Introduction to Micro and Macroeconomics

Subprime lending led to a collapse in confidence in financial markets, triggering a crisis in the housing sector.

Brexit disrupted trade between Ireland and the UK, leading to concerns for businesses reliant on cross-border commerce.

The hospitality, aviation, and entertainment sectors suffered significantly due to decreased demand and event cancellations.

<p>Sensible fiscal policies include monitoring credit and investing in education.</p> Signup and view all the answers

<p>The 2008 Recession led to severe financial difficulties for Irish banks, necessitating a government bailout.</p> Signup and view all the answers

<p>Microeconomics focuses on individual markets, while Macroeconomics studies the economy as a whole.</p> Signup and view all the answers

<p>Aggregate demand is the total demand for all goods and services in an economy, which is relevant for analyzing overall economic performance.</p> Signup and view all the answers

<p>Positive statements are objective and can be tested, while normative statements are subjective opinions about how the economy should function.</p> Signup and view all the answers

<p>The report promoted free trade and redirected the Irish economy towards growth.</p> Signup and view all the answers

<p>Foreign direct investment and an educated workforce.</p> Signup and view all the answers

<p>Keynesian Economists support government intervention, while Free Market Economists advocate for minimal or no government involvement.</p> Signup and view all the answers

<p>Ireland joined the European Economic Community (EEC).</p> Signup and view all the answers

<p>The Financial Crisis.</p> Signup and view all the answers

<p>To provide short-term finance for day-to-day operations of industries, companies, banks, and governments.</p> Signup and view all the answers

<p>Banks can lend more money than they hold in reserves by keeping a fraction of deposits as cash and using the remainder for loans.</p> Signup and view all the answers

<p>High interest rates can significantly deter the demand for credit.</p> Signup and view all the answers

<p>The nominal interest rate is the interest rate offered before adjusting for inflation.</p> Signup and view all the answers

<p>Significant increases in credit supply can lead to demand-pull inflation.</p> Signup and view all the answers

<p>Government policies can either incentivize or deter borrowing based on their economic approach.</p> Signup and view all the answers

<p>Reserve ratios limit how much a bank can lend based on the cash it must hold.</p> Signup and view all the answers

<p>If firms are optimistic about future economic conditions, they are more likely to invest and increase their demand for credit.</p> Signup and view all the answers

<p>Real Interest Rate = Nominal Interest Rate - Inflation Rate</p> Signup and view all the answers

<p>Higher interest rates increase mortgage costs, reducing homeowners' disposable income.</p> Signup and view all the answers

<p>They can lead to an increase in loan defaults and personal bankruptcies.</p> Signup and view all the answers

<p>Lower interest rates encourage borrowing, increasing disposable income and spending.</p> Signup and view all the answers

<p>Less competition can lead to limited access to financial services in rural areas.</p> Signup and view all the answers

<p>It ensures stability in the financial system and protects customer financial services.</p> Signup and view all the answers

<p>They balance risk by offering interest rates that facilitate the movement of money.</p> Signup and view all the answers

<p>Higher savings rates can lead to a decline in aggregate demand and delayed consumption.</p> Signup and view all the answers

<p>A decrease in savings rates may reduce government revenue from DIRT.</p> Signup and view all the answers

<p>It ensures fair pricing, high quality, and lower risks of financial crises.</p> Signup and view all the answers

<p>It can create high barriers to entry for new financial companies.</p> Signup and view all the answers

<p>They save time for staff dealing with cash and reduce operational costs.</p> Signup and view all the answers

<p>It enforces accountability measures for financial services and ensures compliance.</p> Signup and view all the answers

<p>They reduce disposable income, thus lowering overall consumer spending.</p> Signup and view all the answers

<p>Capital markets allow firms and governments to raise long-term financing, primarily through issuing shares and bonds.</p> Signup and view all the answers

<p>Higher interest rates generally decrease the demand for credit, as borrowing becomes more expensive for consumers and businesses.</p> Signup and view all the answers

<p>The reserve ratio is significant because it determines the minimum amount of reserves a bank must hold against its deposits, impacting how much credit it can create.</p> Signup and view all the answers

<p>Government policies can either incentivize borrowing through low interest rates or discourage it through regulatory restrictions.</p> Signup and view all the answers

<p>The money multiplier refers to the maximum amount of money that banks can create with each dollar of reserves, calculated as $1 / ext{Reserve Ratio}$.</p> Signup and view all the answers

<p>Inflation can lead to a decreased supply of credit if lenders feel uncertain about future economic conditions and adjust their lending practices accordingly.</p> Signup and view all the answers

<p>Poor lending practices can result in increased defaults and financial instability, as banks may lend to uncreditworthy customers.</p> Signup and view all the answers

<p>A favorable international economic climate can increase credit demand, as firms are more likely to seek loans for expansion if they are optimistic.</p> Signup and view all the answers

<p>Higher interest rates reduce consumer spending due to increased borrowing costs.</p> Signup and view all the answers

<p>Lower interest rates decrease borrowing costs, making loans more affordable for consumers and businesses.</p> Signup and view all the answers

<p>Decreased competition leads to fewer banking options for consumers, often resulting in higher prices.</p> Signup and view all the answers

<p>The Central Bank of Ireland regulates financial institutions to ensure the stability of the financial system.</p> Signup and view all the answers

<p>Increased mortgage repayment costs reduce disposable income for homeowners.</p> Signup and view all the answers

<p>Lower interest rates can decrease DIRT revenue as savings returns diminish.</p> Signup and view all the answers

<p>An increase in the savings rate enhances liquidity and stability within the banking sector.</p> Signup and view all the answers

<p>One argument for banking regulation is that it lowers the risk of financial crises.</p> Signup and view all the answers

<p>Higher interest rates can lead to loan defaults and increased personal bankruptcies.</p> Signup and view all the answers

<p>Financial markets facilitate the movement of money across borders, helping balance risk for lenders and borrowers.</p> Signup and view all the answers

<p>Higher interest rates discourage businesses from investing in capital goods and expansion.</p> Signup and view all the answers

<p>Lower savings rates may discourage saving, leading to increased consumer spending.</p> Signup and view all the answers

<p>Rising unemployment can result from decreased consumer spending and investment.</p> Signup and view all the answers

<p>Limited access to financial services can stifle economic activity in rural communities.</p> Signup and view all the answers

<p>Non-cash payment methods provide increased convenience for consumers.</p> Signup and view all the answers