Question

1a. Discuss the effect of change in interest rate by the central bank to the economy.

b. Explain the effect of protectionism policy on country economy growth.

c. Discuss with example how the standard of living in a developing country might be improved.

Answer 1

ANS A: The effect of change in interest rate by the central bank to the economy are following:-

(1): Increase the cost of borrowing

(2): increase in mortgage interest payment.

(3): Higher interest rates make it more attractive to save in a deposit account because of the interest gained.

(4): Higher interest rates increase the value of a currency

(5)affect both consumer and firm because of rising interest rate.

(6): government debt interest payment increase.

(7) inflation will tend to be lower

(8) unemployment could be rise.

(9) economic growth will tend to be slowers.

ANS B: the effect of Protectionism policy on country growth are the following:

(1): consumers limited choice and pay more for goods and services.

(2): infant industries may never grow up.

(3)businesses suffer from protectionism too.

(4) trade protectionism limits consumer access to foreign goods.

ANS 3: A standard of living is the level of wealth, comfort, material goods, and some necessities .it is more available in a developed country .since the GDP rises, in developed country  .this means that business can make more profit, and therefore can pay higher wages to employees and even hire more employees. This way standard of living in the deveped country improved because of everybody earns good money.