Eco 100

NameUnit nameUnit codeDateQuestion 3The main objective of studyity of investors who frequently trade in shares at the cable exchange is chief city accomplish . by convey of the collapse of the stock exchange it means that they go away no longer be earning all gains on shares held . This result to a decrease in liquid state income which forces consumers to cut on the direct of consumption . The authorities alike advance fund for it capital and revenue expenditure from the stock food market . This is through the electrical outlet of political science bond and treasury bills which are forms of domestic borrow . Where the political relation cannot lambaste such funds from the stock market whence it will respond in two waysThe government may cut down on it expenditure . This will in the end cause a reduction in dispos able income on the hand of household who will in revoke abridge 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 shell in economic development banks birth major frenzy since they are used by government in counseling execution of monetary policies . This monetary policy affect major macroeconomic variable such as inflation , unemployment , thriftiness enthronization and aggregate demand . For this reason therefore banks receive more than atte ntion from macroeconomist . When the governm! ent deprivations to reduce the bar 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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