Explain and example : 1.Money Supplies , interest rate and rate exchange , Purch

Question

Explain and example : 1.Money Supplies , interest rate and rate exchange , Purchasing Power Parity 2.National Income Accounting and Balance of Payment. 3. Dilemma and Trilemma 4. Finacial Globalization (2008 Financial Crisis) Explain and example : 1.Money Supplies , interest rate and rate exchange , Purchasing Power Parity 2.National Income Accounting and Balance of Payment. 3. Dilemma and Trilemma 4. Finacial Globalization (2008 Financial Crisis) 1.Money Supplies , interest rate and rate exchange , Purchasing Power Parity 2.National Income Accounting and Balance of Payment. 3. Dilemma and Trilemma 4. Finacial Globalization (2008 Financial Crisis)

Explanation / Answer

1. Money supplies- it indicates the circulation of money in teh eco system. Money is printed and pumped in market by govt only. however the supply is completely controled by central bank of country. otherwise it will lead to infltation.

Interest rate and rate exchange- interest rate is the cost banks recover when lending the money. this rate is dependent on many factors in the market including, inflation, demand and supply, global economy and many more. This rate decides all the cost of all debt instruments in teh country and it varies from time totime as situation demands. Rtae of exhange is the rate where teh countries do foreign trade with each other. It decides the export and import quanity of a country. It creates forex reserve in the counttry and make its economically stronger. The higher the currency the powerful and effficent teh country.

Purchasing power parity- Its a theory which states that exchange rates between countries are at equilibrium if purchasing power parity is same across those countries.

2. National Income Accounting- Its a syetem the country adopts to keep a record and track by measring the economic activity in the country for a given time period.

Balance of payment- Its simple the difference between how much we get from out side country in way of exports and how much we pay to outside country in terms of imports.

Positive BOP is a boon for economy.

3. Dilemma- Its a situation where its difficult to decide between two equavalent options mostly both are equally undesirable. Trillema- Its a situation where 3 options availble but only 2 can be taken at one time. 3 are equally undesitable to choose from.

Both of these tests your decision making skills and patience.

4. Finalcial Globalization- In 2008 it was a big finacial meltdown as subprime crisis happend in US everything was in credit and the banks were in huge debt in terns of credit dependance. The housing bubble burst and the impact was on teh banks as could not recover the money. so lehman brothers was teh 1st to sink. it had huge global impact and economy suffered massively in terms of unemployment and price fall.

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