Forensic Science Example Essay Example

a new equilibrium point y1, denoting this increase.

If the economy produces less real GDP than its potential, induced expenditures will increase to fill the gap. The equilibrium GDP is achieved when the national income equals the total aggregate demand, resulting in the maximum possible GDP. Referring to the 45-degree diagram above, it can be concluded that changes in exogenous savings impacting induced expenditures and total expenditures will impact the aggregate demand. As a result, aggregate demand will continue to increase with increased expenditures.

The outcome of this would be a rise in equilibrium real GDP. While an increase in exogenous savings does not have a direct impact on reducing unemployment, productive investment of these savings could lead to decreased unemployment rates. Implementation of policies like tax cuts and investment subsidies can also influence the steady state level of output.

When economic convergence occurs, the impact of capital accumulation on economic growth is significant. The US economy's size and influence are a major concern because downturns in this economy can have worldwide effects due to its status as the world's largest economy and the primary exchange currency being the US dollar. Therefore, it is essential for countries like Australia to consider macroeconomic policies that can mitigate any negative consequences. To comprehend this concept and examine its effect on macroeconomic policy, utilizing the 45-degree diagram can be beneficial.

Displayed in the diagram below is a 45-degree representation highlighting the significance of upholding stability within the economy of the United States. The visual demonstrates that if the economy were to reach or exceed full employment (Y0), then an increase in interest rates by double from the Federal Reserve would

result in considerable consequences.

In the event that the government faces pressure to increase taxes, investment (I1 to I2) and savings (S1 to S2) will probably decrease. The diagram indicates that this would shift the equilibrium employment level towards Y1. As a result, both durable and non-durable goods consumer spending in the United States would drop. Given the close relationship between Australian and American economies, specific macroeconomic outcomes are anticipated.

Australia's economy would suffer if the US reduces its imports from Australia, as it is a significant importer. Additionally, a reduction in manufacturing activities in the US would lead to a decline in Australian imports from the country. These actions would weaken the exchange rate and have monetary policy consequences for Australia.

Recognizing that Australia's decrease in currency value could have a significant impact on the global economy, it is important to consider potential disruptions in international trade transactions that rely on the US dollar exchange rate. To minimize these effects, countries utilizing floating currencies, managed floats or pegged exchange rates may need to adjust their monetary and fiscal policies accordingly. Additionally, it should be noted that foreign direct investments contribute significantly to the US economy's Gross Domestic Product (GDP). Thus, any shift from equilibrium GDP at Y0 to Y1 would affect home countries of major investors in the US economy, such as Australia.

In summary, globalization has its benefits and drawbacks. It has brought about free trade, open economies, and economic liberalization. Additionally, it has caused the ripple effect where if the US experiences an economic downturn, other nations are impacted as well. To counteract this phenomenon, other economies must build up their resistance to these shocks

so that they cannot be affected by the US's economic issues.

It is feasible to achieve a transformation, albeit not swiftly. The crucial factor is the execution of well-informed fiscal and monetary policies by other economies. If these policies are carried out efficiently, there exists substantial potential for growth in regions like Asia, Latin America, and sub-Saharan Africa. References: Eugene F.

Thomson Southwestern published the book Financial Management: Theory and Practice by Brigham and Michael C. Ehrhardt in 2005.