Document
... may affect aggregate supply In doing this, we must distinguish between long-term trends in aggregate supply, and supply shocks, which are unexpected events that affect aggregate supply, often only ...
... may affect aggregate supply In doing this, we must distinguish between long-term trends in aggregate supply, and supply shocks, which are unexpected events that affect aggregate supply, often only ...
Teaching the Recession1
... Inflation – “too many dollars chasing too few goods.” Deflation – “too few dollars chasing too many goods.” ...
... Inflation – “too many dollars chasing too few goods.” Deflation – “too few dollars chasing too many goods.” ...
Macro Intro
... Firms do not simply respond to market-determined prices, but they actually set prices. Pricesetting firms do not have individual supply curves because these firms are choosing both output and price at the same time. ...
... Firms do not simply respond to market-determined prices, but they actually set prices. Pricesetting firms do not have individual supply curves because these firms are choosing both output and price at the same time. ...
ECN 2003 MACROECONOMICS
... As velocity is constant, any change in the money supply leads to a proportionate change in nominal GDP. Because inputs and production function have already determines real GDP, change in nominal GDP must present a change in P. Hence the quantity theory implies that the price level is proportional to ...
... As velocity is constant, any change in the money supply leads to a proportionate change in nominal GDP. Because inputs and production function have already determines real GDP, change in nominal GDP must present a change in P. Hence the quantity theory implies that the price level is proportional to ...
Answers to Homework #5
... purchase the same basket of goods and services. Consumers bid up interest rates with their increased demand for money. As the interest rate increases, this results in less investment spending and therefore a reduction in the quantity of aggregate output demanded. Remember that an increase in the agg ...
... purchase the same basket of goods and services. Consumers bid up interest rates with their increased demand for money. As the interest rate increases, this results in less investment spending and therefore a reduction in the quantity of aggregate output demanded. Remember that an increase in the agg ...
Unit 7 - Inflation - Inflate Your Mind
... Too little demand Too much government spending Steady increases in the money supply Trade deficits ...
... Too little demand Too much government spending Steady increases in the money supply Trade deficits ...
Tutorial
... a. real balance effect. b. interest-rate effect. c. net exports effect. d. substitution effect. B. At a high price level, the demand for borrowed money increases and results in higher cost of borrowing (interest rates). Higher interest rates result in lower consumption and investment spending. ...
... a. real balance effect. b. interest-rate effect. c. net exports effect. d. substitution effect. B. At a high price level, the demand for borrowed money increases and results in higher cost of borrowing (interest rates). Higher interest rates result in lower consumption and investment spending. ...
Inflation
... Effects of Inflation on Cash Flows: Often there is a tendency to assume erroneously that, when, both net revenues and the project cost rise proportionately, the inflation would not have much impact. These lines of arguments seem to be convincing, and it is correct for two reasons. First, the rate u ...
... Effects of Inflation on Cash Flows: Often there is a tendency to assume erroneously that, when, both net revenues and the project cost rise proportionately, the inflation would not have much impact. These lines of arguments seem to be convincing, and it is correct for two reasons. First, the rate u ...
Explanations
... in the spaces provided. Then bubble in the appropriate letters below your name. You must also fill in the last 5 digits of your student number in the field called “ID Number.” Use the 5 columns on the left when you fill in these digits. Then bubble in the appropriate spaces below your number. Proble ...
... in the spaces provided. Then bubble in the appropriate letters below your name. You must also fill in the last 5 digits of your student number in the field called “ID Number.” Use the 5 columns on the left when you fill in these digits. Then bubble in the appropriate spaces below your number. Proble ...
consumer price index
... The GDP Deflator versus the Consumer Price Index • The consumer price index compares the price of a fixed basket of goods and services to the price of the basket in the base year (only occasionally does the BLS change the basket)... • …whereas the GDP deflator compares the price of currently produc ...
... The GDP Deflator versus the Consumer Price Index • The consumer price index compares the price of a fixed basket of goods and services to the price of the basket in the base year (only occasionally does the BLS change the basket)... • …whereas the GDP deflator compares the price of currently produc ...
Keynesian Theory and the AD-AS Framework: A
... and the ‘supply side’ – and examines their interaction using accounting identities, equilibrium conditions and behavioral and institutional equations. The ‘demand side’ typically examines factors relating to the demand for goods and the demand and supply of assets. The ‘supply side’ typically examin ...
... and the ‘supply side’ – and examines their interaction using accounting identities, equilibrium conditions and behavioral and institutional equations. The ‘demand side’ typically examines factors relating to the demand for goods and the demand and supply of assets. The ‘supply side’ typically examin ...
SOLUTIONS TO TEXT PROBLEMS:
... the sticky-wage theory suggests that because nominal wages are slow to adjust, a decline in the price level means real wages are higher, so firms hire fewer workers and produce less, causing the quantity of goods and services supplied to decline. Second, the sticky-price theory suggests that the pr ...
... the sticky-wage theory suggests that because nominal wages are slow to adjust, a decline in the price level means real wages are higher, so firms hire fewer workers and produce less, causing the quantity of goods and services supplied to decline. Second, the sticky-price theory suggests that the pr ...
Unemployment
... • Increases in unemployment reduce real GDP as the labor input to production falls because fewer workers are employed. So an increase in the natural rate reduces potential real GDP, provided there are no accompanying changes in productivity to be accounted for. ...
... • Increases in unemployment reduce real GDP as the labor input to production falls because fewer workers are employed. So an increase in the natural rate reduces potential real GDP, provided there are no accompanying changes in productivity to be accounted for. ...
Module 13 new2015
... •Frictional unemployment (TEMPORARY) •Structural unemployment (OBSOLETE) •Together they make up the natural rate unemployment (NRU). America is at full employment if we have NRU. This is the normal amount of unemployment that we SHOULD have. ...
... •Frictional unemployment (TEMPORARY) •Structural unemployment (OBSOLETE) •Together they make up the natural rate unemployment (NRU). America is at full employment if we have NRU. This is the normal amount of unemployment that we SHOULD have. ...
17 Unemployment - Mr. Davidson`s IB Economics Page
... Slopes upwards because as wages increase workers will be willing to work ...
... Slopes upwards because as wages increase workers will be willing to work ...
2.3 Macroeconomic Objectives (Phillips Curve)
... more permanent level of unemployment that's caused by forces other than the business cycle. It can be the result of an underlying shift in the economy that makes it difficult for certain segments of the population to find ...
... more permanent level of unemployment that's caused by forces other than the business cycle. It can be the result of an underlying shift in the economy that makes it difficult for certain segments of the population to find ...
Chapter 17 homework - Mr. Sadow`s History Class Website
... 5. Define short-run (SR) economic growth rate. Define long-run (LR) economic growth rate. What are the three best ways to enhance a country’s LR economic growth rate? Why are humans (workers) considered capital? 6. Review the chapter presentation for Chapter 2 online. A little studying now will go a ...
... 5. Define short-run (SR) economic growth rate. Define long-run (LR) economic growth rate. What are the three best ways to enhance a country’s LR economic growth rate? Why are humans (workers) considered capital? 6. Review the chapter presentation for Chapter 2 online. A little studying now will go a ...
Chapter 7 Employment and Unemployment
... great economic, psychological, and social costs on unemployed individuals, as well as their families and their communities. It is associated with higher rates of depression, suicide, domestic violence, and lack of social cohesion. 17. The household survey questions 60,000 households on a monthly bas ...
... great economic, psychological, and social costs on unemployed individuals, as well as their families and their communities. It is associated with higher rates of depression, suicide, domestic violence, and lack of social cohesion. 17. The household survey questions 60,000 households on a monthly bas ...
Spring 2015 TEST 3 w/o solution
... 3. (Figure: Inflationary and Recessionary Gaps) If the economy is in short-run equilibrium at Y1 in panel (b), a contractionary policy to bring the economy back to potential output at YP would attempt to A) shift the LRAS to the left B) shift the aggregate demand curve to the left by decreasing aggr ...
... 3. (Figure: Inflationary and Recessionary Gaps) If the economy is in short-run equilibrium at Y1 in panel (b), a contractionary policy to bring the economy back to potential output at YP would attempt to A) shift the LRAS to the left B) shift the aggregate demand curve to the left by decreasing aggr ...
Class 5. The IS-LM model and Aggregate Demand
... happens to the equilibrium interest rate if the supply of money is raised from 1,000 to 1,200? d) If the Fed wishes to raise the interest rate to 7 percent, what money supply should it set? 6. Use the IS-LM model to predict the effects of each of the following shocks on income, the interest rate, co ...
... happens to the equilibrium interest rate if the supply of money is raised from 1,000 to 1,200? d) If the Fed wishes to raise the interest rate to 7 percent, what money supply should it set? 6. Use the IS-LM model to predict the effects of each of the following shocks on income, the interest rate, co ...
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.