The Demand Of The Economy Essay - 701 Words

â€Å"The demand-pull means that demand in the economy is the key factor, which may be result of cheap borrowing or tax cuts† (Morrison, 2011, p. 85). The reduced interest rate has made cheaper borrowing possible. Just four years prior to 2005, in 2001 the lending interest rate in Nigeria was 23.4%. Over the next decade the lending rate slowly decreased to 16.5% in 2014. The decreased rate made it easier for consumers to increase their spending capabilities in lines of short-term credit. The lending rate has remained high, averaging 16.92% over the last ten years and is significantly lower than the 23.4% rate in 2001. As Morrison (2011, p. 85) points out, high inflation tends to force up interest rates, to enable investors to achieve a real return on investment. From 2008 to 2010 and again in 2012, the lending rate increased with the inflation rate. The graph indicates that after 2010, the GDP growth rate did decrease due to the high interest rates. Higher interest rates also make disposable consumer income decrease which lowers the domestic product demand. Even though the GDP per capita is increasing every year, the effects of price inflation compounded with higher interest rates than other competing markets have put the citizens in a severe state of poverty. According to (The World Factbook: Nigeria), Over 62% of the total population is below the poverty line. This is due to increased cost of living and increased interest rates on borrowing. The growth will soon slowShow MoreRelatedThe Effect Of Aggregate Demand On The Economy1048 Words   |  5 PagesAs supported by the minutes released from the November meeting of the Federal Open-market Committee, the economy continues to strengthen and looks as though it will remain healthy through the foreseeable future. The economy has returned to normalcy in terms of Consumer Price since the hurricanes hit Florida and Texas, as evidenced by the Consumer Price Index for All Urban Consumers: Gasoline(all types) which is portrayed in the graph below. The FOMC has also reported that inflation is projected toRead MoreSupply and Demand and Centrally Planned Economy Essay697 Words   |  3 Pages  incentive   | |   2.   | A bridge is an example of something that is usually provided as a _________.  public good    | |   3.   | To show how demand for a good will change at specific price points, economists use a ____.  Demand curve   | |   4.   | People will buy more of a good when its price falls and less when its price rises, according to the _______.  Ã‚  Ã‚  Ã‚  Ã‚     Law of demand   | |   5.   | The rate the Federal Reserve charges banks for loaning them money is the   _____________________.  Discount rate   | FillRead MoreIncreasing Economy With Growing Potential Automobiles Demand2006 Words   |  9 PagesThe continuously increasing economy with growing potential automobiles demand has made more attention be paid to China, while the other parts of the world seems to remain stagnant (Holweg et al., 2009). The Reportlinker website (2014) suggest that, two main reasons, growing replacement demand and rising affordability in lower-tier cities, might support the growing sales of auto vehicles in China. Luxury autos industry is expected to continue to contribute to economic growth in China. Middle classRead MoreEconomics Notes: Small and Open Economies, Growth, Aggregate Supply and Demand926 Words   |  4 Pagesinterest rate makes borrowing more expensive, the quantity of loanable funds demanded falls as the interest rate rises. The supply and demand for loanable funds depend on the real interest rate and not nominal. Increase in saving = shift the supply of loanable funds to the right = reduces the interest rate. (graphique page 181) Increase in investment = demand for loanable funds increase = interest rise. Incentive to increase investment = increase in quantity of loanable funds demanded When theRead MoreEnergy Supply, Its Demand and Security Issues for Developed and Emerging Economies2119 Words   |  9 PagesAvailable online at www.sciencedirect.com ScienceDirect Solar Energy 112 (2015) 68–77 www.elsevier.com/locate/solener Short-term reforecasting of power output from a 48 MWe solar PV plant Yinghao Chu, Bryan Urquhart, Seyyed M.I. Gohari, Hugo T.C. Pedro, Jan Kleissl, Carlos F.M. Coimbra ⇑ Department of Mechanical and Aerospace Engineering, Jacobs School of Engineering, Center for Renewable Resource Integration, University of California, San Diego, 9500 Gilman Drive, La Jolla, CA 92093Read MoreProducts, Services, and Prices in the Free Market Economy: Price Elasticity of Demand1040 Words   |  5 PagesThe company shines with its home delivery service. This paper will show how Domino s Pizza can increase or decrease its revenue by using price elasticity of demand and will discuss interpretations of elastic demand, inelastic demand and unit elasticity. Furthermore, this paper will show how determinants of price elasticity of demand affect decisions by analyzing substitutability and proportion of income and time. The determination of how to increase or decrease revenue is thoroughly investigatedRead MoreIs The Us Healthcare System Truly Reflective Of A Free Market Economy Driven By Supply And Demand?1763 Words   |  8 Pagespneumonia causing an increase in demand for certain antibiotics and medical care (supply) necessary to treat these ailments. If physicians and/or hospitals do not increase their supply, this will cause a shortage in medical care available meaning the price for care will increase. This is, at its very basic, an example of supply and demand. Introduction Is the US Healthcare system truly reflective of a free market economy driven by supply and demand? Initially, one would be inclinedRead MoreThe Impact of Rising Oil Prices on the South African Economy in Relation to the Demand and Supply of New Motor Vehicles1172 Words   |  5 Pages1 SUPPLY VS DEMAND 2 FINDINGS 6 PRIMARY FACTORS. 7 CONCLUSION. 7 REFERENCE. 9 THE IMPACT OF RISING OIL PRICES ON THE SOUTH AFRICAN ECONOMY IN RELATION TO THE DEMAND AND SUPPLY OF NEW MOTOR VEHICLES. INTRODUCTION A continual upward trend in the price of crude oil in recent years has led to increasing concerns about its economic implications, both abroad and in South Africa. This study looks at the rising oil prices and their impact on the South African economy within the frameworkRead MoreDiscuss the Extent to Which Economic Growth May Benefit an Economy. (18)794 Words   |  4 Pagesan economy. (18) Economic growth is an increase in the output that an economy produces over time, for the minimum of two consecutive quarters. Economic growth can benefit an economy in a number of ways. Firstly, higher average incomes, this allows consumers to enjoy more goods and services and enjoy better standards of living. This in turn could lead to the ‘Trickle Down’ effect, those who are the highest income earners spending their disposable income on goods and services in the economy, thoseRead MoreDifference Between Aggregate Demand And The Price Level1747 Words   |  7 Pages(3) A) What is Aggregate Demand? Aggregate demand is the total amount that all consumers, businesses, government agencies, and foreigners spend on final goods and services. Aggregate demand is represented by the aggregate-demand curve, and it describes the relationship between price levels and the quantity of output that firms are willing to provide. Aggregate demand is not a fixed number because it depends on the price level. The relationship between aggregate demand and the price level normally