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Eco403 GDB No. 1 Spring 2012 Solution

Tuesday, April 24, 2012 Edit This
Gross domestic product to the market value officially recognized final goods and services with in country in a given period. It has a major affect of gross domestic product and the economy. The state bank of the country has to issue currency in order to fulfill loan needs in the country. The inflation in the country increase and effect badly lower and mid class of economy.

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A. Disruption in Energy Supplies
Supply Curve would indeed move to the left. The demand curve for energy is generally constant, so there is no move in the demand curve. If anything, there would be a increase depending on the disruption in energy supplies. Remember after Hurricane Katrina, the huge spike in price.

GDP would be affected. It would likely decrease because energy is a major part of any economy. 

Inflation would rise because if there is a shortage in the supply, naturally, the price will increase based on simple economics. Depending on variables, high inflation could cause consumers to begin hoarding out of concern that prices will increase more in the future.

Unemployment would rise depending on the longevity of the disruption in energy supplies especially a nation as dependent on oil and coal.

B. New Information Technology
The supply curve would definitely push the curve to the right. The demand curve would likely move to the right as well depending on the technology.

GDP: Yes, it would definitely rise the GDP because the productivity is is more.

Inflation: Uncertain about inflation, but it would probably remain the same or likely decrease.

Unemployment Depending on the technology, it really differs. Automated phones across the country have put some people out of work. Many manufacturers downsized due to technology. Overall, it is hard to say.

C. Fear of recession
There is really no movement in the supply curve, but the demand curve would definitely be dramatic, and we are all witnesses of fear mongering in this recession. This causes surpluses in supply and a lot of money lost.

GDP would go decrease without a doubt. Again this is self evident in our current circumstance.

Inflation: Rather than a increase in prices, there would be a rather decrease in prices. It is could deflation, but more likely a disinflation

Unemployment: There will be a rapid increase in unemployment. Again, our current situation.

D. Increase in exports

The demand curve obviously increased to whatever foreign entity, but the supply curve would probably move to the right in order to meet the demands.

GDP: Foreign investment is always a benefit to a economy, so it would have to be beneficial and increase.

Inflation: Yes an increase in price since there is a higher demand.

Unemployment: Since it is not FDI, it would probably decrease anyway due to the increase production.

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