This is the very notion that dictates budgetary control practices via the medium of Capital Markets. Asset prices have become so sensitive to information and inferences based off policies and budgets that companies who took part in leveraged growth have to choose between honest growth where budgetary control is being used as intended and face the probability that their market capitalization will decimate, or keep the dream alive a little longer and use budgetary control as a communicative tool to paint a rosy facade. Sadly, the latter is the case
Both of these ways can provide benefits for the economy but can also be costly for it as well. On one hand, financial liberalisation processes can enhance the pace of the economic growth of the market but on the other hand there is evidence that liberalisation programmes can decrease the stability level of the financial sector and thus making it more susceptible to a financial crisis event. We will try to investigate and understand the effects of financial liberalisation and more specifically we will try to understand the way its policies affect the development and the growth of the financial
The process involves gathering relevant financial information, setting financial goals, scrutinizing your current financial position and coming up with an approach or plot for how you can encounter your goals given your current condition and future plans. Financial Planning provides direction and connotation to your financial decisions. It allows you to comprehend how each financial decision you make affects other areas of your finances. By observing each financial decision as part of the whole, you can consider its short and long-term effects on your financial goals. You can also adapt more easily to financial changes and feel more secure that your goals are on track.
.3.3 Inflation Rate The inflation rate used as an indicator in measuring the stability of economic condition for a particular country (Rashid et al., 2011). In financial theory, inflation rate reflected by consumer price index (CPI) represents all the price of goods and services will go up and it need to take more money to buy the same items. Moreover, high inflation is likely cause a great impact on economic activities of a particular country because it reduces the purchasing power of domestic consumers and it would lead to currency value decline. The previous researchers believe that the inflation rate will influence the stock market return. There are many empirical studies establish that the inflation rate has an impact on stock market
Tutorial: Economics Basics What Is a Recession? A recession can be defined as an extended period of significant decline in economic activity including negative gross domestic product (GDP) growth, faltering confidence on the part of consumers and businesses, weakening employment, falling real incomes, and weakening sales and production. This is not exactly the environment that would lead to higher stock prices or a sunny outlook on stocks. Other aspects of recessionary environments as they relate to investments include a heightened risk aversion on the part of investors and a subsequent flight to safety. However, on the bright side, recessions do eventually lead to recoveries and follow a relatively predictable pattern of behavior along the way.
The impact of taxes and public spending on economic growth has become a subject of much discussion and debate among economists. This is partly because there are many theories regarding what propels and facilitates economic growth: while some favour the Keynesian demand side factors, others Neo-classical supply side factors, while yet others consider a mixture of the two or another theory altogether. However, the world economy is sufficiently large and complex enough so that any theory can find some support in the data. By implementing changes in tax rates and public spending, the government can influence the economy, through what is popularly known as fiscal policy. There are strong proponents as well as opponents for cutting taxes and public
Business cycle The business cycle measures the expansion and contraction of economic activity over a specific period of time. The cycle consists of four component which are namely the; trough, upswings, a peak and downswings (Mohr, 2015:411) 2.4. Cause of business cycles According to the monetarists business cycles are brought about exogenous factors which are outside influences such as faulty government policies. These influences induce instabilities in prices, production and unemployment, these economist believe that should the government not intervene in the market system, market forces can be given a chance to correct their own economic dysfunctions. Whoever Keynesians economists believe that endogenous factors such as the multiplier, interest rates and foreign exchange cause business cycles and encourage government intervention to smoothen out the cycles.
Introduction Unemployment and inflation are key components which can cripple the growth of a country, causing a negative impact on a countries’ economic activities. An ideal economy is where there is low unemployment and low inflation rates in a country. However, such economical balance is not always consistent, thus affecting the stability of the economy. One of the key functions of a government is being a solution provider and create a safety net with visionary leadership skills for the people to overcome the economic crisis. In such circumstances, both government and the people have to work together in implementing demand side policies comprising both expansionary and contractionary fiscal and monetary policies which would help to stimulate
Inflation is a function of supply and demand of money, defined as sustained increase in prices of services and goods over a period. It is one of the most misunderstood economic phenomenon which are difficult to forecast and control. As the price of good increases, the purchasing power and the value of currency decreases. Inflation may affect economy in both positive and negative ways. High inflation rates can make it difficult for the companies to plan their budget in each financial year as it becomes difficult to forecast prices going forward.