Aspects of microeconomics and macroeconomics

Aspects of microeconomics and macroeconomicsOn this grant forget be looking into different aspect of microeconomics and macroeconomics, will be taken into consideration the definition and concept of the whole question as fol let loose down the stairs.Part 1 (Micro section)Q1To help images by defining subscribe that is the quantity of a good which consumers want, and argon prepargond and able to stick out for. In this case the demand of organic fodder and insobriety has go sharply, and the main influence for fallen on demand for those harvestings ar equipment casualty in get in the hurt of substitute goods the price of complements taste demographic accompanimentors advertising and expectations. fiscal value is one of the most important factors and it shift demand slew when it rises, the motion is shown by a movement along the demand curve, beca occasion consumers are in all wantlihood to substitute cheaper alternative goods.http//upload.wikimedia.org/wikibooks/en/c/ c1/ acquireCurveMovementExample2.pngThe demand curve is downward-sloping, presentation that as a price falls, demand rises, and vice versa. In this graphic, a reduction of price from P2 to P1 causes a rise in demand from Q2 to Q1.Usually, the to a greater extent(prenominal)(prenominal) sight earn, the more than than they will spend. The demand for most goods growth as income rises, and these goods are known as normal goods. And organic food and drink are normal goods, because the demand falls as consumers income falls, and vice versa. solicit can change both(prenominal)times, because of the expectation of price changes in the future. For example, post-Christmas sales whitethorn push customers to postpone spending until January.In an article entitled nutrition Price, Ellis plants the point that () The proportion of shoppers buying organic food dropped by louvre per cent in the previous year. In July 2009, research carried out by marketing consultancy Cohn and Wolfe simi larly reported that British shoppers are turning their backs on premium foods, organic produce and Fair-trade goods. According to the Cohn and Wolfe report, 69 per cent of shoppers regularise they intend to stick to their belt-tightening shopping practices even after the downturn ends (). www.bbc.co.uk/food/food_matters/foodprices.shtmlwhat_ close to_the_ break.Q2The production possibility frontier illust gaits the problems of scarcity and choice and the opportunity personify of re characters allocation decisions. The opportunity cost of something is what you give up to get it.To understand the idea the frugality, which produce two goods as manufacturing and financial services, with all resources employed, producing more financial services can only be achieved by some sacrifice on manufacturing services.It can be illustrated on diagram below shown.BA0The frontier shows all the maximum realistic outputs given the scrimpings existing quantity of resources. It can have any combin ation of goods along the line. Point A shows a society which is failing to use all of its resources to the full, either by means of inefficiency or unemployment. Point B is soon unachievable, hardly can be achieved throw economic return.The shape of the curve is bowed outwards to the origin, is based on the notion of that society more and more allocates more resources to the production of a particular good, the opportunity cost of doing so will increase. In other words the curve is bold because the more input the less is the output.For example, UK saving is based on services because the governance decide not to invest on manufacturing and thought the easiest way to make money is by providing financial services curiously banks and shoppings only 13% of UK GDP comes from manufacturing. Now the services have been beaten by the recession, galore(postnominal) another(prenominal) banks are facing financial problems, because they use to lend money to nation who were at lower inc ome. Many of these hatful cannot repay their mortgage because they alienated their jobs and they are haven their home been repossessed, it is causing atrocious problems on economy records can be seen on graphic below.http//news.bbc.co.uk/1/hi/ pipeline/7789844.stmQ5It is important to be aware of the differences between theoretical models a suddenly matched firm monopolistic competitive oligopoly and a monopoly. But here only two will be taking into account.Perfectly warlikeMonopolyVery many small suppliers angiotensin converting enzyme supplier only alike goods Suppliers products are a perfect substitute for one another star type of product only no close substitutes accessibleOne market pricePrice set by one firm. mayhap price discriminationDemand curve of individual firm is horizontal.Demand curve of firm and industry is downward-slopingPerfect information rickety InformationNo barrier to entry in the long foot raceBarriers to entryClearly the assumptions essential perfect competitive extremely are not likely to apply in the real world on that point is no market which obeys all the conditions.On the other hand, in that respect are some that come close. The stock markets and orthogonal exchange are examples. besides complying with regulations the market is costly, as is training and equipment needed to operate in such a sophisticated, highly computerised market. As you can see, the conditions are not obeyed absolutely, but it may be that the markets are near enough the formal definition that displays the main characteristics of a theoretical perfectly competitive firm.The monopolist produces less, and charges more, than the perfectly competitive firm. He makes supernatural profits, which would be competed away in a perfectly competitive market in the long run. He may also be technically inefficient, operating at above borderline average cost.The monopolist equates marginal cost and marginal revenue. The perfectly competitive market equates margi nal cost and average revenue. In perfect competition, individually firm produces at the point where P=MC.PART 2 (Macro section)Q1The economy is in recession because production is below its potential capacity, the border recession mean lack of money supplier. To respond this crisis the authorities is intervene through fiscal and monetary constitution to increase aggregate demand, and the way for doing it is by supporting bank difference sheet cutting in post evaluateation(VAT -2.5) quantitative easing (bank of England) and employment direct.Fiscal policy is basically about authorities taxation and expenditure. To help in this crisis the government has castrate the use tax VAT -2.5 to 15% to stimulate investment expenditure, but thither was a big criticism about this idea, because reducing VAT did not cause long term fix in the economy, would cause more impact if they invest the 12 billion building an public stand to increase an aggregate demand.Monetary policy the bank of England is an independent monetary policy institution there a committee people appoint by government to make decision about interest rate, monetary policy is focus in regulating the money supplier in the economy through interest rate it has a big impact on aggregate demand.The bank of England has abridged its interest rate to 0.5% to ascent the UK economy and start lending money to business and individuals. As the economy scratch to grown some others part of the economy will be automatically adjust, for example an increase on employment. Some companys worker has agree to have a pay cut on their salaries to reduce people being redundant (BA Line).Automatic adjust as the economy beginning to grow the employment rate will declinehttp//news.bbc.co.uk/1/hi/business/7832714.stmAccording to Kyosaki, Robert, Rich dad scummy dad 2, E, (2008), a few(prenominal) people have anticipated the financial problems we face today were created more than 60 years ago by politicians and lawmake rs predecessors.Q3In the post-war period government have adopted four central objectives of macroeconomic policy low pomposity full employment rising economic growth and rest of payments. But full employment is too hard to archive especially there is a trend for national income to experience cycle of growth and contraction, i.e. boom and recession. These cause severe social problems as failing train of economic activity throws people out of work and causes business to fail.The term unemployment means those of working age who are without work, but who are available for work at current wage rates. Unemployment could still exist because of many causes mentioned belowCyclical unemployment, this occurs due to a deficiency of demand, often tincts to the fact that in such circumstances it is possible that prices will fall.Frictional unemployment, refer those people who are unemployed and jobs available rarely match perfectly, filming to an inevitable degree of unemployment.Technologi cal unemployment, can occur when industry is increment and moving towards more efficient capital intensive methods of operation.Seasonal unemployment, relates to fluctuations in demand for labour directly related to cycles in demand for terminal product. Tourism and leisure industries are the best examples, these can contribute to regional problems as they are strong in particular areas.Some of the remedies that government can use to reduce the level of unemployment are direct increase in government spending on public foundation encouragement of business investment by offering grants and loans encouragement of exports subsidise firms in financial trouble, guarantee jobs for workers facing redundancy and to restrict imports of competing foreign goods and also using specific measures to get people back into work like new deal programme and so on.The relation between unemployment and inflation can be explained with Philips curve, by Professor AW Philips in the 1862-1958. Philips ob served that the rate of change in money wages was inversely related to the level of unemployment. Rising money wages were identified as a source of inflation and the inflation appeared to be inversely related to the level of unemployment.http//welkerswikinomics.com/students/wp-content/uploads/2008/08/fig21-300269.jpgQ4The globalization and the environment are linked, because for expansion of economic, environmental aggrieve are produced that are essential to the butt against of globalization.Mander argue that globalization is a human asylum that aims to remove impediments, such as environmental laws that restrict companies access to resources and markets, environmental damage is therefore an intrinsic part of the globalization system. www.gale.cengage.com/pdf/samples/toc32870.pdThe intention of having a globalized world and to lower trade barriers, protecting free trade and my environment, so make foring the economic development in poor countries, so that people have access to information, improving their health and liability to environmental protection. The process helps to globalize the ideas run free from one country to another, increasing the approachability of knowledge and other opinions, helping the development among the nations.But for many environmentalists and anti-globalists Globalization will lead to environmental disaster and will gradually lead to the destruction of the environment, because the vision of globalization and produced without precedents to environmental deterioration. Speth points out that Since the end of demesne War II economic expansion has produced enormous environmental damage and global economic development can be expected to bring about even more dire economic consequences. www.gale.cengage.com/pdf/samples/toc32870.pdHe believes that with globalization the few developed countries are benefiting because there was an opening up colossal markets for them, since many of these poor countries produce more effective products and efficient, doing so will be multinationals are setting up in places, boosting investment foreign direct investment, and generating many jobs open to residents, e.g. Asian Tigers of South Korea, Taiwan, Hong Kong and Singapore show the great benefits of globalization and free trade. www.futureharvest.org/ news / globalization_pir.In the other hand, there is a great inequality and between well-to-do and poor countries. Aislin It has been argued that poor countries are often exploited and pushed into the world trade forums. For example, it is evident when the rich nations are allowed to pay huge subsidies to their farmers, which leaves LDN is a disadvantage industrial Workers.http//www.abcnews.go.com/sections/politics/dailynews/TheNote_March5.htmlQ5If imports goods are too high it may be possible to reduce demand for them in the economy by imposing tariffs to raise the price of imports goods to prevent unfair competition in the home market. Also to subjugate buying product from the market were workers have been exploited to export their product cheap.This policy is likely to be met by retaliation from overseas countries, which will reduce exports putting the current account back into deficit.In addition, craft of tariffs does not reduce expenditure if demand for imports is relatively inelastic, government policy favouring domestic suppliers may mean high than necessary taxes to pay for the higher necessary purchase cost, and restrictions generally encourage smuggling and black marketFor example, a poor country that in main revenue comes from the tax on trade, if withdraw the tax trade its revenue will reduce significantly also the amount of investment on public infrastructure will be reduce, consequently many import goods may come into the market in a low price, causing the domestic goods serious problems on market as well as increase unemployment. The symmetricalness of payment also will be affected because of lack of exporting it may cause government to borrow some money to balance the balance of payment.