Hidalgo and Hausmann and their index of economic complexity
AS Macro Revision: Multiplier, Accelerator and Keynesian Economicstutor2u
The document discusses key concepts in macroeconomics including the multiplier effect, accelerator effect, and Keynesian economics. It provides the following information:
1. The multiplier effect occurs when an initial change in aggregate demand leads to a multiplied change in GDP as each new round of spending generates income and further spending.
2. The accelerator effect describes how investment spending responds positively to changes in consumer demand as firms expand capacity to meet sustained changes in demand.
3. Keynesian economics holds that free markets are unstable and governments need to intervene through fiscal and monetary policy to stabilize output and employment over the business cycle.
Economics is the study of choice. It is about people and how they choose to use limited resource in an effort to satisfy unlimited wants. There are two important components to this definition: limited resources and unlimited wants .Together they form what is now as the problem of scarcity which is basic most of all economic problems. If we are stop and think for a moment, we can see why scarcity are such as problem there are not enough resources on this planet for people to get everything they want. As result choice must be made.
Hyperinflation and its effect on different world economiesDevanshDhruv1
What is Hyperinflation?
Causes of Hyperinflation.
Effects of Hyperinflation.
Examples of Economies that faced Hyperinflation.
Countries like Hungary, Zimbabwe, Venezuela.
Solutions of Hyperinflation.
The document discusses economic growth, which can be defined as an increase in the output an economy produces over time or an increase in its productive potential as shown by an outward shift in its production possibility frontier (PPF). The PPF depicts maximum output possibilities given available resources. Economic growth occurs when an economy employs new technology, production methods, labor, raw materials or specialization through division of labor, leading to an outward PPF shift. Inward PPF shifts indicate reduced capacity from resource depletion, failure to invest, natural disasters or asymmetric growth between sectors. Factors influencing growth include social capital, technology, investment, health, education, productivity, population changes, trade and business environment policies. GDP and GNP per capita are measures
This document provides a group assignment report on hyperinflation submitted to a professor at NMIMS University. It contains definitions of hyperinflation, warning signs, causes such as excessive money supply growth and supply shocks, models like the crisis of confidence model and monetary model, units of measurement for inflation, costs of hyperinflation, examples of severe historical hyperinflations in Germany, Zimbabwe and Hungary, latest updates on Venezuela, surviving the aftermath, and conclusions. It examines hyperinflation from economic, historical and practical perspectives.
The document discusses supply-side competitiveness and growth in the UK economy. It identifies several key supply-side challenges facing the UK, including a persistent productivity gap, high youth unemployment, low investment and research spending. It also discusses some potential policies to boost long-run supply-side growth, such as improving labour supply and mobility through immigration, investing in skills and training to boost productivity, and improving infrastructure to reduce bottlenecks. The effectiveness of these policies depends on overcoming challenges such as political opposition, significant costs, and long timeframes to see results.
This document provides an overview of macroeconomics. It defines macroeconomics as looking at the overall economy and studying economic aggregates. It discusses the importance of macroeconomics in understanding how an economy functions, formulating policies, and analyzing monetary problems. The document also notes some limitations of macroeconomics, such as ignoring individual welfare. It then contrasts macroeconomics with microeconomics, which focuses on individual units rather than aggregates.
The balance of payments (BOP) records a country's transactions with other countries. It has two main categories: the current account which covers trade in goods, services, and income, and the capital and financial account which covers capital transfers and financial flows. The overall BOP position is the change in a country's net international reserves resulting from transactions. It is calculated as the current account balance plus the capital and financial account balance minus net unclassified items. The document provides the Philippines' BOP data for 2009 and 2010, showing growth rates for each component.
The document discusses economic growth and its key drivers. It defines economic growth as a long-term expansion of a country's productive potential. The main drivers of growth include increasing capital stock, labor supply, productivity, and innovation. However, growth also faces limitations such as infrastructure gaps, export dependency, human capital problems, and rising inequality within countries. Rapid growth can increase a nation's income but also widen inequality, posing challenges for maintaining balanced and sustainable development.
Hyperinflation occurs when monthly inflation exceeds 50% and prices rapidly increase as the currency loses value. It is often associated with crises that decrease tax revenue while maintaining government spending. Hyperinflation results from an increasing money supply outpacing the supply and demand of goods. Major causes include excessive money creation, price inflation, and the velocity of money. Costs include shoe leather costs from frequent trips to the bank, menu costs to update prices, and tax complications. Examples are Armenia in 1992-1994 with inflation peaking at 73.1% and Germany in 1923 with prices doubling every two days and inflation reaching 29,525% in November.
The document discusses economic growth and development models. It provides an overview of Rostow's stages of growth model which outlines five stages that countries progress through: traditional society, preconditions for take-off, take-off, drive to maturity, and high mass consumption. Key factors that influence economic development are also examined, including natural resources, human resources, capital formation, technology, and socio-cultural factors. The application of Keynesian economic theory to developing countries is also considered.
This document discusses hyperinflation in Zimbabwe and Germany. It provides details on the causes and effects of hyperinflation in these two countries. For Zimbabwe, the key drivers included land reforms, war funding, and economic mismanagement which led the government to print more money. This caused prices to increase rapidly, with the inflation rate reaching 79.6 million percent in November 2008. Effects included currency devaluation, severe food shortages, population displacement, and declining life expectancy. Lessons highlighted include how printing excessive money can lead to hyperinflation and that price controls do not effectively stop rising prices.
Econ452 Learning Unit 10 - Part 2 - 2020 fallsakanor
This document discusses various non-tariff barriers (NTBs) to trade such as quotas, export subsidies, import quotas, and voluntary export restraints. It explains how each of these policies affect trade flows and impact producer surplus, consumer surplus, and national welfare in exporting and importing countries. Specifically, it analyzes the effects of the EU's agricultural export subsidies and the US sugar import quota. It also covers how transportation costs, local content requirements, and technological changes have impacted patterns of international trade over time.
AS Macroeconomics - Aspects of UK Fiscal Policytutor2u
The document discusses aspects of fiscal policy, including government spending, taxation, and borrowing. It provides examples of fiscal policies that could be used to influence aggregate demand and supply to achieve objectives like low inflation and high employment. There is debate around using austerity versus stimulus, as well as spending on infrastructure to boost productivity and attract investment.
1) The document discusses short-run economic fluctuations and the aggregate demand and aggregate supply model.
2) It explains that the aggregate demand curve slopes downward, as a lower price level increases consumption, investment, and net exports.
3) The aggregate supply curve is upward sloping in the short run but vertical in the long run, as the price level does not affect the quantity supplied over the long term.
Short-run economic fluctuations are caused by shifts in aggregate demand and aggregate supply. A decrease in aggregate demand causes output to fall in the short run as the economy enters a recession, with declining GDP and rising unemployment. In the long run, output returns to its natural rate. An adverse shift in aggregate supply also causes output to fall and can lead to stagflation, with both recession and inflation. Policymakers aim to stabilize output by influencing aggregate demand.
National income measures the monetary value of all goods and services produced in a country over a period of time, usually one year. Gross domestic product (GDP) is the primary measure of national income and can be calculated through expenditures, factor incomes, or output. Real GDP adjusts for inflation to measure the actual volume of economic activity by holding prices constant. While nominal GDP shows current monetary values, real GDP indicates economic growth. National income data helps analyze economic growth, living standards, and income distribution.
AS Macroeconomics - The Economic Cycle (April 2015)tutor2u
This document contains information for an AS Macroeconomics revision workshop in March 2015. It includes discussion of aggregate demand and supply, the economic cycle, key macroeconomic indicators in the UK, components of aggregate demand, foreign direct investment into the UK, and factors affecting consumption and investment. The workshop covers topics like recessions, inflation, fiscal and monetary policy, and productivity to help students prepare for their exams.
AS Macro Revision: Migration and the Economytutor2u
This document provides an overview of labor migration and its economic impacts. It discusses:
1) The scale of global labor migration, with over 200 million international migrants worldwide.
2) The economic benefits of net inward migration, including increased skills, labor supply, productivity, and tax revenues.
3) How labor migration can increase both aggregate demand and long-run aggregate supply using AD-AS analysis.
4) Potential risks and costs of migration like welfare costs, job displacement of domestic workers, and rising housing costs.
5) The challenges of quantifying the overall effects, which depend on migrant skills, job placement, capital investment responses, and dynamic innovation impacts.
Unemployment occurs when able and willing workers cannot find jobs despite actively searching. It means scarce resources are not being used to produce goods and services. Persistently high unemployment has damaging economic and social costs. It is measured using terms like the claimant count and labor force survey. Types of unemployment include seasonal, structural, frictional, and cyclical. Policies aim to stimulate labor demand through macroeconomic stimulus and reducing business costs, as well as labor supply through training, mobility, and work incentives. Youth unemployment and long-term unemployment present ongoing challenges.
This document discusses several economic concepts including inflation, deflation, multipliers, and demand-pull vs cost-push inflation. It provides the following examples:
1. Zimbabwe in the 2000s experienced hyperinflation with prices rising over 79 million percent due to excessive money printing.
2. Germany in the 1920s suffered from hyperinflation as the government excessively printed money to pay reparations after WWI, causing prices to double every few days.
3. The oil crisis of the 1970s led to cost-push inflation as OPEC restricted oil exports and raised prices, contributing to a global recession.
4. Dublin's property boom of the 2000s saw demand-pull inflation
This document discusses money, inflation, and monetary policy. It defines money and inflation, and explains the classical theory that inflation is caused by increasing the money supply. Historical inflation rates are provided from the 19th century to 1990s. The quantity theory of money holds that the price level is determined by the money supply. Hyperinflation occurs when prices rise over 50% per month due to too much money printing. The costs of inflation include shoe leather costs, menu costs, and redistribution of wealth. Monetary policy aims to balance money supply and demand to achieve price stability.
Economics is the study of choice. It is about people and how they choose to use limited resource in an effort to satisfy unlimited wants. There are two important components to this definition: limited resources and unlimited wants .Together they form what is now as the problem of scarcity which is basic most of all economic problems. If we are stop and think for a moment, we can see why scarcity are such as problem there are not enough resources on this planet for people to get everything they want. As result choice must be made.
Hyperinflation and its effect on different world economiesDevanshDhruv1
What is Hyperinflation?
Causes of Hyperinflation.
Effects of Hyperinflation.
Examples of Economies that faced Hyperinflation.
Countries like Hungary, Zimbabwe, Venezuela.
Solutions of Hyperinflation.
The document discusses economic growth, which can be defined as an increase in the output an economy produces over time or an increase in its productive potential as shown by an outward shift in its production possibility frontier (PPF). The PPF depicts maximum output possibilities given available resources. Economic growth occurs when an economy employs new technology, production methods, labor, raw materials or specialization through division of labor, leading to an outward PPF shift. Inward PPF shifts indicate reduced capacity from resource depletion, failure to invest, natural disasters or asymmetric growth between sectors. Factors influencing growth include social capital, technology, investment, health, education, productivity, population changes, trade and business environment policies. GDP and GNP per capita are measures
This document provides a group assignment report on hyperinflation submitted to a professor at NMIMS University. It contains definitions of hyperinflation, warning signs, causes such as excessive money supply growth and supply shocks, models like the crisis of confidence model and monetary model, units of measurement for inflation, costs of hyperinflation, examples of severe historical hyperinflations in Germany, Zimbabwe and Hungary, latest updates on Venezuela, surviving the aftermath, and conclusions. It examines hyperinflation from economic, historical and practical perspectives.
The document discusses supply-side competitiveness and growth in the UK economy. It identifies several key supply-side challenges facing the UK, including a persistent productivity gap, high youth unemployment, low investment and research spending. It also discusses some potential policies to boost long-run supply-side growth, such as improving labour supply and mobility through immigration, investing in skills and training to boost productivity, and improving infrastructure to reduce bottlenecks. The effectiveness of these policies depends on overcoming challenges such as political opposition, significant costs, and long timeframes to see results.
This document provides an overview of macroeconomics. It defines macroeconomics as looking at the overall economy and studying economic aggregates. It discusses the importance of macroeconomics in understanding how an economy functions, formulating policies, and analyzing monetary problems. The document also notes some limitations of macroeconomics, such as ignoring individual welfare. It then contrasts macroeconomics with microeconomics, which focuses on individual units rather than aggregates.
The balance of payments (BOP) records a country's transactions with other countries. It has two main categories: the current account which covers trade in goods, services, and income, and the capital and financial account which covers capital transfers and financial flows. The overall BOP position is the change in a country's net international reserves resulting from transactions. It is calculated as the current account balance plus the capital and financial account balance minus net unclassified items. The document provides the Philippines' BOP data for 2009 and 2010, showing growth rates for each component.
The document discusses economic growth and its key drivers. It defines economic growth as a long-term expansion of a country's productive potential. The main drivers of growth include increasing capital stock, labor supply, productivity, and innovation. However, growth also faces limitations such as infrastructure gaps, export dependency, human capital problems, and rising inequality within countries. Rapid growth can increase a nation's income but also widen inequality, posing challenges for maintaining balanced and sustainable development.
Hyperinflation occurs when monthly inflation exceeds 50% and prices rapidly increase as the currency loses value. It is often associated with crises that decrease tax revenue while maintaining government spending. Hyperinflation results from an increasing money supply outpacing the supply and demand of goods. Major causes include excessive money creation, price inflation, and the velocity of money. Costs include shoe leather costs from frequent trips to the bank, menu costs to update prices, and tax complications. Examples are Armenia in 1992-1994 with inflation peaking at 73.1% and Germany in 1923 with prices doubling every two days and inflation reaching 29,525% in November.
The document discusses economic growth and development models. It provides an overview of Rostow's stages of growth model which outlines five stages that countries progress through: traditional society, preconditions for take-off, take-off, drive to maturity, and high mass consumption. Key factors that influence economic development are also examined, including natural resources, human resources, capital formation, technology, and socio-cultural factors. The application of Keynesian economic theory to developing countries is also considered.
This document discusses hyperinflation in Zimbabwe and Germany. It provides details on the causes and effects of hyperinflation in these two countries. For Zimbabwe, the key drivers included land reforms, war funding, and economic mismanagement which led the government to print more money. This caused prices to increase rapidly, with the inflation rate reaching 79.6 million percent in November 2008. Effects included currency devaluation, severe food shortages, population displacement, and declining life expectancy. Lessons highlighted include how printing excessive money can lead to hyperinflation and that price controls do not effectively stop rising prices.
Econ452 Learning Unit 10 - Part 2 - 2020 fallsakanor
This document discusses various non-tariff barriers (NTBs) to trade such as quotas, export subsidies, import quotas, and voluntary export restraints. It explains how each of these policies affect trade flows and impact producer surplus, consumer surplus, and national welfare in exporting and importing countries. Specifically, it analyzes the effects of the EU's agricultural export subsidies and the US sugar import quota. It also covers how transportation costs, local content requirements, and technological changes have impacted patterns of international trade over time.
AS Macroeconomics - Aspects of UK Fiscal Policytutor2u
The document discusses aspects of fiscal policy, including government spending, taxation, and borrowing. It provides examples of fiscal policies that could be used to influence aggregate demand and supply to achieve objectives like low inflation and high employment. There is debate around using austerity versus stimulus, as well as spending on infrastructure to boost productivity and attract investment.
1) The document discusses short-run economic fluctuations and the aggregate demand and aggregate supply model.
2) It explains that the aggregate demand curve slopes downward, as a lower price level increases consumption, investment, and net exports.
3) The aggregate supply curve is upward sloping in the short run but vertical in the long run, as the price level does not affect the quantity supplied over the long term.
Short-run economic fluctuations are caused by shifts in aggregate demand and aggregate supply. A decrease in aggregate demand causes output to fall in the short run as the economy enters a recession, with declining GDP and rising unemployment. In the long run, output returns to its natural rate. An adverse shift in aggregate supply also causes output to fall and can lead to stagflation, with both recession and inflation. Policymakers aim to stabilize output by influencing aggregate demand.
National income measures the monetary value of all goods and services produced in a country over a period of time, usually one year. Gross domestic product (GDP) is the primary measure of national income and can be calculated through expenditures, factor incomes, or output. Real GDP adjusts for inflation to measure the actual volume of economic activity by holding prices constant. While nominal GDP shows current monetary values, real GDP indicates economic growth. National income data helps analyze economic growth, living standards, and income distribution.
AS Macroeconomics - The Economic Cycle (April 2015)tutor2u
This document contains information for an AS Macroeconomics revision workshop in March 2015. It includes discussion of aggregate demand and supply, the economic cycle, key macroeconomic indicators in the UK, components of aggregate demand, foreign direct investment into the UK, and factors affecting consumption and investment. The workshop covers topics like recessions, inflation, fiscal and monetary policy, and productivity to help students prepare for their exams.
AS Macro Revision: Migration and the Economytutor2u
This document provides an overview of labor migration and its economic impacts. It discusses:
1) The scale of global labor migration, with over 200 million international migrants worldwide.
2) The economic benefits of net inward migration, including increased skills, labor supply, productivity, and tax revenues.
3) How labor migration can increase both aggregate demand and long-run aggregate supply using AD-AS analysis.
4) Potential risks and costs of migration like welfare costs, job displacement of domestic workers, and rising housing costs.
5) The challenges of quantifying the overall effects, which depend on migrant skills, job placement, capital investment responses, and dynamic innovation impacts.
Unemployment occurs when able and willing workers cannot find jobs despite actively searching. It means scarce resources are not being used to produce goods and services. Persistently high unemployment has damaging economic and social costs. It is measured using terms like the claimant count and labor force survey. Types of unemployment include seasonal, structural, frictional, and cyclical. Policies aim to stimulate labor demand through macroeconomic stimulus and reducing business costs, as well as labor supply through training, mobility, and work incentives. Youth unemployment and long-term unemployment present ongoing challenges.
This document discusses several economic concepts including inflation, deflation, multipliers, and demand-pull vs cost-push inflation. It provides the following examples:
1. Zimbabwe in the 2000s experienced hyperinflation with prices rising over 79 million percent due to excessive money printing.
2. Germany in the 1920s suffered from hyperinflation as the government excessively printed money to pay reparations after WWI, causing prices to double every few days.
3. The oil crisis of the 1970s led to cost-push inflation as OPEC restricted oil exports and raised prices, contributing to a global recession.
4. Dublin's property boom of the 2000s saw demand-pull inflation
This document discusses money, inflation, and monetary policy. It defines money and inflation, and explains the classical theory that inflation is caused by increasing the money supply. Historical inflation rates are provided from the 19th century to 1990s. The quantity theory of money holds that the price level is determined by the money supply. Hyperinflation occurs when prices rise over 50% per month due to too much money printing. The costs of inflation include shoe leather costs, menu costs, and redistribution of wealth. Monetary policy aims to balance money supply and demand to achieve price stability.
This document discusses money, inflation, and monetary policy. It defines money and inflation, and explains the classical theory that inflation is caused by increasing the money supply. Historical inflation rates are provided from the 19th century to 1990s. The quantity theory of money holds that the price level is determined by the money supply. Hyperinflation occurs when prices rise over 50% per month due to too much money printing. The costs of inflation include shoe leather costs, menu costs, and redistribution of wealth. Monetary policy aims to balance money supply and demand to achieve price stability.
This document discusses money, inflation, and monetary policy. It defines money as assets used to purchase goods and services, and inflation as a general increase in prices. The quantity theory of money holds that inflation is primarily caused by increasing the money supply. When the money supply increases, the price level must also rise for monetary equilibrium to be maintained. Hyperinflation, with prices rising over 50% per month, can occur if a government prints too much money to fund spending. The costs of inflation include shoeleather costs, menu costs, and a redistribution of wealth through unexpected price changes.
CHAPTER III MONEY GROWTH AND INFLATION.pdfMengsongNguon
The document discusses several key aspects of inflation and its causes according to economic theory:
1. Inflation is caused by increases in the money supply beyond growth in the real output of the economy. The quantity theory of money posits that changes in the money supply directly impact the price level.
2. An increase in the money supply lowers the value of money and raises the price level in the long run until monetary equilibrium is reached.
3. Governments can cause hyperinflation by printing too much money to fund spending, in effect imposing an "inflation tax" on holders of the currency.
4. Inflation imposes economic costs like shoe leather costs, menu costs, tax
The document discusses the classical theory of inflation and how it relates to money supply. It states that inflation is defined as a rise in the overall price level in an economy. The quantity theory of money explains that inflation is primarily caused by increases in the money supply as controlled by the central bank. When the money supply grows faster than the amount of goods and services, it leads to too much money chasing too few goods and a rise in prices, or inflation. The document also notes that hyperinflation, which is a very high rate of inflation, can occur when governments print too much money to fund spending.
This document discusses inflation, including types of inflation, causes of inflation, and measures to control inflation. It defines inflation as a sustained increase in general price levels over time. The main types are creeping, walking, running, and hyperinflation. Causes include demand-pull and cost-push factors. Measures to control inflation involve monetary policies like changing reserve requirements or interest rates, fiscal policies like adjusting government spending/taxation, and other supply-side policies. Extreme examples of hyperinflation in countries like Hungary, Zimbabwe, Yugoslavia, Germany, and Greece are provided where monthly inflation rates exceeded thousands of percent and prices doubled within days.
This document discusses inflation, including types of inflation, causes of inflation, and measures to control inflation. It provides examples of extreme hyperinflation cases in countries like Hungary, Zimbabwe, Yugoslavia/Republika Srpska, Germany, and Greece. The main points are: (1) Inflation is a sustained increase in prices over time, reducing purchasing power. (2) Causes include excess demand/money supply and increasing costs. (3) Control measures center on monetary policies like interest rates and reserves, fiscal policies, and output/price controls. (4) Examples show how hyperinflation reached monthly rates over 10,000% and prices doubled within hours or days.
This document discusses inflation, including types of inflation, causes of inflation, and measures to control inflation. It provides examples of extreme hyperinflation cases in countries like Hungary, Zimbabwe, Yugoslavia/Republika Srpska, Germany, and Greece. The main points are: (1) Inflation is a sustained increase in prices over time, reducing purchasing power. (2) Causes include excess demand/money supply and increasing costs. (3) Control measures center on monetary policies like interest rates and reserves, fiscal policies, and output/price controls. (4) Examples show how hyperinflation reached monthly rates over 10,000% and prices doubled within hours or days.
This document discusses theories of inflation and the quantity theory of money. It defines inflation as a sustained increase in the overall price level over time. The quantity theory of money holds that inflation is primarily caused by increases in the money supply, as more money chasing the same amount of goods causes prices to rise. The document also discusses costs of inflation like menu costs and shoe leather costs, as well as the redistributive effects of unexpected inflation.
This document provides an overview of money supply, inflation, and related concepts. It begins with introducing money as a medium of exchange, measure of value, and store of value. It then discusses the demand and supply of money, as well as theories like the quantity theory of money. The document defines inflation and its different types. It examines causes of inflation like demand-pull and cost-push factors. It also explores the relationship between inflation and employment via Phillips Curve. The document concludes by looking at ways to measure and control inflation through monetary and fiscal policy tools.
When disasters strike, markets can help allocate scarce resources through price signals. Prices rise in response to supply shocks and consumption shocks to ration goods. Higher prices encourage conservation and signal producers to increase supply. Case studies of hurricanes Katrina and Rita found gasoline production declined in affected areas but increased elsewhere as prices rose, avoiding shortages. However, price controls intended to help consumers can cause shortages and inefficient allocation. Markets best address scarcity through decentralized price adjustments.
This document discusses several macroeconomic problems including inflation, balance of payments issues, and fluctuations in foreign exchange rates. It defines inflation and discusses how it is measured using price indices. The main causes of inflation are identified as the quantity theory of money, cost-push inflation, and demand-pull inflation. The document also defines the balance of payments and its components, and discusses potential problems like disequilibrium. Fluctuations in foreign exchange rates are covered, including causes like changes in imports/exports and interest rates, and the effects of currency appreciation and depreciation.
Hyperinflation occurs when inflation rapidly increases and a currency loses value quickly. The document discusses hyperinflation affecting Zimbabwe and Germany in the 1920s. Causes of hyperinflation include excessive money printing, imbalances between supply and demand, and loss of confidence in an economy. Consequences are decreases in purchasing power, lack of investment, and wealth redistribution. Stopping hyperinflation requires monetary and fiscal reforms like adopting a new currency and balancing government budgets.
This document discusses inflation and how it is measured. It provides the following key points:
1. Inflation is defined as a general rise in prices over time which reduces the purchasing power of money. It is commonly measured using price indices like the Consumer Price Index (CPI).
2. The CPI tracks the prices of goods and services in a market basket over time, using a base year (often 1982) as a benchmark. It expresses current prices as a percentage of base year prices to calculate inflation rates.
3. There are three main causes of inflation - too much money printing by the government, too much spending outpacing production (demand-pull), and higher production costs pushing prices up (
The document discusses current issues affecting global supply chains. Inflation has increased due to massive government spending during COVID and disruptions to production. Supply chain disruptions started with panic buying during lockdowns and lack of shipping container capacity. Shortages of computer chips and natural resources have impacted multiple industries. The Russia-Ukraine war further strained supply of commodities, food, and shipping routes. Companies are exploring options like nearshoring and dual sourcing to build more resilient supply chains within regions in response to COVID and geopolitical risks.
Inflation leads to a decline in the value of money over time as prices rise. There are different types of inflation including creeping, walking, galloping, and hyperinflation depending on the rate of price increases. Inflation can be caused by demand-pull factors like increases in aggregate demand or cost-push factors like increases in production costs. Central banks use monetary policies like raising interest rates and fiscal policies to control inflation. A business cycle involves periodic expansions and contractions in economic activity around the long-run growth trend, with stages including peak, recession, trough, and recovery.
Financial forces in international business2ajikesh
The document discusses several key concepts related to international finance and how they impact business:
1. Foreign exchange rates determine the value of currencies based on supply and demand. Fluctuations in exchange rates can significantly impact the profits of multinational businesses.
2. A country's balance of payments records transactions with other countries. A current account deficit occurs when payments to other countries exceed payments received, which can burden a country with high interest payments if financed through borrowing.
3. Inflation and deflation impact businesses through changing costs, asset values, and consumer demand. Moderate inflation allows businesses to raise prices but high inflation increases costs like wages and makes debt repayment more difficult.
The document discusses the business cycle and its key stages and features. It defines the business cycle as the fluctuations in economic activity around its long-term trend, involving periods of growth and periods of decline. The main stages are identified as boom, recession, slump, and recovery. Other key points covered include the periodicity and self-reinforcing nature of business cycles as well as different theories that attempt to explain the causes of the cycle such as monetary, fiscal policy, innovation, and overproduction theories.
This document discusses inflation in Pakistan. It defines inflation as a sustained increase in prices over time and notes it reduces purchasing power. The document then covers historical forms of currency, current methods of measuring inflation in Pakistan, past inflation rates, ongoing causes like rupee depreciation, and measures to control inflation through monetary, fiscal and general policies. In conclusion, it states high inflation has impacted many in Pakistan and strategic planning is needed to control it, including encouraging domestic production.
Ivanti’s Patch Tuesday breakdown goes beyond patching your applications and brings you the intelligence and guidance needed to prioritize where to focus your attention first. Catch early analysis on our Ivanti blog, then join industry expert Chris Goettl for the Patch Tuesday Webinar Event. There we’ll do a deep dive into each of the bulletins and give guidance on the risks associated with the newly-identified vulnerabilities.
zkStudyClub - LatticeFold: A Lattice-based Folding Scheme and its Application...Alex Pruden
Folding is a recent technique for building efficient recursive SNARKs. Several elegant folding protocols have been proposed, such as Nova, Supernova, Hypernova, Protostar, and others. However, all of them rely on an additively homomorphic commitment scheme based on discrete log, and are therefore not post-quantum secure. In this work we present LatticeFold, the first lattice-based folding protocol based on the Module SIS problem. This folding protocol naturally leads to an efficient recursive lattice-based SNARK and an efficient PCD scheme. LatticeFold supports folding low-degree relations, such as R1CS, as well as high-degree relations, such as CCS. The key challenge is to construct a secure folding protocol that works with the Ajtai commitment scheme. The difficulty, is ensuring that extracted witnesses are low norm through many rounds of folding. We present a novel technique using the sumcheck protocol to ensure that extracted witnesses are always low norm no matter how many rounds of folding are used. Our evaluation of the final proof system suggests that it is as performant as Hypernova, while providing post-quantum security.
Paper Link: https://eprint.iacr.org/2024/257
Generating privacy-protected synthetic data using Secludy and MilvusZilliz
During this demo, the founders of Secludy will demonstrate how their system utilizes Milvus to store and manipulate embeddings for generating privacy-protected synthetic data. Their approach not only maintains the confidentiality of the original data but also enhances the utility and scalability of LLMs under privacy constraints. Attendees, including machine learning engineers, data scientists, and data managers, will witness first-hand how Secludy's integration with Milvus empowers organizations to harness the power of LLMs securely and efficiently.
Taking AI to the Next Level in Manufacturing.pdfssuserfac0301
Read Taking AI to the Next Level in Manufacturing to gain insights on AI adoption in the manufacturing industry, such as:
1. How quickly AI is being implemented in manufacturing.
2. Which barriers stand in the way of AI adoption.
3. How data quality and governance form the backbone of AI.
4. Organizational processes and structures that may inhibit effective AI adoption.
6. Ideas and approaches to help build your organization's AI strategy.
Skybuffer SAM4U tool for SAP license adoptionTatiana Kojar
Manage and optimize your license adoption and consumption with SAM4U, an SAP free customer software asset management tool.
SAM4U, an SAP complimentary software asset management tool for customers, delivers a detailed and well-structured overview of license inventory and usage with a user-friendly interface. We offer a hosted, cost-effective, and performance-optimized SAM4U setup in the Skybuffer Cloud environment. You retain ownership of the system and data, while we manage the ABAP 7.58 infrastructure, ensuring fixed Total Cost of Ownership (TCO) and exceptional services through the SAP Fiori interface.
The Microsoft 365 Migration Tutorial For Beginner.pptxoperationspcvita
This presentation will help you understand the power of Microsoft 365. However, we have mentioned every productivity app included in Office 365. Additionally, we have suggested the migration situation related to Office 365 and how we can help you.
You can also read: https://www.systoolsgroup.com/updates/office-365-tenant-to-tenant-migration-step-by-step-complete-guide/
Freshworks Rethinks NoSQL for Rapid Scaling & Cost-EfficiencyScyllaDB
Freshworks creates AI-boosted business software that helps employees work more efficiently and effectively. Managing data across multiple RDBMS and NoSQL databases was already a challenge at their current scale. To prepare for 10X growth, they knew it was time to rethink their database strategy. Learn how they architected a solution that would simplify scaling while keeping costs under control.
"Frontline Battles with DDoS: Best practices and Lessons Learned", Igor IvaniukFwdays
At this talk we will discuss DDoS protection tools and best practices, discuss network architectures and what AWS has to offer. Also, we will look into one of the largest DDoS attacks on Ukrainian infrastructure that happened in February 2022. We'll see, what techniques helped to keep the web resources available for Ukrainians and how AWS improved DDoS protection for all customers based on Ukraine experience
Introduction of Cybersecurity with OSS at Code Europe 2024Hiroshi SHIBATA
I develop the Ruby programming language, RubyGems, and Bundler, which are package managers for Ruby. Today, I will introduce how to enhance the security of your application using open-source software (OSS) examples from Ruby and RubyGems.
The first topic is CVE (Common Vulnerabilities and Exposures). I have published CVEs many times. But what exactly is a CVE? I'll provide a basic understanding of CVEs and explain how to detect and handle vulnerabilities in OSS.
Next, let's discuss package managers. Package managers play a critical role in the OSS ecosystem. I'll explain how to manage library dependencies in your application.
I'll share insights into how the Ruby and RubyGems core team works to keep our ecosystem safe. By the end of this talk, you'll have a better understanding of how to safeguard your code.
Fueling AI with Great Data with Airbyte WebinarZilliz
This talk will focus on how to collect data from a variety of sources, leveraging this data for RAG and other GenAI use cases, and finally charting your course to productionalization.
Monitoring and Managing Anomaly Detection on OpenShift.pdfTosin Akinosho
Monitoring and Managing Anomaly Detection on OpenShift
Overview
Dive into the world of anomaly detection on edge devices with our comprehensive hands-on tutorial. This SlideShare presentation will guide you through the entire process, from data collection and model training to edge deployment and real-time monitoring. Perfect for those looking to implement robust anomaly detection systems on resource-constrained IoT/edge devices.
Key Topics Covered
1. Introduction to Anomaly Detection
- Understand the fundamentals of anomaly detection and its importance in identifying unusual behavior or failures in systems.
2. Understanding Edge (IoT)
- Learn about edge computing and IoT, and how they enable real-time data processing and decision-making at the source.
3. What is ArgoCD?
- Discover ArgoCD, a declarative, GitOps continuous delivery tool for Kubernetes, and its role in deploying applications on edge devices.
4. Deployment Using ArgoCD for Edge Devices
- Step-by-step guide on deploying anomaly detection models on edge devices using ArgoCD.
5. Introduction to Apache Kafka and S3
- Explore Apache Kafka for real-time data streaming and Amazon S3 for scalable storage solutions.
6. Viewing Kafka Messages in the Data Lake
- Learn how to view and analyze Kafka messages stored in a data lake for better insights.
7. What is Prometheus?
- Get to know Prometheus, an open-source monitoring and alerting toolkit, and its application in monitoring edge devices.
8. Monitoring Application Metrics with Prometheus
- Detailed instructions on setting up Prometheus to monitor the performance and health of your anomaly detection system.
9. What is Camel K?
- Introduction to Camel K, a lightweight integration framework built on Apache Camel, designed for Kubernetes.
10. Configuring Camel K Integrations for Data Pipelines
- Learn how to configure Camel K for seamless data pipeline integrations in your anomaly detection workflow.
11. What is a Jupyter Notebook?
- Overview of Jupyter Notebooks, an open-source web application for creating and sharing documents with live code, equations, visualizations, and narrative text.
12. Jupyter Notebooks with Code Examples
- Hands-on examples and code snippets in Jupyter Notebooks to help you implement and test anomaly detection models.
5th LF Energy Power Grid Model Meet-up SlidesDanBrown980551
5th Power Grid Model Meet-up
It is with great pleasure that we extend to you an invitation to the 5th Power Grid Model Meet-up, scheduled for 6th June 2024. This event will adopt a hybrid format, allowing participants to join us either through an online Mircosoft Teams session or in person at TU/e located at Den Dolech 2, Eindhoven, Netherlands. The meet-up will be hosted by Eindhoven University of Technology (TU/e), a research university specializing in engineering science & technology.
Power Grid Model
The global energy transition is placing new and unprecedented demands on Distribution System Operators (DSOs). Alongside upgrades to grid capacity, processes such as digitization, capacity optimization, and congestion management are becoming vital for delivering reliable services.
Power Grid Model is an open source project from Linux Foundation Energy and provides a calculation engine that is increasingly essential for DSOs. It offers a standards-based foundation enabling real-time power systems analysis, simulations of electrical power grids, and sophisticated what-if analysis. In addition, it enables in-depth studies and analysis of the electrical power grid’s behavior and performance. This comprehensive model incorporates essential factors such as power generation capacity, electrical losses, voltage levels, power flows, and system stability.
Power Grid Model is currently being applied in a wide variety of use cases, including grid planning, expansion, reliability, and congestion studies. It can also help in analyzing the impact of renewable energy integration, assessing the effects of disturbances or faults, and developing strategies for grid control and optimization.
What to expect
For the upcoming meetup we are organizing, we have an exciting lineup of activities planned:
-Insightful presentations covering two practical applications of the Power Grid Model.
-An update on the latest advancements in Power Grid -Model technology during the first and second quarters of 2024.
-An interactive brainstorming session to discuss and propose new feature requests.
-An opportunity to connect with fellow Power Grid Model enthusiasts and users.
What is an RPA CoE? Session 1 – CoE VisionDianaGray10
In the first session, we will review the organization's vision and how this has an impact on the COE Structure.
Topics covered:
• The role of a steering committee
• How do the organization’s priorities determine CoE Structure?
Speaker:
Chris Bolin, Senior Intelligent Automation Architect Anika Systems
Programming Foundation Models with DSPy - Meetup SlidesZilliz
Prompting language models is hard, while programming language models is easy. In this talk, I will discuss the state-of-the-art framework DSPy for programming foundation models with its powerful optimizers and runtime constraint system.
2. What is The Multiplier?
• The multiplier Is the number of times an injection of
money leads to an increase in the national income.
The size of the multiplier depends on
• The marginal prosperity to consume
• The marginal prosperity to save
• The marginal prosperity to tax
• The marginal prosperity to import
3. Example of The Multiplier from
Economic History
• The Economic table of Francois Quesnay, laid the foundation of
the Physiocrat school of economics which is credited as the first
precise formulation of interdependent systems in economics
and the origin of multiplier theory.
• In the economic table, one sees variables in one period feeding
into variables in the next period and a constant rate of flow
yields geometric series, which computes a multiplier.
• The modern theory of the multiplier was developed in the
1930s, by Kahn, Keynes and Giblin.
4. What is Inflation?
• Inflation is the rate at which the general level of prices
for goods and services is rising and subsequently
purchasing power is falling.
• This occurs when demand for products and services by
consumers is stronger than the supply of the desired
products and services.
• Debtors gain in the short term as they can repay the
load with inflated currency which is worth less.
• An inflation rate is the percentage increase in the price
of goods per year.
5. Example of Inflation from
Economic History
• Zimbabwe - 2006 to 2009
• Inflation reached 66,212 % in December 2007, the highest in
the world at that time.
• In 2009 the Zimbabwe government issued the Z$100 trillion bill
as inflation eroded purchasing power.
• Shortly after the Zimbabwean dollar was abandoned in favour
of foreign currencies.
• A roll of toilet roll cost 145,750 Zimbabwe dollars
7. Example of other Inflation
from Economic History
Highest Monthly Inflation Rates in History
Country
Month with highest
inflation rate
Highest monthly
inflation rate
Equivalent daily
inflation rate
Time required for
prices to double
Hungary
July 1946
1.30 x 10 %
195%
15.6 hours
Zimbabwe
Mid-November
2008 (latest
measurable)
79,600,000,000%
98.0%
24.7 hours
Yugoslavia
January 1994
313,000,000%
64.6%
1.4 days
Germany
October 1923
29,500%
20.9%
3.7 days
Greece
November 1944
11,300%
17.1%
4.5 days
China
May 1949
4,210%
13.4%
5.6 days
16
8. What is Deflation?
• Deflation is a decrease in the general price level often caused
by a reduction in the supply of money or credit, it can also be
caused by a decrease in government personal or investment
spending.
• Deflation is an indication that the economic conditions
deteriorating.
• It is also usually associated with unemployment.
9. Example of The Deflation from
Economic History
The Great Depression 1929-1940
• The Great Depression plunged the American
people into an economic crisis unlike any endured
country had seen before or since.
• It was worst and longest downturn in economic
history, it threw millions of hardworking individuals
into poverty and for more than a decade neither the
free market nor the federal government was able to
restore prosperity.
• Unemployment reached 24.1 percent in 1993 , the
stock market crashed, and consumers lost much of
their savings.
10. Six problems caused by high inflation
• Rising prices causes worsening poverty as the essentials for
survival become more expensive which makes it less attainable
to those with low income.
• It creates uncertainty and entrepreneurs will be reluctant to
invest which will slow down potential for economic growth
• High inflation can reduce the incentive to save.
11. Six problems caused by high inflation
• Shoe leather costs – when prices are unstable there will be an
increase in search times to discover more about prices. It
increases the opportunity cost of holding money so more
people make visits to their banks.
• Consumers and businesses on fixed incomes will lose out .
• Menu costs – is extra costs to firms of changing price
information which can be important for companies who rely on
bulky catalogues to send price information to customers.
15. 10,000 Mark would buy over
pounds of meat
250 Pounds of Meat
Germany 1922- 10,000 Mark
500,000 Mark would buy just 40
Germany 1923- 500,000 Mark
16. What caused Hyperinflation in Germany
?
• Conditions of the Treaty Of Versailles
• Obligated to pay war reparations
• 1923 Germany could not pay these reparations
• Occupation of the Ruhr - France and Belgium
• All out General Strike in Germany
• Government did not have enough to pay workers
17. What did this mean for Germany?
• Had to print more money
• Wages increased to keep up with prices
• The more money printed, more it diluted its value
• Eventually money became worthless- paper money
• Wages increased
• Businesses raised prices• Wages got higher and higher
19. Country Struggle
• People collected their wages in a wheelbarrow
• Prices of food went up higher than people’s wages
• Fixed incomes suffered
• Wages staying the same food prices going up –
• Too low to live on
• Those who had savings suffered –now worthless
20. Who benefitted from Hyperinflation?
• DebtorsPeople paying back debt gained as the money was not worth the same
as it once was
• Foreigners who visited GermanySmall amounts of money would be able to buy a lot in the wreckage of
Germany
21. Cost Push Inflation
• Cost Push Inflation is where the Selling Price must be increased due
to the cost of making the product or service rising in price
• Raw materials, wages, taxes
• Rising Prices in Irish potatoes since 2012• High demand for a limited supply
• €2.50 - €3.00 – local chipper
• If higher tax on alcohol- Wine prices will raise
22. Oil Crisis 1973
In response to Yom Kippur War –
OPEC Changes :
• Announced Oil Embargo
• Raise in all trade prices
• Unified Block on all exports
• Oil price raised by 70%
• Gave OPEC power
23. What did this lead to?
• Worldwide recession
• Long term possibility of high oil prices
• Smaller Quantities of Oil for more money
• Shortage of Petrol
• Heating, Electricity and Gas became an issue
• Saving energy – Oregon Christmas lights ban
• Unemployment/ Wage cuts– not as many people needed
• Campaigns – “Don’t be Fuelish”
26. Alternatives
1974- Prices raised 4 times higher than they had at the start of the Oil
Crisis
• New alternatives
• Cheaper ways to live
• Cycling to work
• Solar power energy
• Japan- Produced Cars less petrol
• Moved on to electronics
27. Demand Pull Inflation
Definition• The demand for a certain product is greater than the amount of
goods being supplied
• When there are high demands, prices will rise
• Individuals are trying to purchase the same good, the price will
inevitably increase
• The complete opposite of Cost Push Inflation
28. Dublin’s Property Boom
• Full employment- More money
• Living like the United States
• People thought boom last forever
• People borrowing 8-10 times monthly income
• High demand for houses
• Houses limited
• Prices rose
• Oversupply of apartments
29. What did this lead to?
• Continuous rising in price
• Led to suburbs becoming more expensive e.g. Clontarf / Dublin 4
• Public Transport prices rising
• More borrowing
• Investment abroad
• Government investing their own money in property –
• Urban redevelopment
• Property Bubble bursting
• Debt - houses not worth what they once were
Recession
30. 7a) Six problems caused by high inflation
• Rising prices causes worsening poverty as the essentials for
survival become more expensive which makes it less attainable
to those with low income.
• It creates uncertainty and entrepreneurs will be reluctant to
invest which will slow down potential for economic growth
• High inflation can reduce the incentive to save.
31. Six problems caused by high inflation
• Shoe leather costs – when prices are unstable there will be an
increase in search times to discover more about prices. It
increases the opportunity cost of holding money so more
people make visits to their banks.
• Consumers and businesses on fixed incomes will lose out .
• Menu costs – is extra costs to firms of changing price
information which can be important for companies who rely on
bulky catalogues to send price information to customers.
32. 7b) Three ideas put forward in Keynesians
Economics regarding booms and recessions
and how to prevent them
• Keynes predicted economic crisis in the 1930’s
1. If no one is spending, no money is coming into the economy
• People were saving money
• Government have to step in
• Stop raising taxes – Progressively poorer
• Getting the economy flowing again
• Investing in Businesses
• Creating jobs
• Employment will rise
33. Great Depression
• Herbert Hoover raised taxes
• Made Depression worse
• Keynes thought- “In the long run we are all dead”
• Start by reducing interest rates
• Increasing spending in infrastructure
• Increase in employment = increase in spending
• Get us back to a cycle of:
• Receiving income spending it back into the economy
34. What we should do in a Boom
2. According to Keynes –
Booms are not good as it has to lead to Bust
• We want a more steady economy
• We don’t want a big boom then a big bust
• Counter Cyclical Fiscal Policies• Increasing taxes in booms
• Cutting back in government spending
35. What does this lead to?
• Tax tends to decrease demand when the economy is booming
• E.g. property prices not going to an extreme in price
• Leads to people not spending as much
• Prepares us for the worst
• Keeps us steady
• Spending enough to keep cycle going
• Not going from one extreme to another
• Government have money – harder for a recession to hit
• Economy is stronger
36. Keynes Multiplier Effect
3. If a government invests money into a business
That business would then use that money to make goods and pay
wages
With the goods they make, they then sell on
-They use the profits to buy the items necessary for making the
product
-This money is then going back into the economy and slowly increasing
Creating a circular flow of income
37. Example
• Example – Ireland exports –
Government invested a lot of money into IT
Now exporting a lot of their goods which increases the multiplier effect
38. References – Kelvin Weymes
www.Joelscoins.com
www.Britannica.com
http://en.wikipedia.org/wiki/Keynesian_economics
http://www.investopedia.com/terms/d/demandpullinflation.asp
http://www.youtube.com/watch?v=WI1i5yhwOz8
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