Econ fin

MACRO FOR DECISION MAKING - A3 (Template Version)

2-3 first sentences: Start with an introduction that briefly explains the purpose of this section Hints: To provide an overview of recent economic events and their significance.

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Table of Contents

DETAILED INSTRUCTION

A/ ASSIGNMENT RECAP

The assignment involves three main sections: 

  • First, it requires an analysis of 2-3 significant macroeconomic events in the Vietnamese economy over the past year and their impacts on various sectors and the well-being of residents. 

Suggested Structure:

  1. Section 1: Events 

  1. Introduction

  2. &  C. Event/Condition 1&2 

    D.  Conclusion 

  1. Section 2: Economic Activity

  1. Data Presentation

  2. IS-LM Framework

  3. Industry Analysis

  1. Section 3: Recommendation

 

B/ KEYWORD EXPLANATIONS

  1. IS-LM model

The IS-LM model shows the relationship between the goods market and the money market in an economy. The IS curve represents equilibrium in the goods market, plotting the combination of interest rates and national income where investment equals savings. The LM curve represents equilibrium in the money market, plotting the interest rate and income combination where money demand equals the fixed money supply. The intersection of the IS and LM curves determines the equilibrium interest rate and national income in the economy given fiscal and monetary policies.

 

  1. Fiscal Policy

Fiscal policy refers to the use of government taxation and spending to influence economic conditions. Fiscal policy impacts interest rates and aggregate output, represented by shifts in the IS curve in the IS-LM model.

  • Expansionary fiscal policy involves increased government spending and/or reduced taxes to boost aggregate demand during recessions. 

  • Contractionary fiscal policy does the opposite - cutting spending and/or raising taxes to cool demand and restrain inflation. 

 

  1. Monetary Policy

Monetary policy refers to central bank actions to influence money supply and interest rates. Monetary policy impacts interest rates and aggregate output through shifts in the LM curve in the IS-LM model.

  • Expansionary monetary policy aims to lower interest rates and increase money supply to boost lending, investment, and consumer spending during economic slowdowns. 

  • Contractionary monetary policy does the opposite - raising interest rates and reducing money supply growth to dampen inflationary pressures. 

 

  1. Business cycle

The business cycle describes how economies go through regular ups and downs in economic activity. 

  • During expansions, the economy is growing as production and employment rise. Expansions lead to a peak where the economy is operating at full capacity. 

  • After the peak, contractions or recessions occur - economic activity declines, firms make less, unemployment goes up. 

  • At the bottom is the trough, after which a new expansion begins and the cycle repeats. Governments use policies to try to flatten the sharp rises and falls over the business cycle.

D/ DETAILED OUTLINE 

 

  1. Section 1: Events Overview

 

  1. Introduction:

  • 2-3 first sentences: Start with an introduction that briefly explains the purpose of this section

Hints: To provide an overview of recent economic events and their significance.

 

  1. &   C.Event/Condition 1/2/3(if applicable)

  • 1-2 first sentences - Identification and Nature

Example: Ukraine - Russia war

  • The escalating conflict between Russia and Ukraine that erupted into full-scale war in February 2022 has had pronounced macroeconomic ripples globally, including in distant Vietnam

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