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What is meant by the term spillovers

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Reference no: EM13724246

Part -1:

1. What is meant by the term 'spillovers'? Explain why positive and negative `spillovers' are seen as reasons why competitive markets 'fail'. Conclude your analysis with a comment on how such failure could be corrected.

2. 'Government influence in the economy is widespread. It has a role as a market regulator, as a supplier of public goods and services and in stabilising the macro economy.' Discuss this statement fully giving examples where appropriate.

3. How do you measure Economic Activity? What are the two ways of measuring GDP?

4. What are the different types of Unemployment?

5. Distinguish between Demand-Pull and Cost - Push inflation?

Part -2:

1. In the presence of a spillover cost there will be an over allocation of resources to the production of a good or service.

2. Where a spillover benefit is present, private demand will exceed that associated with the optimal demand for the product at all prices.

3. Gross domestic product excludes second hand goods.

4. Net exports are equal to GDP-C+I+G.

5. When aggregate demand falls, those workers who lose their jobs are classified as frictionally unemployed.

6. Full employment is a situation where there is zero unemployment.

7. The aggregate demand-aggregate supply model is directly related to the demand -supply model for individual products.

8. An increase in government spending, other things remaining the same, will shift the aggregate demand curve to the right.

9. A fall in demand for Australian exports, or a rise in Australian demand for imports, would shift the aggregate demand curve to the left.

10. Increases in investment expenditure, the result of reductions in interest rates, shift the aggregate demand curve rightwards.

Reference no: EM13724246

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