Practice Prob/Essay for Second Midterm (actual MT given in past)
... 3. We now allow the small economy's interest rate to diverge temporarily from the world economy's interest rate, but in the long run, the domestic interest rate (r) will return to equal the world's interest rate (rf ). In this problem we'll investigate what happens when fiscal policy is used to att ...
... 3. We now allow the small economy's interest rate to diverge temporarily from the world economy's interest rate, but in the long run, the domestic interest rate (r) will return to equal the world's interest rate (rf ). In this problem we'll investigate what happens when fiscal policy is used to att ...
ECON 10020/20020 Principles of Macroeconomics
... the ten cents . . . ”. Is there a potential economic (logical) fallacy in this statement? If so, identify the economic fallacy and briefly explain why the commentator’s statement can be classified as the logical fallacy you identified. • The person making the statement seems to imply they know what ...
... the ten cents . . . ”. Is there a potential economic (logical) fallacy in this statement? If so, identify the economic fallacy and briefly explain why the commentator’s statement can be classified as the logical fallacy you identified. • The person making the statement seems to imply they know what ...
Teaching Modern Macroecsnornics at the Principles Level
... of technology growth, including education, research and development, and the process of invention and innovation. B. Economic Flt~ctttations While the growth accounting formula is useful for explaining long-term growth in the economy, other factors (e.g., the short-run trade-off, expectations, and m ...
... of technology growth, including education, research and development, and the process of invention and innovation. B. Economic Flt~ctttations While the growth accounting formula is useful for explaining long-term growth in the economy, other factors (e.g., the short-run trade-off, expectations, and m ...
Measuring the Economy
... Occur after an economic upswing or downturn Length of unemployment stats ...
... Occur after an economic upswing or downturn Length of unemployment stats ...
Answers to above Clicker Review
... Answer: Mistakes. It was believed that a deficit would stimulate the economy but it crowded out instead. That’s a mistake about the effect of the deficit. An inflationary bias occurs Answer: Unintended Consequences. A result of the Fed’s attempt to manipulate the economy. The Political Cycle Answer: ...
... Answer: Mistakes. It was believed that a deficit would stimulate the economy but it crowded out instead. That’s a mistake about the effect of the deficit. An inflationary bias occurs Answer: Unintended Consequences. A result of the Fed’s attempt to manipulate the economy. The Political Cycle Answer: ...
Solutions to Problems
... not fully employed. Unemployment exceeds the natural rate. 9c. Eventually, the real GDP will increase and full employment will be restored. The price level will fall. With unemployment exceeding the natural rate of unemployment, the money wage rate will eventually fall. The SAS curve will shift righ ...
... not fully employed. Unemployment exceeds the natural rate. 9c. Eventually, the real GDP will increase and full employment will be restored. The price level will fall. With unemployment exceeding the natural rate of unemployment, the money wage rate will eventually fall. The SAS curve will shift righ ...
Economic Study Notes Inflation - The description of inflation
... Inflationary expectations: If consumers believe the price will rise in the future, they will increase spending now to offset decreased purchasing power Depreciating NZD: Increased exports, increased exporters disposable incomes, increased consumption spending Disposable income/transfer payments: Inc ...
... Inflationary expectations: If consumers believe the price will rise in the future, they will increase spending now to offset decreased purchasing power Depreciating NZD: Increased exports, increased exporters disposable incomes, increased consumption spending Disposable income/transfer payments: Inc ...
AP Macro Reading Questions Unit V Inflation, Unemployment and
... B. is a vertical line extending from Qf upward through e, b, and d . C. may be either AS1, AS2, or AS3 depending on whether the price level is P1, P2, or P3. D. is a horizontal line extending from P2 rightward through f , b, and g. ...
... B. is a vertical line extending from Qf upward through e, b, and d . C. may be either AS1, AS2, or AS3 depending on whether the price level is P1, P2, or P3. D. is a horizontal line extending from P2 rightward through f , b, and g. ...
Solutions
... in the long run, the nominal economy is completely separate from the real economy. This means that in the long run, money and nominal prices have no impacts on real variables such as real GDP. The sticky in‡ation assumption in the Short Run Model implies that the Classical Dichotomy does NOT hold in ...
... in the long run, the nominal economy is completely separate from the real economy. This means that in the long run, money and nominal prices have no impacts on real variables such as real GDP. The sticky in‡ation assumption in the Short Run Model implies that the Classical Dichotomy does NOT hold in ...
market moves 12.20.2013
... their associated inflation concerns have not been realized. At some future point the reserve money may make its way into the system, however, we doubt this will happen anytime soon. For the time being we conclude that the current monetary policy is not inflationary. ...
... their associated inflation concerns have not been realized. At some future point the reserve money may make its way into the system, however, we doubt this will happen anytime soon. For the time being we conclude that the current monetary policy is not inflationary. ...
Economics Section 7
... Frictional Unemployment Structural Unemployment Seasonal Unemployment Cyclical Unemployment Induced Unemployment ...
... Frictional Unemployment Structural Unemployment Seasonal Unemployment Cyclical Unemployment Induced Unemployment ...
Aggregate Supply Under Price Rigidity
... wage becomes equal to the marginal productivity of labor and the marginal cost of labor curve is not sensitive to output changes. Thus, with a constant mark-up no relation exists between inflation and excess capacity. ...
... wage becomes equal to the marginal productivity of labor and the marginal cost of labor curve is not sensitive to output changes. Thus, with a constant mark-up no relation exists between inflation and excess capacity. ...
Economic of Depression, Hyperinflation, and Deficits
... Great Depression: 25% of US labor force was unemployed During the 20th century many countries experienced hyperinflation Over the later part of the 20th century the budget balance in the U.S. swung from deficit to surplus, and then back to deficit Looking to the future, will the social securit ...
... Great Depression: 25% of US labor force was unemployed During the 20th century many countries experienced hyperinflation Over the later part of the 20th century the budget balance in the U.S. swung from deficit to surplus, and then back to deficit Looking to the future, will the social securit ...
Presentation to the Money Marketeers of New York University
... increase in non-participation not related to retirement. It’s likely that many of these people will come back to the labor force as job-seekers as the market improves. We can therefore think of them as a source of labor market slack that is not reflected in the official unemployment rate, though I’d ...
... increase in non-participation not related to retirement. It’s likely that many of these people will come back to the labor force as job-seekers as the market improves. We can therefore think of them as a source of labor market slack that is not reflected in the official unemployment rate, though I’d ...
Chapters 26-28
... Possibly, the announcement itself would be enough to change the behavior of workers and firms. Understanding that the new Chair would fight unemployment even at the cost of inflation, they would expect higher inflation in the future. People would build higher inflation into their contracts and the P ...
... Possibly, the announcement itself would be enough to change the behavior of workers and firms. Understanding that the new Chair would fight unemployment even at the cost of inflation, they would expect higher inflation in the future. People would build higher inflation into their contracts and the P ...
Long-Run Aggregate Supply
... wages and prices are completely flexible—that’s what the “long-run” means. iii. Thus higher prices don’t induce higher output. Why should it? If the price level increases, input prices (including materials and labor) also increased. iv. This also means we’re at full-employment at the LRAS. If equili ...
... wages and prices are completely flexible—that’s what the “long-run” means. iii. Thus higher prices don’t induce higher output. Why should it? If the price level increases, input prices (including materials and labor) also increased. iv. This also means we’re at full-employment at the LRAS. If equili ...
Phillips curve
In economics, the Phillips curve is a historical inverse relationship between rates of unemployment and corresponding rates of inflation that result in an economy. Stated simply, decreased unemployment, (i.e., increased levels of employment) in an economy will correlate with higher rates of inflation.While there is a short run tradeoff between unemployment and inflation, it has not been observed in the long run. In 1968, Milton Friedman asserted that the Phillips Curve was only applicable in the short-run and that in the long-run, inflationary policies will not decrease unemployment. Friedman then correctly predicted that, in the upcoming years after 1968, both inflation and unemployment would increase. The long-run Phillips Curve is now seen as a vertical line at the natural rate of unemployment, where the rate of inflation has no effect on unemployment. Accordingly, the Phillips curve is now seen as too simplistic, with the unemployment rate supplanted by more accurate predictors of inflation based on velocity of money supply measures such as the MZM (""money zero maturity"") velocity, which is affected by unemployment in the short but not the long term.