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Chapter 6: Market analysis: shares, currency and labour markets

Learning Objectives. By the end of this chapter, you shouldunderstand?the key factors influencing supply and demand in the labour, share, capital goods, and currency markets;?the consequences of changes in supply and demand conditions in these markets;?the effects of changes in these variable

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Chapter 6: Market analysis: shares, currency and labour markets

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    1. Chapter 6: Market analysis: shares, currency and labour markets Andrew Gillespie

    2. Learning Objectives By the end of this chapter, you should understand ? the key factors influencing supply and demand in the labour, share, capital goods, and currency markets; ? the consequences of changes in supply and demand conditions in these markets; ? the effects of changes in these variables; ? how the government intervenes in markets and the effect of such intervention.

    3. Short Answer Questions 1. What determines demand for a currency? 2. What determines the supply of a currency? 3. What is meant by a ‘strong’ pound? 4. How might the government intervene to increase the value of its currency? 5. Why do investors buy shares? 6. What is meant by market capitalization? 7. What is meant by marginal revenue product? 8. What factors determine the supply of labour to an industry? 9. What determines the wage elasticity of demand for labour? 10. Why is demand for labour a derived demand?

    4. Essay Questions Discuss the main reasons why exchange rates are often so unstable. Discuss the main factors influencing the level of investment in an economy. 3. To what extent does a change in share price of a company matter?

    9. Wage elasticity of demand Measured by: Percentage change in quantity demanded of labour Percentage change in wages Influenced by: Price elasticity of demand for the final product Ease of substitution of other factors of production Time

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