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I studied PPE at Lady Margaret Hall college, Oxford University, and currently work as an Economics A Level teacher. I have also examined several different economic units for Edexcel AS and A2.
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Hi Badria
Positive externalities are economic growth, employment , increasing income etc
Negative externalities are pollution, more assets in foreign hands, may increase current account deficit as more money in form of profit will go outside, national companies may not grow, Due to less taxes and less wages there may be exploration of resources etc.
Damage to environment is really a negative externality. Government can impose a some extra tax for environment fund which would purely be used for improving local environment. We can take price at y-axis and aggregate supply at x-axis.
If Govt increases tax at high rate, aggregate supply would go down because this will reduce profits and investment and companies may increase price to improve their profits which may decrease aggregate demand.
The problems in the global banking system have affected most economies of the world.
Examine how the UK government of that country has adjusted its monetary and fiscal policy in response to the world downturn. Explain the reasoning behind these adjustments.
Thank you so much
Is there any macroeconomic invisible hand to ensure that saving and investment balance at full employment?explain without using ISLM. (6marks)
‘along the consumption function income changes more then consumption.’why? what does this say about mpc and mps plz explain?
Using a graph explain the meaning and causes of equilibrium unemployment
hi, I have difficulty with this question which is about fiscal policy..
May you help me please??
thanks a lot~
An economy is operating with output $400 billion below its natural rate, and fiscal policymakers want to close this recessionary gap. The central bank agrees to adjust the money supply to hold the interest rate constant, so there is no crowding out. The marginal propensity to consume is 4/5, and the price level is completely fixed in the short run.
a. In what direction and by how much would government spending need to change to close the recessionary gap? Explain your thinking.
b. In what direction and by how much would taxes need to change to close the gap? Explain.
c. If the central bank were to hold the money supply, rather than the interest rate, constant in response to the change in fiscal policy, would your answers to the previous questions be larger, smaller, or the same? Explain.
d. If policymakers in this economy wanted to close the recessionary gap without increasing the government’s budget deficit, what are two ways they can accomplish this goal?