First are demand side policies which there are fiscal policy and monetary policy. Fiscal policy will increase income taxes to decrease disposable income, lower corporate taxes to cut back on investment and lower government spending. These will directly impact on aggregate demand to decrease the price level. For monetary policy government could increase interest rates and reduce the money supply. However, in the long run these will have an effect on unemployment that will rise up and getting even worse.
Caused by: Demand pulled inflation is caused by monetary and real factors (the increase in money supply government spending and foreign exchange rates). Cost pushed inflation is caused by monopolistic groups of the society. 3. Output: Demand pulled inflation: the output raise until employment is fully achieved. Cost pushed inflation: the output fall down since the supply is reduced.
Productivity growth has a significant relationship with the quality of human capital, through the technological competence of the workforce. One and the same technology can be applied in two different firms, but the output would vary with the skill or human capital of the labors in these firms. Hence the nature of human capital is crucial to economic growth. Human capital also generates positive externalities (Lucas, 1988; Mallick, 2017).
.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
Cost Push Theory Cost push theory is where inflation is due to direct result of increase in the cost of production that is increase in prices of raw materials, increase in labour cost (wages & salaries). Cost push inflation can be also defined as prices have been “pushed up’ due to increase in price for factors of production. So as the cost push theory says inflation is caused by increase in cost of production factors, this leads to decrease in the demand for raw materials, which leads to decrease in production and demand stays consistent, than this leads to increase in price (inflation). The figure 1.0 shows what happens in the cost push theory. If the firm is operating at point Q1, P1 any increase in price for factors of production will lead to increase in price that is moving from point P1 to P2 quantity supplied decreases due to increase in cost for factors of production moving from Q1 to Q2.
The people, their skills – inherent and learnt, availability of raw material, climatic conditions give countries an advantage over others. This is another reason that necessitates Foreign Trade. Economic Development There is often diversity in the economic growth rate of different countries. While some countries are developed, some are underdeveloped and some others are developing. Underdeveloped and developing countries depend on for capital which further increases the need for Foreign Trade.
Much of this due to the development of transportation infrastructure, macroeconomic conditions, and technology that has promoted cross-border trade, both in products and in inputs. Globalization and liberalization are beneficial because it promotes economic growth and living standards. It also encourages global competition, creativity, and innovation. Globalization and liberalization have also promoted global justice for trade, diversity, and social equality. However, when assessing the effectiveness of these factors of promoting global interdependence, we must bear in mind that many of them have their own shortcomings and limitations.
Immigration contributes critically to the economy of the host country, either positively or negatively. This paper has argued that immigration should be encouraged in order to improve the host country’s economy because there are obvious benefits to the economy of the host country in terms of state revenue, the labor market, and country development. Although, some might argue that immigration leads to mass deportation, and an increase on border-patrol budget as well as a decrease in the wages of native-born, high-skilled workers. As discussed before, immigration increases gross domestic product and provide cheap services, enabling high-skilled, indigenous workers to focus on their work more, rather than doing domestic jobs, such as house cleaning. Moreover, immigrants create innovations, such as Google, and they increase the number of scientist in the U.S. As a suggestion, the host country should inspire companies to employ workers depending on their experience, so immigrants have a great opportunity to compete with the natives.
While other researchers argue that economic globalization gives solutions of trading and poverty that developing countries encounter. In this paper, I will discuss how Economy Globalization is a good trend that brings benefit for the country. The decision of doing economy globalization chosen because it is considered as beneficial for the country. “The economic essence of globalization is actualized in spreading out the most efficient forms of social production, which in technological terms is demonstrated in the speed, cost-cutting, and reliability of production processes.” (Mamedov, 2016). Globalizing the trade to become international wide gives more opportunity for the country to fulfill the demand of the country.
CRITICAL REVIEW Name: Institution: Instructor: Course: Date: Globalization - Good or bad? Globalization refers to increased economic integration as a result of increased trade and investments which then leads to increased movement of people, goods, services, capital, and ideas across the world. The author of the article “Globalization - good or bad?” under review has highlighted the main reasons why globalization is a good thing that should be embraced by all nations. China and India have been cited as classical examples of how globalization can help transform the livelihoods of poor citizens and make them climb the social ladder into the middle class. In terms of International Trade, the author has described globalization as the