IS-LM Model: Fiscal and Monetary Policy Effects
Monetary and Expansionary Fiscal Policy
In our simplified model, we assume constant prices, which isn’t always true in reality. Implementing both monetary and expansionary fiscal policies can significantly increase aggregate demand, potentially causing prices to rise sharply.
Achieving Income Stability and Investment Growth
If monetary authorities aim to keep income stable while increasing investment, a combined approach is needed. An expansionary monetary policy should be paired with a restrictive
Read MoreCentennial Pharmaceuticals & Horniman: Compensation & Cash Flow
Centennial Pharmaceuticals: Employee Compensation
Employee compensation refers to the benefits (cash, vacation, etc.) that an employee receives in exchange for the service they provide to their employer. Employee compensation is generally one of the largest costs for any organization. This employee compensation case represents a discounted cash flow valuation problem with the consequences of changes connected to an earn-out agreement. An earn-out agreement is a contractual provision stating that
Read MorePublic Budgeting and Fiscal Policy
Budget Phases and Content
Government budgets are typically a sequence of annual steps. These budgets plan spending aligned with projected income. The phases include:
Budget Preparation
Led by the executive branch (government) through the ministries of economy and finance. This takes six to nine months, varying by country.
Discussion and Approval
Occurs between legislative chambers. This phase must conclude before the end of the year prior to publication.
Publication
A formal requirement for dissemination.
Read MoreUnderstanding Unemployment, Externalities, and Welfare State
Lessons of Unemployment, Externalities, and Welfare State
Types of Unemployment
- Cyclical Unemployment: Increases during recessions and decreases during expansions. Public sector intervention aims to smooth economic cycles to minimize labor supply fluctuations.
- Seasonal Unemployment: Arises from activities requiring labor only at specific times of the year. Diversifying production can reduce dependence on seasonal activities.
- Structural Unemployment: Results from mismatches between employer needs and
Key Concepts in Labor Economics and Land Economics
Key Concepts in Labor and Land Economics
Value Added: The difference between the value of goods produced and the cost of raw materials and intermediate goods used to produce them.
Derived Demand: The amount that employers are willing to pay for factors or their services, such as purchasing a machine or leasing land for a specified period.
Cost-Reducing Business Strategy: A company chooses the combination of factors that achieves the lowest possible cost for a specific product.
Salary: All income received
Read MoreMarket Structures: Monopoly and Competition
Types of Market Structure
Economists have developed four basic models of market structure: perfect competition, monopoly, oligopoly, and monopolistic competition. This system is based on two characteristics:
- The number of producers in the market (one, few, or many).
- Whether the goods offered are identical or differentiated (differentiated goods are goods that consumers consider different but substitutes to some extent; for example, Coca-Cola and Pepsi).
In a monopoly, a single producer sells a single,
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