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Explain how a decrease in interest rates affects real GDP and inflation. When may a decrease in the interest rate not affect real GDP?

When interest rates decrease, this decreases the cost of borrowing and reduces the reward for saving. As a result, there is a higher incentive for firms and individuals to borrow/spend and a lower incentive ...
IB
Answered by India B. • Economics tutor
18272 Views

Evaluate policies that could be implemented to reduce the market failures arising from polluting industries.

1 - Definitions: Products of such industries are de-merit goods with negative externalities in production and as such MSC > MPC of production, so products are over produced under the free market (this is ...
JD
Answered by Joshua D. • Economics tutor
2320 Views

explain the effect of a rise in government expenditure in the AD-AS framework

A rise in government expenditure shifts the aggregate demand to the right (Insert graph). We assume that there is no change to the aggregate supply and that this is a one time increase. In the short-run both...
CA
2143 Views

Evaluate the extent to which policies to increase economic growth may conflict with the objectives of other policies (20)

Economic growth is an increase in the sum values of all goods and services produced in an economy over a year. To increase this the government may undertake expansionary fiscal policy, by raising spending on...
NO
3181 Views

Explain one determinant of consumption:

Interest rates are one major determinant of household consumption. The level at which interest rates are set will affect consumer decisions on borrowing and saving, and therefore consumption. If interest rat...
SS
Answered by Samuel S. • Economics tutor
2585 Views