Question

Summarize

1.Fisher effect

2. Aggregate model

3. Aggregate demand shift

4. Phillips curve

5. Protectionist policies

6. capital inflow and capital outflow

Answer 1

1)

Fisher effect talks about the inflation, real interest rate and nominal interest rate.

Real interest rate = Nominal interest rate - inflation rate.

2)

Aggregate model includes the aggregate demand and aggregate supply. Equilibrium is established where these aggregate demand and aggregate supply are equal.

3)

Aggregate demand shift when it is affected by the factors other than price. it shifts to right or left. when demand shifts to right , it means demand has increased while leftward shift denotes fall in aggregate demand.

4)

Phillips curve depicts an inverse relationship between the inflation and rate of unemployment. or there is tradeoff between these two objectives. In order to reduce unemployment rate, society has to bear higher rate of inflation.

5)

Protectionist policies refer to the policies of government which safeguard domestic industries against the foreign competition. Tariffs and non-tariffs barriers are created to safeguard domestic market.

6)

Capital inflow and output flow occur when money either moves inside the country or moves out of country. Rate of interest and profits are key drivers behind the movement of capital.