normal profit in economics
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normal profit in economics

In his theory, money supply is controlled by the central bank and is an exogenous variable with no interest rate elasticity. At this point, monetary demand depends on people's psychological "liquidity preference". The report also supports the government's plan to cut its annual budget deficit this year. With the expansion of the global economy, Mr Trump may hope that tax cuts and deregulation will spur enough growth and create enough jobs that he will boast about. A 2 per cent potential growth rate does not necessarily help his blue-collar base, but it could at least push the stock market to its highest ever level. Although, of course, including republican all mainstream economists agree that, regardless of his policies, potential growth rate will remain at about 2%, still trump will claim that the U.S. economy can grow at 4%. After August 1987, for example, as the dollar fell, people rushed to buy sterling, the high-yielding currency, which rose from $1.65 to $1.90 in a very short time, up almost 20%. In order to limit the rise in the pound, the UK cut interest rates for several consecutive times between may and June 1988, falling from 10% to 7.5%, with the pound falling every time it cut interest rates. But the pound began to pick up again after the bank of England was forced to raise interest rates several times as the pound weakened too quickly and inflationary pressures increased. According to this model, the interest rate decision depends on the supply of savings and investment needs, money supply, money demand, four factors, cause a change in the saving investment, money supply and demand factors will affect the level of interest rates. This theory is characterized by general equilibrium analysis. Modern economy, the interest rate as the price of money, not only restricted by many factors in the economic and social, and changes in interest rates to have a great impact on the economy as a whole, as a result, modern economists are studying the interest rate decision problem, pay special attention to the relationship between the variables and the balance of the economy as a whole, the interest rate decision theory has experienced the classical interest rate theory, Keynes's interest theory, interest rate in loanable funds theory and is-lm analysis as well as the contemporary evolution of dynamic interest rate model, the development process.