ECON216 Lecture Notes - Lecture 11: Money Market, Division Of Property, Money Supply
Document Summary
Internal imbalances n inflation imbalance : caused by excess aggregate demand. n recession imbalance : caused by insufficient aggregate demand. External imbalances n a deficit or surplus in bop. Fiscal (changes in govern exp, taxes or both )and monetary policy tools (change in ms affects: to alter the level of aggregate expenditures in the economy, expenditure switching policies. > possible that the policies available for correcting the imbalances may improve one situatio n only at the expense of worsening another. Devaluation of currency cause export become less expensive, stimulate quantity of export , Equilibrium in the goods market, in the money market and in the balance of. When trade deficit is matched by an equal net capital inflow or trade surplus is matched by eq ual net capital outflow. The lower interest, the higher level of investment so that national income has to be higher to induce higher saving and imports.
