dynamic AD
... and the real interest rate are at their natural values, inflation and expected inflation are at the target rate of inflation, and the nominal interest rate equals the natural rate of interest plus target inflation. • The long-run equilibrium is described as follows: Output and the real interest rate ...
... and the real interest rate are at their natural values, inflation and expected inflation are at the target rate of inflation, and the nominal interest rate equals the natural rate of interest plus target inflation. • The long-run equilibrium is described as follows: Output and the real interest rate ...
dynamic AD
... and the real interest rate are at their natural values, inflation and expected inflation are at the target rate of inflation, and the nominal interest rate equals the natural rate of interest plus target inflation. • The long-run equilibrium is described as follows: Output and the real interest rate ...
... and the real interest rate are at their natural values, inflation and expected inflation are at the target rate of inflation, and the nominal interest rate equals the natural rate of interest plus target inflation. • The long-run equilibrium is described as follows: Output and the real interest rate ...
Macro Sample Exam Questions
... 28) What is the current equilibrium price level and real GDP for the economy illustrated in the figure above? Does this economy have an inflationary gap, a recessionary gap, or neither? As it adjusts toward full employment, which curve shifts? What is the equilibrium real GDP and price level that t ...
... 28) What is the current equilibrium price level and real GDP for the economy illustrated in the figure above? Does this economy have an inflationary gap, a recessionary gap, or neither? As it adjusts toward full employment, which curve shifts? What is the equilibrium real GDP and price level that t ...
2. What is deflation?
... might further exacerbate this tendency. A well-known example of a self-reinforcing price– income mechanism is Japan’s experience in the 1990s, also referred to as the “lost decade”. A deflation triggered by a sharp fall in aggregate demand, possibly accompanied by unpredictable changes in economic s ...
... might further exacerbate this tendency. A well-known example of a self-reinforcing price– income mechanism is Japan’s experience in the 1990s, also referred to as the “lost decade”. A deflation triggered by a sharp fall in aggregate demand, possibly accompanied by unpredictable changes in economic s ...
mankiw6e-chap04_2007_
... Central bank controls the money supply. Quantity theory of money assumes velocity is stable, concludes that the money growth rate determines the inflation rate. CHAPTER 4 ...
... Central bank controls the money supply. Quantity theory of money assumes velocity is stable, concludes that the money growth rate determines the inflation rate. CHAPTER 4 ...
Chapter 5: Goods and Financial Markets: The IS
... Equilibrium in the goods market exists when production, Y, is equal to the demand for goods, Z. In the simple model developed in chapter 3, the interest rate did not affect the demand for goods. The equilibrium condition was given by: Y C(Y T ) I G ...
... Equilibrium in the goods market exists when production, Y, is equal to the demand for goods, Z. In the simple model developed in chapter 3, the interest rate did not affect the demand for goods. The equilibrium condition was given by: Y C(Y T ) I G ...
Speech by Charles Bean at Oxonia Distinguished
... the rapid development taking place in China and elsewhere in the Asian subcontinent. Or it could be the consequence of demographics or increased saving by households worried about their living standards in retirement. Getting to the bottom of such puzzles is the daily task of those who work in centr ...
... the rapid development taking place in China and elsewhere in the Asian subcontinent. Or it could be the consequence of demographics or increased saving by households worried about their living standards in retirement. Getting to the bottom of such puzzles is the daily task of those who work in centr ...
ECON-4.9-10.12 Inflation
... Did you know that gasoline costs less in 2005 than it did in 1980? Impossible, you say! That is the case, though, when prices are adjusted for inflation. Back in 1980, a gallon of gas cost about $1.13. More recently, in 2005 a gallon of gas cost $1.66. Yes, $1.66 is more than $1.13, but when the rat ...
... Did you know that gasoline costs less in 2005 than it did in 1980? Impossible, you say! That is the case, though, when prices are adjusted for inflation. Back in 1980, a gallon of gas cost about $1.13. More recently, in 2005 a gallon of gas cost $1.66. Yes, $1.66 is more than $1.13, but when the rat ...
Chapter 1
... inflation rate of 4% for the coming year. Using past and current information about macroeconomic policy and an understanding of the macroeconomy, it is possible that the rational forecast of future inflation could also be 4%. 3. Suppose they expect the price level to drop by 4% and it actually drops ...
... inflation rate of 4% for the coming year. Using past and current information about macroeconomic policy and an understanding of the macroeconomy, it is possible that the rational forecast of future inflation could also be 4%. 3. Suppose they expect the price level to drop by 4% and it actually drops ...
Nicholas
... interest. As our analysis will not consider demand side shocks, we have omitted shift terms from these equations. All variables are measured as proportional deviations from secular trend and therefore have a zero mean. ...
... interest. As our analysis will not consider demand side shocks, we have omitted shift terms from these equations. All variables are measured as proportional deviations from secular trend and therefore have a zero mean. ...
ECN 111 Chapter 14 Lecture Notes
... A. Aggregate Supply Basics The quantity of real GDP supplied (Y), depends on: the quantity of labor employed, the quantities of capital and human capital and the technologies they embody, the quantities of land and natural resources used, and the amount of entrepreneurial talent available. B. Aggreg ...
... A. Aggregate Supply Basics The quantity of real GDP supplied (Y), depends on: the quantity of labor employed, the quantities of capital and human capital and the technologies they embody, the quantities of land and natural resources used, and the amount of entrepreneurial talent available. B. Aggreg ...
Mr. Woodford and the Challenge of Finance
... In effect, Woodford’s answer to the challenge of finance involves reformulating monetary economics as a branch of public finance. Part II of the book (Ch. 6-8, pp. 379623) is all about the policy problem of choosing the interest rate rule that produces the best outcome, where “best” is measured fund ...
... In effect, Woodford’s answer to the challenge of finance involves reformulating monetary economics as a branch of public finance. Part II of the book (Ch. 6-8, pp. 379623) is all about the policy problem of choosing the interest rate rule that produces the best outcome, where “best” is measured fund ...
New approaches to business cycle theory in current economic science
... on the contrary, the price change results from monetary perturbations, then such an adjustment is not only useless, but can also be harmful. However, until they determine the actual nature of price changes, agents will react – at least in part – as if it were real. If the price change has only monet ...
... on the contrary, the price change results from monetary perturbations, then such an adjustment is not only useless, but can also be harmful. However, until they determine the actual nature of price changes, agents will react – at least in part – as if it were real. If the price change has only monet ...
Demand for bonds - Iowa State University Department of Economics
... d) Why is it true that in a world with easy accessibility to information and without transactions costs, financial intermediaries would not exist? If there is easy accessibility to information and no transactions costs, people could make loans to each other at no costs, and would thus have no need f ...
... d) Why is it true that in a world with easy accessibility to information and without transactions costs, financial intermediaries would not exist? If there is easy accessibility to information and no transactions costs, people could make loans to each other at no costs, and would thus have no need f ...
Homework 1
... market will lead to a valuable domestic currency. But a strong currency in the future would make investing in the domestic bank accounts today relatively attractive, which will increase the supply of foreign funds to the domestic forex market today and reduce demand for foreign dollars by domestic i ...
... market will lead to a valuable domestic currency. But a strong currency in the future would make investing in the domestic bank accounts today relatively attractive, which will increase the supply of foreign funds to the domestic forex market today and reduce demand for foreign dollars by domestic i ...
(dis)equilibrium, uncertainty and monetary analysis: an essential
... on decisions with respect to production, the quantities, the raw materials, exchange and transactions between different firms. Economic actors were ex ante influenced on their decisionmaking: this can be seen as a significant limit to past economic organisations (Polanyi et al., 1957). Advanced mark ...
... on decisions with respect to production, the quantities, the raw materials, exchange and transactions between different firms. Economic actors were ex ante influenced on their decisionmaking: this can be seen as a significant limit to past economic organisations (Polanyi et al., 1957). Advanced mark ...
Lesson 7
... • Economic integration = opportunities for growth and development but also = • Easier for crises to spread from one country to another • e.g. 1992 currency speculation against British pound and other European currencies = near collapse of monetary arrangements in Europe ...
... • Economic integration = opportunities for growth and development but also = • Easier for crises to spread from one country to another • e.g. 1992 currency speculation against British pound and other European currencies = near collapse of monetary arrangements in Europe ...
Solutions to Assignment 2
... is 1/(1 – MPC): because the MPC is 0.75, the government-purchases multiplier is 4. A level of income of 1,600 represents an increase of 300 over the original level of income. The government-purchases multiplier is 1/(1 – MPC): the MPC in this example equals 0.75, so the government-purchases multipli ...
... is 1/(1 – MPC): because the MPC is 0.75, the government-purchases multiplier is 4. A level of income of 1,600 represents an increase of 300 over the original level of income. The government-purchases multiplier is 1/(1 – MPC): the MPC in this example equals 0.75, so the government-purchases multipli ...
Fiscal-monetary interaction and ambiguity in the wake of the crisis Princeton University
... not to “monetizing the debt”, but to buying a fraction of newly issued debt, which may be very small, or even zero if transactions demand for money is weak enough, that is required to maintain the constant nominal interest rate. The total quantity of outstanding nominal government liabilities then d ...
... not to “monetizing the debt”, but to buying a fraction of newly issued debt, which may be very small, or even zero if transactions demand for money is weak enough, that is required to maintain the constant nominal interest rate. The total quantity of outstanding nominal government liabilities then d ...