The Economic Economy Of The Economy Essay - 1742 Words

1. the money from the banks and spend that money on increasing the economy which results in an increase in aggregate demand (AD) for the products and services. d. The monetary stance to adopt to counteract a recession: At the time of recession, the Reserve Bank decreases the rates of interest and increases the quantity of loans and increases the supply of money so that the economy can expand. By this the aggregate demand can increase which results in an increase in GDP. With the decrease in the interest rates, people are encouraged to borrow money from banks in the form of loans so that they can stabilise their business and get back to their stable position. The central banks at the time of depression keep less reserve and lend as much money as they can which results in an increase in investment rates in business and by this the AD and GDP grow more. All these arrangements are to be done in order to increase the economy of the world and by increasing the money supply the recession period will not last longer. Question 4 (Emma – spoke to you in class, last minute job because we couldn’t get hold of Calum): Causes that increase aggregate demand (ie, aggregate demand curve shifts to the right): The answer to this question recognises the formula, whereby aggregate demand equals the sum of consumption (C), investment (I), government spending (G), and net export (X -M), given by: AD = C + I + G + (X - M). (Boundless.com, 2015). Thus, given this formula, the transmissionShow MoreRelatedThe Economic Economy : The Economy Of Venezuelas Economy809 Words   |  4 Pages Economic Affairs: Its mayor export partners are United States with trading values ranging from $24 to $30 billions per year at least in the last 3 years. 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