The Main Determinants Of Money Supply Essay - 1062 Words

The major determinants of money supply being the size of monetary base and the components that determines the money multipliers, such as income level, deposit rate, various interest rate, liquidity preferences of the people, the theory suggests that the NRB’s policy has been a steady growth money supply which is reflected in the publication, the Periodic Economic Planning, of the planning commission and the Economic Review published by NRB. According to Thapa (1997), the highest growth was recorded in 1960, and the lowest growth was recorded in 1971. In 1960, the M1 and M2 monetary aggregates grew by 40.9% and reserve money (monetary base) grew by 48.8%. In 1971, the growth of M1 was 3.9% while reserve money declined by almost 1%. 1.2 Conceptual Background of the Rational Expectations Hypothesis The policy effectiveness has been a continuing debate in macroeconomics between the Classical and the Keynesians. The introduction of the rational expectation hypothesis in macroeconomics elevated the debate by differentiating policies into anticipated and unanticipated. The rational expectation hypothesis suggests that economic agents use all available information to form the future expectation. Therefore, any expected policy change will not have any impact on real macro-variables as the economic agents fully incorporate the information into their expectation formation. The policy implication of this hypothesis is that the change in policy should be a surprise to have aShow MoreRelatedSoft Latte Demand At Starbucks1366 Words   |  6 Pageswith many variations of what people call coffee; from flavored lattes, and frozen frappuccinos, to herbal teas and smoothies. Many people visit Starbucks on a daily basis to ge t there caffeine fix to get them through their busy days. Two of the main determinants for demand include the income of their customers, and the changing habits of their customers. Flavored lattes are a normal good – as income rises, so does the demand for the product. But the reverse is also true – as income decreases, so doesRead MoreEconomics Question Bank772 Words   |  4 Pagesobjectives of firm? 11. What are the types of firms? 12. What is sole proprietorship? 13. What is partnership firm? 14. What is FOP? 15. What are the main areas of focus in managerial economics? 16. What is demand? 17. What is demand function? 18. What are related goods? 19. What are the determinants of demand? 20. State the law of demand. 21. Why does demand curve slope downwards? 22. What are the types of demand? 23. Define price demand. 24. DefineRead MoreEssay Keynesian Economics1662 Words   |  7 Pageseconomy. Macroeconomics deals with economic factors such as total national output and income, unemployment, balance of payments, and the rate of inflation. It is distinct from microeconomics, which is the study of the composition of output such as the supply and demand for individual goods and services, the way they are traded in markets, and the pattern of their relative prices. At the basis of macroeconomics is an understanding of what constitutes national output, or national income, and theRead MoreMicroeconomics Chapter 4 Essay1220 Words   |  5 Pages we see that a prince increase on an elastic good results in total revenue decrease. The owner should lower prices to see a total revenue increase. 11. A gasoline station very near a professional football stadium parks cars on its lot to make money on game days. Last year it charged $4.00 per car and parked 1000 cars. This year it raised the parking price to $5.00 and parked 850 cars. Did the station owner make a good economic decision in raising the parking prices from one year to the nextRead MoreDetermination of Wages893 Words   |  4 Pagesclaim that â€Å"at the simplest level of analysis, wages, viewed as the price of labour, are seen as being straightforwardly determined by the intersection of labour demand and supply curves in the market for labour.† (Sapsford et al., p. 155) Thus on one side we have the demand for labour by the firm, and on the other we have the supply of labour by workers. In cases where the market is in perfect competition the wage is given so the firm must choose the amount of workers it wants to employ at that wageRead MoreMicroeconomic and Tourism1182 Words   |  5 PagesList of figu res. †¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦ IX. References. †¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦ List of Figures: * Figure 1: Determinants Of Competitiveness. †¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦.... * Figure 2: Determinants of Competitiveness (Sophistication of Company . Operations and Strategy). †¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦.... * Figure 3: Determinants Of Competitiveness (Quality of The National Business . Environment). †¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦.. Read MoreAnalyzing The Concept Of Zeta Score And The Details It Includes?1582 Words   |  7 PagesUse the concept of zeta score and the details it includes? Credit analysis is the process of examining the creditability, credit history and financial situation of client or potential borrowers. The banks or moneylenders to ensure safety of their money use this process. At the same time, bond portfolio managers or investors to debt issuing companies on the basis of their credit rating and financial situations also define credit analysis as investigation process that performs. Credit rating is anRead MoreEconomics : A Human Interaction Within Markets Essay1621 Words   |  7 Pagesit reveals people’s goals that they are accomplishing. The economic agents can be individuals, businesses, organizations, or governments. Economics can be broken down into microeconomics and macroeconomics. †¢ Microeconomics is small theories of supply and demand, and the quantity of production and charge desired by individual businesses. People who have any desire to start their own business or to learn the rational of the pricing of particular products and services are interested in this areaRead MoreKeynesian, Monetarist, Fiscal Policy, Unemployment, Inflation898 Words   |  4 PagesMonetarist argument, we notice that both sides are correct in different terms. How unemployment is resolved in a labor market is opposed on the Keynesian side. While the Monetarist looked at the quantity of money, which should be increasing at a constant rate. The Monetarist reduce the money supply, which reduces the spending’s and increases the unemployment rate. Keynesian The public eye of the Keynesians was John Maynard Keynes. To have input on the Keynesian side, one must have employment to makeRead MoreAggregate Expenditure And Output Of The Short Run Essay1563 Words   |  7 PagesAggregate expenditure and output in the short run. In principle, an economy is in equilibrium when the main macroeconomic variables tend to remain stable over time without external shocks. However, the conditions that this balance must fulfill differ according to the period in which we are analyzing the economy. In any economy, output, income, and aggregate expenditure coincide. However, this cannot be the equilibrium condition, since it is an identity. In order to be able to say that the economy