We are here with you hands in hands to facilitate your learning & don't appreciate the idea of copying or replicating solutions. Read More>>

Looking For Something at vustudents.ning.com? Click Here to Search

www.bit.ly/vucodes

+ Link For Assignments, GDBs & Online Quizzes Solution

www.bit.ly/papersvu

+ Link For Past Papers, Solved MCQs, Short Notes & More


Dear Students! Share your Assignments / GDBs / Quizzes files as you receive in your LMS, So it can be discussed/solved timely. Add Discussion

How to Add New Discussion in Study Group ? Step By Step Guide Click Here.

Please Discuss Here about this GDB.Thanks

+ How to Follow the New Added Discussions at Your Mail Address?

+ How to Join Subject Study Groups & Get Helping Material?

+ How to become Top Reputation, Angels, Intellectual, Featured Members & Moderators?

+ VU Students Reserves The Right to Delete Your Profile, If?


See Your Saved Posts Timeline

Views: 195

.

+ http://bit.ly/vucodes (Link for Assignments, GDBs & Online Quizzes Solution)

+ http://bit.ly/papersvu (Link for Past Papers, Solved MCQs, Short Notes & More)

+ Click Here to Search (Looking For something at vustudents.ning.com?)

+ Click Here To Join (Our facebook study Group)

Replies to This Discussion

Money supply increase

Inflation decrease

Balance of Payment (BOP) increase

Real Growth may increase or decrease

Banking sector plays vital role in the capitalist economies all over the world especially this role also gets significance in the developing countries like Pakistan. Policies of Central Bank, imposed on the commercial bank and financial sector, are considered as one of the key factors to boost the economy and control the inflation.

 

“If all commercial banks in Pakistan increase the small loans limit to Rs. 200,000 for general public at very low interest rate along with relaxed terms and conditions. Such loans will be used only for personal use and luxury items. What will be the effect of this activity of commercial banks on the money supply, inflation, Balance of payment (BOP) and real growth?”

 

You are required to answer/comments in the following table, which show only which component increases or decreases or both situations are possible”

 

Macro issue

Increases / Decreases

/ May increase or decrease

Money supply

?

Inflation

?

Balance of Payment (BOP)

?

Real Growth

?

“If all commercial banks in Pakistan increase the small loans limit to
Rs. 200,000 for general public at very low interest rate along with
relaxed terms and conditions. Such loans will be used only for
personal use and luxury items. What will be the effect of this
activity of commercial banks on the money supply, inflation, Balance
of payment (BOP) and real growth?”

money supply increase / decrease or may
increase or decrease
inflation increase / decrease or may
increase or decrease
Balance of payment (BOP) increase / decrease or may increase or decrease
real growth increase / decrease or may
increase or decrease

ANSWER:-
1-money supply will Increase .

2-inflation will Decrease .

3-Balance of payment (BOP) will Increase .

4-real growth may increase or decrease.
See the attached file for another idea solution
Attachments:
I dont agree peoples.
When the restriction ofn Loan will decrease, it will cause an increase in Money supply. People will take loans for consumption & luxry goods.
The First effect will
Money Supply will increase in the economy. The circulation of money will increase.
Increase circulation of mony or increase in money supply will cause inflation to increasee.

Now we come to very difficult point "Balance of Payment"
If people start consuming imported goods then Balance of Payment will decrease & become unfavourable. Normally Luxurious Goods are imported so, there are more chances to unfavourable balance of payment. But this will not happen in Rich country where luxrious products are being produced e.g, America U.K.
I shall say that Balance of Payment will go decrease & become more unfavourable for pakistan like country.
Real Growth will not change. whereas nominal growth rate will increase. So,
Real growth rate will not change, it will depend on other variables. So, may increase or decrease.

GDB MGT411 ITS 100% 

Macro issue 

Increases / Decreases 

/ May increase or decrease

Money supply

 Increase

Inflation

 Increase

Balance of Payment (BOP)

May increase or decrease

Real Growth

Decrease

 

 

Here is the conformation of my this solution 


Refrence for the commet 1st ;

Chapter#31

when the rate  of interest  is low , demand will move from savings, to investment and consumption.this will result in the inflation so

solution  is;

 

Money supply

 Increase

 

low interest rates and the associated increase in themoney supply  

in the long run, the inflation rate is essentially dependent on the growth rate of money supply

refrence :chpter #32

 

 

refrence for the 2nd comment ;

there is positive and direct relation ship between the inflation and money supply coz more money supplye results in the inflation

inflation is an increase in the money supply, rising prices are merely consequences and this semantic difference is important in defining inflation

solution by Admin Binish:

 

Inflation

 Increase

High interest rates and slow growth of the money supply are the traditional ways through which central banks fight or prevent inflation

 

Refrence for the BOP:

BOP A record of all transactions made between one particular country and all other countries during a specified period of time. 

So this directly don’t have such clear relation with this but it is 50 50 chance.it is conditional and periodic change . Chapter no 31 to 33 

Solution ;

 

Balance of Payment (BOP)

May increase or decrease

 

 

 for the 4rth comment:

Highter the inflation is bad for the growth means highter inflation the lower will be the reall growth.CHAPTER NO 31   POINT NO 5  PAGE NO 96

Real Growth

Decrease

 


--
good job maani
Wow ... Gr8 Maani ...

RSS

© 2020   Created by +M.Tariq Malik.   Powered by

Promote Us  |  Report an Issue  |  Privacy Policy  |  Terms of Service

.