Econ202 Sp14 answers 1 2 3 4 5 6 to midterm exam group B
... S at any r will stay the same (or, S curve will not shift). I at any r will stay the same (or, I curve will not shift). The world real interest rate r* will not change. Since the domestic real interest rate r is determined by (or, is equal to) the world real interest rate, r will not change either. ...
... S at any r will stay the same (or, S curve will not shift). I at any r will stay the same (or, I curve will not shift). The world real interest rate r* will not change. Since the domestic real interest rate r is determined by (or, is equal to) the world real interest rate, r will not change either. ...
THE MULTIPLIER EFFECT A FORMULA FOR THE SPENDING
... Suppose, for instance, that the government increases expenditure on a form of government-provided capital, such as roads. Roads are used by private businesses to make deliveries to their customers; an increase in the quantity of roads increases these businesses’ productivity. Hence, when the governm ...
... Suppose, for instance, that the government increases expenditure on a form of government-provided capital, such as roads. Roads are used by private businesses to make deliveries to their customers; an increase in the quantity of roads increases these businesses’ productivity. Hence, when the governm ...
Martin Feldstein DEFLATION
... indicates that discretionary fiscal policy is not useful in dealing with the typical short recession downturn, a discretionary fiscal stimulus may be appropriate when faced with a long-term weakness of the type experienced now in Japan or with anticipated deflation. Contrary to the usual assumption, ...
... indicates that discretionary fiscal policy is not useful in dealing with the typical short recession downturn, a discretionary fiscal stimulus may be appropriate when faced with a long-term weakness of the type experienced now in Japan or with anticipated deflation. Contrary to the usual assumption, ...
28.1 money and the interest rate
... • When the interest rate is below its equilibrium level, the quantity of money demanded exceeds the quantity of money supplied. • People are holding too little money, so they try to get more money by selling other financial assets. • The demand for financial assets decreases, the prices of these ass ...
... • When the interest rate is below its equilibrium level, the quantity of money demanded exceeds the quantity of money supplied. • People are holding too little money, so they try to get more money by selling other financial assets. • The demand for financial assets decreases, the prices of these ass ...
Chapter 1: Introduction
... velocity, and so nominal money supply growth had to dip well below zero in order to keep inflation from rising. Economic theory suggests that money demand should be inversely related to the nominal interest rate, which is the sum of the real interest rate and the current inflation rate. The cash in ...
... velocity, and so nominal money supply growth had to dip well below zero in order to keep inflation from rising. Economic theory suggests that money demand should be inversely related to the nominal interest rate, which is the sum of the real interest rate and the current inflation rate. The cash in ...
Factors Influencing Relative Price of Goods and Services Sectors in
... diverging movements in goods and services sectors prices, two components of the CPI basket, have drawn particular attention. However, both theoretical and quantitative studies on this issue have remained rather limited in developing as well as advanced countries. This distortion in relative prices, ...
... diverging movements in goods and services sectors prices, two components of the CPI basket, have drawn particular attention. However, both theoretical and quantitative studies on this issue have remained rather limited in developing as well as advanced countries. This distortion in relative prices, ...
chapter 13 powerpoint
... • inflation: a general increase in prices across an economy • purchasing power: the ability to purchase goods and services • price index: a measurement that shows how the average price of a standard group of goods changes over time • Consumer Price Index: a price index determined by measuring the pr ...
... • inflation: a general increase in prices across an economy • purchasing power: the ability to purchase goods and services • price index: a measurement that shows how the average price of a standard group of goods changes over time • Consumer Price Index: a price index determined by measuring the pr ...
Monetary policy and supply shocks - Hans-Böckler
... either case, potential output once again reaches a higher level. Whether this potential output level is higher or lower than the one that would have been realized in the absence of an oil price shock depends, among other things, on the technological progress embedded in new production methods. In th ...
... either case, potential output once again reaches a higher level. Whether this potential output level is higher or lower than the one that would have been realized in the absence of an oil price shock depends, among other things, on the technological progress embedded in new production methods. In th ...
Keynesian and Monetarist Views on the German Unemployment
... discussed. Regarding the policy dispute, first the monetarist demand for wage moderation is reviewed, which is followed by a discussion of the Keynesian doubts on the effectiveness of this policy. In conclusion, this paper cannot hope to settle the long-running controversy on this issue, but it show ...
... discussed. Regarding the policy dispute, first the monetarist demand for wage moderation is reviewed, which is followed by a discussion of the Keynesian doubts on the effectiveness of this policy. In conclusion, this paper cannot hope to settle the long-running controversy on this issue, but it show ...
aggregate supply (AS) curve
... Sustained Inflation as a Purely Monetary Phenomenon Virtually all economists agree that an increase in the price level can be caused by anything that causes the AD curve to shift to the right or the AS curve to shift to the left. It is also generally agreed that for a sustained inflation to occur, t ...
... Sustained Inflation as a Purely Monetary Phenomenon Virtually all economists agree that an increase in the price level can be caused by anything that causes the AD curve to shift to the right or the AS curve to shift to the left. It is also generally agreed that for a sustained inflation to occur, t ...
Abenomics: An update - Brookings Institution
... there are no visible effects of monetary policy on the consumption of households expected to benefit most, net debtors and the young. In contrast, the April 2014 consumption tax increase had large effects on the consumption of all types of households. Thus the story of flat consumption in Japan may ...
... there are no visible effects of monetary policy on the consumption of households expected to benefit most, net debtors and the young. In contrast, the April 2014 consumption tax increase had large effects on the consumption of all types of households. Thus the story of flat consumption in Japan may ...
THE RETURN OF THE WAGE PHILLIPS CURVE
... Phillips Curve. Under certain assumptions, that relation takes the same form as the original equation of Phillips (1958). Furthermore, in the presence of wage indexation to past inflation—an assumption often made in extensions of the basic model—the resulting wage dynamics are consistent with a spec ...
... Phillips Curve. Under certain assumptions, that relation takes the same form as the original equation of Phillips (1958). Furthermore, in the presence of wage indexation to past inflation—an assumption often made in extensions of the basic model—the resulting wage dynamics are consistent with a spec ...
Monetary Policy Fall 2016 (material for last course outline)
... Monetary policy was also loosened substantially as problems in housing finance became evident. In the summer of 2007 (before the beginning of the official recession in December 2007) rising mortgage defaults caused problems in financial markets. In response to these concerns, the Fed began to cut th ...
... Monetary policy was also loosened substantially as problems in housing finance became evident. In the summer of 2007 (before the beginning of the official recession in December 2007) rising mortgage defaults caused problems in financial markets. In response to these concerns, the Fed began to cut th ...
Perfect Competition
... Short-Run Supply Curves • The firm’s short-run supply curve shows the relationship between the price of a product and the quantity of output supplied by a firm in the short run. • The firm’s short-run supply curve is the part of the firm’s short-run marginal cost curve above the shut-down price. ...
... Short-Run Supply Curves • The firm’s short-run supply curve shows the relationship between the price of a product and the quantity of output supplied by a firm in the short run. • The firm’s short-run supply curve is the part of the firm’s short-run marginal cost curve above the shut-down price. ...
Aggregate Disturbances, Monetary Policy, and the Macroeconomy: The FRB/US Perspective
... equilibrium periodically. For example, during economic downturns an unusually large percentage of the labor force may be willing to work at current wage rates but be unable to find a job. Alternatively, during periods of above-average activity, the unemployment rate may temporarily fall to a low lev ...
... equilibrium periodically. For example, during economic downturns an unusually large percentage of the labor force may be willing to work at current wage rates but be unable to find a job. Alternatively, during periods of above-average activity, the unemployment rate may temporarily fall to a low lev ...
Inflation-Linked Pricing in the Presence of a Central Bank Reaction
... We propose a pricing model for inflation-linked derivatives based on the premise that, to be successful, an inflation model has to take into account the central bank reaction function to explain the co-movement of interest rates and inflation. To achieve this, we adapt elements of a mainstream macro ...
... We propose a pricing model for inflation-linked derivatives based on the premise that, to be successful, an inflation model has to take into account the central bank reaction function to explain the co-movement of interest rates and inflation. To achieve this, we adapt elements of a mainstream macro ...
The Theory of Capital Markets
... • The price level rises to P2, and the real wage falls to w1/P2. • Labor demand rises,, but labor supply is not available at the lower real wage. • Firms offer higher nominal wages, causing the short-run aggregate supply curve to shift left. • Output remains at Y1 with an efficiency wage of w2/P3 eq ...
... • The price level rises to P2, and the real wage falls to w1/P2. • Labor demand rises,, but labor supply is not available at the lower real wage. • Firms offer higher nominal wages, causing the short-run aggregate supply curve to shift left. • Output remains at Y1 with an efficiency wage of w2/P3 eq ...
macronotes - Houston H. Stokes Page
... problems. Since the notes are distributed in WORD® 97 format, students can edit the notes. I. Fundamentals of Macroeconomics: Chapter 1 The Macroeconomy: Growth and Fluctuations Macroeconomics studies the aggregate economy - how and why the economy grows and fluctuates over time. Macro Theory provid ...
... problems. Since the notes are distributed in WORD® 97 format, students can edit the notes. I. Fundamentals of Macroeconomics: Chapter 1 The Macroeconomy: Growth and Fluctuations Macroeconomics studies the aggregate economy - how and why the economy grows and fluctuates over time. Macro Theory provid ...
Output gap - McGraw Hill Higher Education
... cast doubt on the reliability of the data and impose serious limitations on the public and policymakers’ ability to deal effectively with recessions. It is common knowledge, at least in the academic world, that one of the most daunting tasks in conducting research about countries in the developing ...
... cast doubt on the reliability of the data and impose serious limitations on the public and policymakers’ ability to deal effectively with recessions. It is common knowledge, at least in the academic world, that one of the most daunting tasks in conducting research about countries in the developing ...
Principles of Economics, Case and Fair,9e
... Sustained Inflation as a Purely Monetary Phenomenon Virtually all economists agree that an increase in the price level can be caused by anything that causes the AD curve to shift to the right or the AS curve to shift to the left. It is also generally agreed that for a sustained inflation to occur, t ...
... Sustained Inflation as a Purely Monetary Phenomenon Virtually all economists agree that an increase in the price level can be caused by anything that causes the AD curve to shift to the right or the AS curve to shift to the left. It is also generally agreed that for a sustained inflation to occur, t ...
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.