random walk - McGraw
... Any unemployment is purely frictional Neither monetary nor fiscal policy changes will have any systematic effect on output ...
... Any unemployment is purely frictional Neither monetary nor fiscal policy changes will have any systematic effect on output ...
Introduction to Macroeconomics 1012 Practise Mid-Term
... E) a point inside the production possibilities frontier. 2) For the aggregate economy, income equals A) expenditure equals GDP. B) GDP, but expenditure is generally less than these. C) expenditure, but these are not generally equal to GDP. D) expenditure equals GDP only if there is no depreciation. ...
... E) a point inside the production possibilities frontier. 2) For the aggregate economy, income equals A) expenditure equals GDP. B) GDP, but expenditure is generally less than these. C) expenditure, but these are not generally equal to GDP. D) expenditure equals GDP only if there is no depreciation. ...
Money Growth and Inflation
... The overall increase in the level of prices, as measured by the CPI or the GDP deflator, is called inflation. Although most economies experience at least some inflation most of the time, in the 1 ...
... The overall increase in the level of prices, as measured by the CPI or the GDP deflator, is called inflation. Although most economies experience at least some inflation most of the time, in the 1 ...
Cost-push inflation
... A third reason involves the cost-push theory which states that labor groups cause inflation. If a strong union wins a large wage contract, it forces producers to raise their prices in order to compensate for the increase in salaries they have to pay. The fourth explanation is the wage-price spiral w ...
... A third reason involves the cost-push theory which states that labor groups cause inflation. If a strong union wins a large wage contract, it forces producers to raise their prices in order to compensate for the increase in salaries they have to pay. The fourth explanation is the wage-price spiral w ...
learning from adversity: policy responses to two oil shocks
... countries from 1971 to 1983, up from 4 percent in the 1960s. Unemployment also rose, particularly after the second oil shock, from 1979 to 1983. The misery index rose from 61/2 percent in the 1960s to 13 percent from 1971 to 1978 and to 16 percent from 1979 to 1983. In 1983 and 1984, it began gradua ...
... countries from 1971 to 1983, up from 4 percent in the 1960s. Unemployment also rose, particularly after the second oil shock, from 1979 to 1983. The misery index rose from 61/2 percent in the 1960s to 13 percent from 1971 to 1978 and to 16 percent from 1979 to 1983. In 1983 and 1984, it began gradua ...
Unit 3: Aggregate Demand and Supply and Fiscal Policy
... When we use aggregates we combine all prices and all quantities. Aggregate Demand is all the goods and services (real GDP) that buyers are willing and able to purchase at different price levels. The Demand for everything by everyone in the US. There is an inverse relationship between price level and ...
... When we use aggregates we combine all prices and all quantities. Aggregate Demand is all the goods and services (real GDP) that buyers are willing and able to purchase at different price levels. The Demand for everything by everyone in the US. There is an inverse relationship between price level and ...
Consumer Price Index
... The market basket of goods used in calculating the CPI is fixed and does not take into account consumers’ ...
... The market basket of goods used in calculating the CPI is fixed and does not take into account consumers’ ...
Answers to questions.
... throughout the economy. This type of inflation is often described as costpush inflation. Increases in costs push prices up. The most common recent examples are inflationary periods caused largely by increases in the price of oil. Or if employers and employees begin to expect inflation, costs and pri ...
... throughout the economy. This type of inflation is often described as costpush inflation. Increases in costs push prices up. The most common recent examples are inflationary periods caused largely by increases in the price of oil. Or if employers and employees begin to expect inflation, costs and pri ...
Meeting the Challenge of Asia
... International organisations, private forecasters and indeed the ECB expect this spell of negative inflation to be reversed, as suggested by inflation forecasts for 2009 and 2010. This can be seen, for example, from slide 7. It plots the latest HICP inflation forecasts from the Euro Zone Barometer – ...
... International organisations, private forecasters and indeed the ECB expect this spell of negative inflation to be reversed, as suggested by inflation forecasts for 2009 and 2010. This can be seen, for example, from slide 7. It plots the latest HICP inflation forecasts from the Euro Zone Barometer – ...
Inflation, deflation and purchasing power
... this fully anticipated monetary policy cannot have any real effects even in the short-run; the CB can affect the real output and employment only if it can find a way to create a “price surprise”. if a policymaker announces a disinflation policy in advance, this cannot reduce prices if people d ...
... this fully anticipated monetary policy cannot have any real effects even in the short-run; the CB can affect the real output and employment only if it can find a way to create a “price surprise”. if a policymaker announces a disinflation policy in advance, this cannot reduce prices if people d ...
Lecture7 - UCSB Economics
... Rate Have on US Economy? Federal Reserve Bank of the US may raise short term interest rates to combat inflation Raising interest rates could discourage consumers from purchasing durable goods, house, and cars Raising interest rates could discourage business from borrowing to invest in new equipm ...
... Rate Have on US Economy? Federal Reserve Bank of the US may raise short term interest rates to combat inflation Raising interest rates could discourage consumers from purchasing durable goods, house, and cars Raising interest rates could discourage business from borrowing to invest in new equipm ...
paper - Institute for New Economic Thinking
... of" the" aggregate" demand" curve" in" aggregate" price" level/real" output" space" rests" on" the" significance"of"Pigouvian/Patinkinesque"effects,"with"price"deflation"making"asset"holders"feel" richer"and"thus"raising"their"consumption"expenditures."Nowadays,"on"the"empirical"side,"this" has" eve ...
... of" the" aggregate" demand" curve" in" aggregate" price" level/real" output" space" rests" on" the" significance"of"Pigouvian/Patinkinesque"effects,"with"price"deflation"making"asset"holders"feel" richer"and"thus"raising"their"consumption"expenditures."Nowadays,"on"the"empirical"side,"this" has" eve ...
Unit 3: Aggregate Demand and Supply and Fiscal Policy
... When we use aggregates we combine all prices and all quantities. Aggregate Demand is all the goods and services (real GDP) that buyers are willing and able to purchase at different price levels. The Demand for everything by everyone in the US. There is an inverse relationship between price level and ...
... When we use aggregates we combine all prices and all quantities. Aggregate Demand is all the goods and services (real GDP) that buyers are willing and able to purchase at different price levels. The Demand for everything by everyone in the US. There is an inverse relationship between price level and ...
Inflation
... bond prices generally fall as interest rates rise, and the current low interest rate environment increases this risk. Current reductions in bond counterparty capacity may contribute to decreased market liquidity and increased price volatility. Bond investments may be worth more or less than the orig ...
... bond prices generally fall as interest rates rise, and the current low interest rate environment increases this risk. Current reductions in bond counterparty capacity may contribute to decreased market liquidity and increased price volatility. Bond investments may be worth more or less than the orig ...
S 1
... – For higher levels of income, the equilibrium rate of interest is lower because households are willing to save more at every value of the interest rate. – For lower levels of income, the equilibrium rate of interest is higher because households are less willing to save at every value of the interes ...
... – For higher levels of income, the equilibrium rate of interest is lower because households are willing to save more at every value of the interest rate. – For lower levels of income, the equilibrium rate of interest is higher because households are less willing to save at every value of the interes ...
Ch6
... A firm may prefer higher than equilibrium wages for the following 4 reasons: (1) Worker Health: Better paid workers eat a better diet and thus are more productive. Increase effective labor and labor productivity (2) Worker Quality: Higher wages attract a better pool of workers to apply for jobs. ...
... A firm may prefer higher than equilibrium wages for the following 4 reasons: (1) Worker Health: Better paid workers eat a better diet and thus are more productive. Increase effective labor and labor productivity (2) Worker Quality: Higher wages attract a better pool of workers to apply for jobs. ...
PART I: Multiple Choice/Fill-In
... expansionary fiscal policy is enacted. Briefly describe why each of these factors causes the multiplier to decrease. There are several factors that decrease the size of the government spending multiplier: 1) automatic stabilizers such as taxes increase during expansions, causing the AD curve to shif ...
... expansionary fiscal policy is enacted. Briefly describe why each of these factors causes the multiplier to decrease. There are several factors that decrease the size of the government spending multiplier: 1) automatic stabilizers such as taxes increase during expansions, causing the AD curve to shif ...
Economics 302
... 2. (5 points) For this question use a Solow Growth Model with no technological change and no population change. An economy is initially in steady state at a level of capital per worker below the Golden Rule level of capital per worker. What must a social planner do to the savings rate to reach k*gol ...
... 2. (5 points) For this question use a Solow Growth Model with no technological change and no population change. An economy is initially in steady state at a level of capital per worker below the Golden Rule level of capital per worker. What must a social planner do to the savings rate to reach k*gol ...
Interest Rates - Cloudfront.net
... market basket. (Result: CPI may be higher than what consumers are really paying) 2. New Products- The CPI market basket may not include the newest consumer products. (Result: CPI measures prices but not the increase in choices) 3. Product Quality- The CPI ignores both improvements and decline in pro ...
... market basket. (Result: CPI may be higher than what consumers are really paying) 2. New Products- The CPI market basket may not include the newest consumer products. (Result: CPI measures prices but not the increase in choices) 3. Product Quality- The CPI ignores both improvements and decline in pro ...
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.