Содержание
- 2. BRIEF SUMMARY OF THE ARTICLE Article suggest us the changes of the policy in activities of
- 3. CRUCIAL ASSUMPTIONS Short run Open economy Fixed prices and wages Movement from fixed to flexible exchange
- 4. IDEA IN THE “GENERAL LANGUAGE” Discount rate is the interest rate charged to commercial banks for
- 5. IDEA IN THE ECONOMICAL THEORY Decrease in the discount rate by the Central Bank leads to
- 6. ALGEBRAIC EXPLANATION Model Setup: Tendency of the foreign currency exchange rate
- 7. GRAPHICAL SUPPORT Fixed exchange rate Flexible exchange rate
- 8. CONCLUSIONS Basing on the economical model after the CB has canceled its operations toward the domestic
- 10. Скачать презентацию
Слайд 2
BRIEF SUMMARY OF THE ARTICLE
Article suggest us the changes of
BRIEF SUMMARY OF THE ARTICLE
Article suggest us the changes of
the policy in activities of The Central Bank on the foreign exchange market:
Previously the economy operated as an open economy with raiding partners and fixed exchange rate but adjustable(by the operations of the central bank) however, with the change of the policy overall model of the economy has also transformed to the economy with a flexible exchange rate.
Overall recession in the economy had an exacerbating factor with the change in domestic currency exchange rate
The transition to inflation targeting
As “The Central Bank has already spent on the maintenance of the course of more than 30 billion dollars from its reserves .” The economy also faces the decrease in the reserves of the foreign currency with the excess demand of the foreign currency on both forex and domestic markets
Previously the economy operated as an open economy with raiding partners and fixed exchange rate but adjustable(by the operations of the central bank) however, with the change of the policy overall model of the economy has also transformed to the economy with a flexible exchange rate.
Overall recession in the economy had an exacerbating factor with the change in domestic currency exchange rate
The transition to inflation targeting
As “The Central Bank has already spent on the maintenance of the course of more than 30 billion dollars from its reserves .” The economy also faces the decrease in the reserves of the foreign currency with the excess demand of the foreign currency on both forex and domestic markets
Слайд 3
CRUCIAL ASSUMPTIONS
Short run
Open economy
Fixed prices and wages
Movement from fixed to
CRUCIAL ASSUMPTIONS
Short run
Open economy
Fixed prices and wages
Movement from fixed to
flexible exchange rate
Reduction of monetary and fiscal interventions
Facts
Perfect capital mobility
Overall recession in the economy
Reduction of monetary and fiscal interventions
Facts
Perfect capital mobility
Overall recession in the economy
Слайд 4
IDEA IN THE “GENERAL LANGUAGE”
Discount rate is the interest rate charged
IDEA IN THE “GENERAL LANGUAGE”
Discount rate is the interest rate charged
to commercial banks for loans received from the Central Bank. With lower rate for which banks borrow money from CB they will reduce interest rates on loans. For private investors and consumers, this will mean an increase in the supply of cheaper money. As a result people will start to spend more on good and services, business will return to investmen in projects, restoring activity.
Слайд 5
IDEA IN THE ECONOMICAL THEORY
Decrease in the discount rate by the
IDEA IN THE ECONOMICAL THEORY
Decrease in the discount rate by the
Central Bank leads to the growth of the monetary base in the form of increasing the excess reserves of commercial banks due to additional borrowing from the central bank . Loan potential of the banking system increases , the volume of loans issued by commercial banks increases and leads to multiplied expansion of deposits and growth in money supply.
Money supply expansion, in its turn, leads to the liquidity growth, and, as a result, the LM curve will shift to the right, causing the decrease in the interest rate. The fall of the interest rate is the reason for the investments' growth, which is one of the components of the aggregate demand curve equation on the goods' market. In this situation, in the short-run the economy is in the short-run equilibrium, with higher prices, so the problem of inflation in the short-run exists. It is obvious, that in the short-run equilibrium, the increase in the price level has a positive effect on the labor market: the real wages will fall, which means the movement along the MPL-curve and the increase of the amount of labor used until the equilibrium on the labor market is reached. As a result, we can see that the government's policy will lead to the inflation in the short-run, however, it will stimulate the economy, so that the output will increase in the short-run, and intuitively in the long-run.
Слайд 6
ALGEBRAIC EXPLANATION
Model Setup:
Tendency of the foreign currency exchange rate
ALGEBRAIC EXPLANATION
Model Setup:
Tendency of the foreign currency exchange rate
Слайд 7
GRAPHICAL SUPPORT
Fixed exchange rate
Flexible exchange rate
GRAPHICAL SUPPORT
Fixed exchange rate
Flexible exchange rate
Слайд 8
CONCLUSIONS
Basing on the economical model after the CB has canceled its
CONCLUSIONS
Basing on the economical model after the CB has canceled its
operations toward the domestic currency rate the output should not change, while in the real situation we experience a drop in the output of the economy and enstrenght of recession.
- Предыдущая
Составление рассказа по картине КурыСледующая -
Афинский акрополь