Describe one example of positive feedback and one of negative feedback, in other systems that have...

Describe one example of positive feedback and one of negative feedback, in other systems that have many interacting parts – such as economic, social, political systems.

Expert Solution

Positive feedback: Monetary policy of expansion increases economic growth.

Explanation: This is the policy of government for increasing money supply in the market. Suppose the central bank (Federal Reserve) of the country starts doing the act by lowering interest rates of commercial banks. It creates investment opportunities, so that the cost of investment (interest) is low. Investors would go for expansion which increases GDP of the country and growth.

Negative feedback: Monetary policy of expansion decreases economic growth.

Explanation: Suppose the expansionary policy is taken but in different way. The central bank goes for printing of notes without analyzing country’s aggregate supply. The country has scarcity of resources (land, labor, capital, and organization are limited); therefore, aggregate supply can’t be increased in the short-run. On the other hand, printing of notes increases money supply and demand on products; demand increases but supply remains the same, creating price rise or inflation.

Rahul Sunny answered 2 years ago

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