Due to increase in exports the trade deficit decreases. Whereas, the contractionary monetary policy has a negative impact on the balance of trade account as it leads towards a decrease in government expenditure, production and exports. Because of the decrease in exports, the trade deficit increases. (Schiller, 2010)
Money and Its Functions
Money can be defined as anything which is generally accepted in exchange for goods and services and which acts as a medium and store of value. The three major functions of money are; 1) it acts as a medium of exchange and is accepted as a payment for goods and services, 2) the value of different products is measured in terms of money, 3) it acts as a store of value because it is generally accepted as a medium of exchange and has a stable value. Banks usually create money in the economy by issuing loans and by buying securities from the market. (Schiller, 2010)
Keynesian and Classical Economic Policies
Classical economists believe in the concept of laissez-faire, a marketplace which requires no or very little government intervention. Classical theories rely on individual decisions while allocating resources and measuring value of goods. Whereas, Keynesian economists rely on value theory while calculating the value of a good. They define the market place by using aggregate demand and government spending. In addition to that, they also rely on the fact that a nation's monetary policy can heavily influence its economy. Classical theories usually focus on long-term effects, therefore, inflation, taxes and laws can be some important factors of these theories, whereas, Keynesian theories focus on short-term results that are aimed at immediately removing the disruption from the market. (Schiller, 2010)
Web Activities:
Web activity 1 (a)
The article suggests that the demand and the price of copper has fallen the most as the growth slows down in China which is the biggest consumer of copper...
The Chinese economy is expanding at a rate which is lower than what the economists have predicted. The economy of China will expand 7.6% this year, however, the economists expected a growth of 7.8%. There has been a constant increase in the stockpiles of copper as monitored by the London Metal Exchange. There is a decline of 10% in the delivery of copper, which is the biggest decline in the delivery of this metal according to the Comex in New York City. In addition to that, LME copper stockpiles increased by 2% and LME, copper for delivery declined by 2.3%. Moreover, delivery of Aluminum, zinc, nickel, lead and tin fell in London. (Richter & Troszkiewicz, 2013)
Web Activity 3(a)
The share price of Mr. Bradley Cooper is currently H$89. 37. The share price of Bradley cooper has increased because recently he has shifted his role from being a supporting actor in films like "The Wedding Crashers" and "Failure to Launch" to a leading actor male in films that were released in late 2012 such as "Hangover" and "Limitless." Both the films did exceedingly well at the box office and his work was very much liked by his fans. Therefore his share price has increased along the years. In addition to that, Bradley Cooper was also nominated as the leading actor male in the 85th annual Academy Awards. His movie 'Silver Linings Playbook', for which he was nominated, was a blockbuster and it added massively to his reputation. It also had a positive impact on his share price as well. ("Bradley Cooper," 2013)
References
Bradley Cooper. (2013, May 15). Retrieved from http://www.hsx.com/security/view/BCOOP
Richter, J., & Troszkiewicz, a. (2013, May 14). Copper futures fall most in two weeks on china demand concerns. Retrieved from http://www.bloomberg.com/news/2013-05-14/copper-falls-most-in-two-weeks-on-indications-of-china-slowdown.html
Schiller, B. (2010). Essentials of Economics (8th Ed.). New York, NY: McGraw-Hill/Irwin.
