i. Fiscal policy refers to an economic policy which regulates the demand for and supply of money which the economy through government spending and taxation.
Monetary policy refers to an economic policy through which the Central banks or other financial authorities apply monetary policy instruments such open market operations and discount rates to regulate and manage the supply of money that is in circulation within the economy.
ii. Exchange rate refers to the amount of foreign currency that can be purchased with one domestic currency.
Interest rate refers to the amount charged for a loan by a bank or any other lender per shilling per year expressed as a percentage. It is the cost of borrowing. The interest rate minus the expected rate of inflation gives us the real rate of interest.
iii. Unemployment rate refers to the fraction of the labour force that cannot find jobs at the prevailing wage rate while Okun’s law states that a 3% increase in real GDP generates a 1% point decrease in the unemployment rate. This relationship acts as a useful guide to policy because it allows us to ask how a particular growth target will affect the unemployment rate over time.
Dullayo answered the question on August 2, 2018 at 08:51
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Given the following equation, derive the expression for the IS curve
(Solved)
Given the following equation, derive the expression for the IS curve.
C =100 +0.8Yd (Consumption function)
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Date posted:
August 1, 2018
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Date posted:
August 1, 2018
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Date posted:
August 1, 2018
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Explain the limitations of Harrod-Domar Models.
Date posted:
August 1, 2018
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(Solved)
Given the following equations for a certain economy:
C = 100 + 0.75 Y
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Date posted:
August 1, 2018
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(Solved)
State and explain the three components of Balance of Payments (BOP).
Date posted:
August 1, 2018
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Date posted:
August 1, 2018
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Date posted:
August 1, 2018
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State the theory of covered interest parity.
Date posted:
August 1, 2018
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Answers (1)
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Date posted:
August 1, 2018
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Describe a full-reserve banking system.
Date posted:
July 27, 2018
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Date posted:
July 27, 2018
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(Solved)
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Date posted:
July 27, 2018
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(Solved)
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Date posted:
July 27, 2018
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Answers (1)
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(Solved)
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Date posted:
July 27, 2018
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Answers (1)
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Date posted:
July 26, 2018
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Date posted:
July 26, 2018
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(Solved)
Explain the measures that can be taken to curb the challenges developing countries face in their industrial sectors.
Date posted:
July 26, 2018
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(Solved)
Examine the key obstacles faced by developing countries in their industrial sectors.
Date posted:
July 26, 2018
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Answers (1)
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Let us say there is a sudden increase in demand in Kenya for Italian products. Explain how this increase will have an impact on the...
(Solved)
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Date posted:
July 21, 2018
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Answers (1)