Macroeconomics (Coursework Sample)

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Macroeconomics
1. How do you define money?
Money may be considered as something that is normally used as a means of payment and acknowledged for the payment of debts.
What are the properties of good money?
The following are the properties of good money:
Uniformity, meaning that all version of similar denomination of money must have similar buying power so that very denomination must equal.
Acceptability meaning each person must accept it to purchase goods and service.
Durability meaning it ought to last over a long period. Portability-effortless to carry about Scarcity - limited enough to be priceless.Divisibility - the capability of being divided into small units Malleability - money should be flexible so that it could be made into new currency.
2. Describe in detail the difficulties that people experienced with Barter Trade before the adoption of today’s monetary system.
Before the adoption of today’s monetary system, the difficulties that people experienced with Barter Trade were:
Wealth storage was a main difficulty of batter trade. It was also very complex to accumulate goods for future trade purposes. The delicate goods like cereals, milk and meat could not be kept to exchange commodities in future.
There was also the Difficulty of double concurrence of wants implying that the needs of two people ought to balance each other for the trade to occur.
The barter system lacked a common unit for measuring the worth of one commodity in terms of the other commodity for trade purposes.
It was extremely hard to pay back credit, as wealth could not be accumulated.
3. What are the functions of the Federal Reserve Board? Explain each of them.
the Federal Reserve’s functions are as follows:- carry out the nation’s economic policy by controlling the fiscal and credit circumstances in the economy in search of the highest employment, constant prices, and reasonable long-standing interest rates - overseeing and regulating banking organizations to guarantee the protection and dependability of the country’s reservoir and monetary structure and to look after the credit privileges of consumers - upholding the firmness of the financial structure and controlling systemic threats that may come up in economic markets - offering financial services to depository organizations and overseas official organizations, as well as playing a key function in operating the nation’s payments organization.
4. What is the difference between discretionary and non-discretionary spending? Explain giving examples.
Non-discretionary spending is spending that is mandatory by regulation that is the legislative body would have to alter a regulation to alter the spending. For instance: Medicaid and Social Security. Discretionary spending is the funds the legislative body appropriates each year. For instance: schooling, security, and overseas aid.
5. What are the characteristics of easy and tight money policies?
The difference is that the Fed usually expands the quantity of money in the economy easy money policies whereas in tight money policies the same quantity of money is shrunk in the economy. This is accomplished in different ways, depending on the Fed's eventual rate at which it desires to achieve and its objective.
How does the Fed implement such policies?
The Fed implements such policies by preserving steady prices and circumventing unexpected changes in the economy. It "squeezes" or "releases" the funds supply as it observes the threats in the economy.
6. What are the characteristics of expansionary and contractionary fiscal policies?
Contractionary fiscal policy implies there is a surplus, with revenues over and above expenditures while the Expansionary fiscal policy comes with an increase in cumulative demand all the way through either government acquisition or through advanced end user expenditure resulting from government duty cuts.
How does the Government implement such policies?
The government implements such policies through duties and expenditure powers to control the state and direction of a country’s financial system
7. What is Laffer curve?
The Laffer curve is an illustration of the correlation linking potential rates of taxation and the ensuing intensity of government returns. It demonstrates the theory of taxable revenue flexibility—that is taxable earnings will vary in response to change in the velocity of taxation....