User:Yeungkashing/sandbox
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Assignment problem in economic means the different economic issues inside an economic entity. These economic issues have their correspond solutions by using different economic policies. In the following article there will be an explanation of different economic problems and the economic policies as well as the solution of the economic issues that are mentioned in the article. In addition, the goals of economic policy and history of the use of economic policy will be explained detailly.
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In specific, there are six main economic problems in the macroeconomic, including inflation, unemployment, economic growth, stagflation, trade cycle, exchange rate and balance of payment. [1]
Inflation means the common increase in the price of goods and production cost in the market which is the opposite circumstances of the deflation. When inflation occur large proportion of the people will lose while a small proportion of people will gain from it. Therefore, the will be a change in the distribution of income. [1]
The issue of unemployment means the human resources that does not voluntary idleness for jobs. When the issue of unemployment occurs, the output of actual will be lower than the potential output of a society. [1]
Economic growth means the trend of the growth of the total output in the long-term of a country. It reflects in the enlarge of the capacity of production in the society, including increase in economic activity such new factories are being set up. The economic growth rate is calculated by the annual rate of raise in the income per capita. In addition, there are three main sources which consist of the economic growth, including technological progress, increase in labor force and the formation of capital. [1]
Stagflation is the opposite of inflation which means the economy is stagnant with a slow growth rate in economic and high rate in unemployment. In other words, stagflation is the decrease in the gross domestic product (GDP) of a country and the price of commodities will raise concurrently.[2]
Trade cycle means the undulate of cyclicity in the business and economic activities. For instance, the increase or decrease in the employment rate and output over a specific period is an example of trade cycle. In a trade cycle, the good trade period will exist and shift to bad trade period as well as the economic boost period with high level of employment rate will shift to recession period accompany by high level of unemployment rate. [1]
The balance of payments is the structured record for the total economic activity transaction between all overseas countries in the world and the own country within a year of accounting. These transactions will be affected by the exchange rate of currency. Exchange rate is the rate that a country’s currency exchanged to another country’s currency. If a country’s exchange rate fall to another country the export of that country will increase as other countries can now obtain more amount of money.[1]
Besides, economic policy includes three major types which are Monetary policy, Fiscal policy and Supply-side policy. Monetary policy is the central bank change the interest rate and alter the supply of money which ordinarily affect the rate of inflation. Beside, Fiscal policy is the alter in taxation rate, government spending and transfer payment. Supply side policy focus on enhance the production capacity of an economy. [1]In addition, both Fiscal and Monetary policy have two sides which is expansionary and contractionary and brings opposed effect. Expansionary aims to stimulate the economy while contractionary reduce economic activity to cool down the economy which is the contrary of expansionary policy.