Eco 100

NameUnit nameUnit codeDateQuestion 3The main objective of majority of investors who frequently trade in shares at the stock exchange is chief city gain . by means of the collapse of the stock exchange it means that they go away no longer be earning any gains on shares held . This result to a decrease in liquid income which forces consumers to cut on the direct of consumption . The authorities also advance fund for it capital and revenue expenditure from the stock food market . This is through the electrical outlet of government bond and treasury bills which are forms of domestic borrow . Where the government cannot raise such funds from the stock market then it will respond in two waysThe government may cut down on it expenditure . This will ultimately cause a reduction in disposable income on the hand of household who will in revoke reduce their consumption take aimsThe government may decide to raise the required fund by increasing taxes .

Increase in tax will directly lead to reduction in disposable income which will ultimately lead to low level of consumption (mishkin 2001Question 4Though insurance companies play a major eccentric in economic development banks receive major ferocity since they are used by government in instruction execution of monetary policies . This monetary policy affect major macroeconomic variable such as inflation , unemployment , saving enthronization and aggregate demand . For this reason therefore banks receive more than attention from macroeconomist . When the government wants to reduce the amount of specie supply in the economy then it may...If you want to check a full essay, order it on our website: Orderessay

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