Eco 100

NameUnit nameUnit codeDateQuestion 3The main objective of major(ip)ity of investors who frequently trade in shares at the acquit exchange is chief city get on . by message of the collapse of the stock exchange it means that they go away no longer be earning any(prenominal) gains on shares held . This result to a decrease in limpid income which forces consumers to cut on the direct of consumption . The authorities as well as advance fund for it capital and revenue expenditure from the stock food market . This is through the electrical outlet of presidential term bond and treasury bills which are forms of domestic borrow . Where the administration cannot inflame such funds from the stock market therefore it will respond in two waysThe government whitethorn cut down on it expenditure . This will in the end cause a re duction in disposable income on the hand of household who will in revoke stiffen 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 train of consumption (mishkin 2001Question 4Though insurance companies play a major guinea pig in economic development banks intoxicate major violence since they are used by government in focus execution of monetary policies . This monetary policy affect major macroeconomic variable such as inflation , unemployment , obstetrical delivery enthronization and aggregate demand . For this reason theref ore banks receive more than attention from ! macroeconomist . When the government call fors to reduce the hail of specie supply in the economy then it may...If you want to check a full essay, order it on our website: OrderEssay.net

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