ECONOMICS
INFLATION
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Countries have to barter manufactured goods for raw materials.
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Goods manufactured for export lose their competitiveness.
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Numbers of foreign visitors increase.
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Spending on imported goods is reduced.
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Detailed explanation-1: -Interest rates – higher interest rates make saving more attractive. Economic growth – high growth and high consumer confidence encourage relatively higher spending and a fall in the savings ratio. The age of individuals – People in their 40s and 50s tend to save for retirement. Old people run savings down.
Detailed explanation-2: -A growing population increases total demand (1) this will encourage firms to increase their output (1) may attract MNCs to set up in the country (1). A higher population may make better use of resources (1) allow firms to take advantage of economies of scale (1).
Detailed explanation-3: -Both economic growth and balance of payments are macroeconomic objectives. Economic growth is an increase in real GDP – leading to higher living standards. Balance of payments stability refers to a sustainable or limited current account deficit/surplus. ( i.e. avoid very high deficit/surplus)
Detailed explanation-4: -The balance of payments model postulates that a foreign exchange rate in equilibrium will remain in equilibrium, providing it maintains a stable account balance. The model is based on the expectation that foreign exchange rates are completely determined by the trade deficit (exports-imports).