Another issue is time lags, if the Government spent more money in the economy it will take time for the majority of people to feel these effects and some people may not feel these effects at all. Therefore fiscal policy may not be very effective in influencing demand.
Policy decisions ultimately depend on the information, which is collected, and forecasts which are made. If this information is incorrect then the policy decisions made will be fundamentally wrong. (Sloman 2012)
Finally Fiscal policy can only affect a small part of aggregate demand and cannot effect Investment and its effectiveness is limited when it comes to the balance of payments. In conclusion it is clear that Fiscal policy can be used to control demand but its effectiveness is limited.
5. Credit creation is a process which increases the amount of bank deposits which are larger than the original deposits. The process begins by looking at the assets and liabilities the bank has. For simplicity we will assume that it has one liability, deposits, and two assets, which are balances to the central bank to succeed liquidity and advances to other customers e.g. loans. The bank then needs to decided on its liquidity ratio, for this example we will set it at 20%. Therefore is someone deposits £100,000 into the bank, and was no deposits in the bank ...
... middle of paper ...
...e spending and reward saving. Governments can use this in order to control demand.
A big factor, which can control the level of consumption in the economy, is confidence and expectations. For example, in a economic downturn confidence is low, people are unsure about their future i.e. their jobs and therefore keep spending to a minimum. People’s expectations also play a part towards consumption expenditure if they feel the price of a good/service is going to fall they will wait in order to see if this occurs.
The last factor is that of inflation. Inflation erodes the purchasing power of money. Therefore your wealth is worth more today than it will be in the future. This has the potential to sway people towards making bigger purchases in the short term rather than waiting into the longer term when their money is worth less. (economicshelp.org, Tejvan Pettinger)
Need Writing Help?
Get feedback on grammar, clarity, concision and logic instantly.Check your paper »
- “ANALYSIS OF CURRENT STRATEGY” Corporate level of strategy: A corporate strategy should enable a company, or one or more of its business units, to perform one or more of the value creation functions at a lower cost or in a way that allows for differentiation and a premium price. .(Hill&jones 2013,p.334). Consequently, as the level of corporate strategy tom tome used integration method which has the most prominent integration was Horizontal integration and horizontal alliance. Furthermore as the level of corporate strategy the related diversification also implemented.... [tags: functional level, market, business level]
922 words (2.6 pages)
- Introduction 1. definition of accounting:  *"Accounting is a set of principles and procedures relating to the registration and compilation, analysis and interpretation of financial data for the purpose of determining the outcome of business and its financial position". * "A method of recording and tabulating and summarizing operations and financial events and then interpret the results". *Body: 2.Assumptions used in accounting:  What assumptions used in accounting is generally predict solutions through experimentation of phenomena to upgrade them to the level of reality through the use of a combination of induction and deduction, and when the results to an acceptable degree of accu... [tags: Accounting and Financial Management]
1611 words (4.6 pages)
- Explain what is meant by the full employment level of National Income and Equilibrium level of National Income. Why might these levels of income be different. National Income is the level of total output, expenditure or income of an economy over a period of time. The main measure of NY used around the world today is Gross Domestic Product, or GDP. This is a measure of all domestic production, that is, production not including trade, which takes into account the value of indirect taxes such as GST.... [tags: Economics]
664 words (1.9 pages)
- An estimation of visitor numbers/expenditure from the identified country based on an analysis of a range of internal and external information sources. Future trends Estimates of visitor numbers Estimates of expenditure 2016 – 2017 50,000 $1 billion 2017 - 2018 60,000 $ 1.8 billion 2018 - 2019 80,000 $ 2 billion An analysis of existing and previous marketing plans, strategies and campaigns and their effectiveness in increasing visitor numbers and expenditure. Your analysis should also identify marketing successes and how this can be applied in marketing to consumers in your identified country.... [tags: Marketing, Customer service, Customer, Sales]
1960 words (5.6 pages)
- National Health Expenditure Analysis INSTRUCTION Click here http://vizedhtmlcontent.next.ecollege.com/pub/content/3c190805-0bf6-4c9c-a78d-41791cca30a3/SU_HCM3002_W1_A3.pdf to view and study the NHE data for selected calendar years between 1970 and 2003 and for selected service categories (with the exception of the catch-all category of “other”) (Centers for Medicare & Medicaid Services [CMS], n.d.). Answer the following questions in a 2- to 3-page Microsoft Word document: SUPPLY APA STYLE OF REFERENCES 1.... [tags: Health care, Health economics, Health insurance]
1119 words (3.2 pages)
- Line Item budgeting is the most widely used approach in many organizations due to its simplicity and its control orientation. “It is referred to as the "historical" approach because administrators and chief executives often base their expenditure requests on historical expenditure and revenue data. One important aspect of line-item budgeting is that it offers flexibility in the amount of control established over the use of resources, depending on the level of expenditure detail (e.g., fund, function, object) incorporated into the document” (National Center for Education Statistics).... [tags: chief executives, administrators, expenditures]
1216 words (3.5 pages)
- ... They also point out that spending was constrained by income: part-time students spend more than full-time ones; the older spend more than the younger (Callender & Kempner, 2000). The reason why Callender’s ranking of accommodation is different from the others has something to do with the different time period and countries where they conduct their research correspondingly. However, all of them rank accommodation at top two, a very significant place. This paper aims at finding a quatitative model to estimate the monthly expenditure of international students of UIUC, in order to help them develop their financial plan covering the whole period of studying abroad... [tags: University of Illinois at Urbana & Champaign]
972 words (2.8 pages)
- Medical Technology and the Healthcare Expenditure Medical technology encompasses a wide range of health care products that are used to diagnose, monitor, and treat diseases (Chandra & Skinner, 2012). Medical technology may include medical devices, vaccinations, pharmaceuticals, information technology, biotech, and healthcare services. Such technologies are intended to improve the quality of health care; while also containing cost, through earlier diagnosis, less invasive treatment options, reductions in hospital stays, and rehabilitation times.... [tags: Health care, Medicine, Health care provider]
1068 words (3.1 pages)
- Capital Expenditures Capital expenditures have a significant impact on the financial performance of the firm; therefore, criteria for selecting projects must be evaluated with great care. Of the two corporations the firm is deciding to acquire, Corporation B is clearly the better investment as shown in Table 1 supported by the following data: net present value (NPV), internal rate of return (IRR), payback period, profitability index (PI), discounted payback period, and modified internal rate of return (MIRR) in addition to 5 year projections of income and cash flows.... [tags: Finances Financial Corporations Essays]
1056 words (3 pages)
- A level Objective The challenging task that I have finalised and undertaken for this coursework is to build and test a sensor. I decided to build a sensor, which would automatically change the speed of a fan by using a thermistor. The main objective of the experiment was to monitor and record the voltage change as the temperature changes. Specifically, as predicting that when the temperature increases the voltage would increase and thus the fan speed would increase too, thus causing a cooling effect to the environment.... [tags: Design and Technology]
2250 words (6.4 pages)