Intermediate Macroeconomics
... long term, there has not been much opportunity for a test. Moreover, if such a situation were to arise, it would mean that the public authority itself could borrow through the banking system on an unlimited scale at a nominal rate of interest.” - Keynes, General Theory, p. 207 ...
... long term, there has not been much opportunity for a test. Moreover, if such a situation were to arise, it would mean that the public authority itself could borrow through the banking system on an unlimited scale at a nominal rate of interest.” - Keynes, General Theory, p. 207 ...
Mankiw 5/e Chapter 14: Stabilization Policy
... An example of the Lucas Critique Prediction (based on past experience): ...
... An example of the Lucas Critique Prediction (based on past experience): ...
The Future Economy Can Destroy Fixed Income
... So QE increases inflation by printing more money. If our country has 3% inflation for ten years, then the ten year treasuries can be redeemed for about 74% of what a dollar used to be worth. So the government made a 26% reduction in old debt by using inflation alone. If inflation goes to 4.5% (which ...
... So QE increases inflation by printing more money. If our country has 3% inflation for ten years, then the ten year treasuries can be redeemed for about 74% of what a dollar used to be worth. So the government made a 26% reduction in old debt by using inflation alone. If inflation goes to 4.5% (which ...
Test 6 - Sections 7 & 8 - Vocab Review
... GDP per capita, or any other variable that grows gradually over time, to double is approximately 70 divided by that variable’s annual growth rate. _____output per worker. _____a reduction in the value of a currency that is set under a fixed exchange rate regime. ...
... GDP per capita, or any other variable that grows gradually over time, to double is approximately 70 divided by that variable’s annual growth rate. _____output per worker. _____a reduction in the value of a currency that is set under a fixed exchange rate regime. ...
Poland`s policy mix: fiscal or monetary leadership?
... monetary policy. Sargent and Wallace (1981) show that, in the long run, the rate of money growth is governed by fiscal policy, since persistent deficits will ultimately force the monetary authority to monetise debt. Alternatively, the government’s solvency condition could be satisfied through an inc ...
... monetary policy. Sargent and Wallace (1981) show that, in the long run, the rate of money growth is governed by fiscal policy, since persistent deficits will ultimately force the monetary authority to monetise debt. Alternatively, the government’s solvency condition could be satisfied through an inc ...
Measuring the Duration of Liabilities
... • Cash flows do not change with interest rates This does not hold for: – Collateralized Mortgage Obligations (CMOs) – Callable bonds – P-L liabilities – due to inflation-interest rate correlation ...
... • Cash flows do not change with interest rates This does not hold for: – Collateralized Mortgage Obligations (CMOs) – Callable bonds – P-L liabilities – due to inflation-interest rate correlation ...
Economics Exam
... A. tariffs and quotas are removed. B. investment in human capital is growing. C. the money supply is increased. D. there is a trade surplus in goods and services. E. the value of the hryvna, relative to foreign currencies, is higher than before. ...
... A. tariffs and quotas are removed. B. investment in human capital is growing. C. the money supply is increased. D. there is a trade surplus in goods and services. E. the value of the hryvna, relative to foreign currencies, is higher than before. ...
Interest Rates - Cloudfront.net
... 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 product quality. (Result: CPI may suggest that pri ...
... 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 product quality. (Result: CPI may suggest that pri ...
CHAPTER 5 Small Business and the Entrepreneur
... Discount Rate • Discount Rate - Interest rate charged to banks that borrow emergency funds from the Federal Reserve Bank ...
... Discount Rate • Discount Rate - Interest rate charged to banks that borrow emergency funds from the Federal Reserve Bank ...
Keynesian interpretation of the quantity theory of money
... 2. Prices, and especially wages, respond slowly to changes in supply and demand, resulting in periodic shortages and surpluses, especially of labor. ...
... 2. Prices, and especially wages, respond slowly to changes in supply and demand, resulting in periodic shortages and surpluses, especially of labor. ...
Business Cycles, Unemployment, and Inflation
... Price of the Most Recent Market Basket in the Particular Year Price estimate of the Market Basket in 1982-1984 ...
... Price of the Most Recent Market Basket in the Particular Year Price estimate of the Market Basket in 1982-1984 ...
Econ 102: Problem Set 1
... with the 10% increase implied by the quantity theory of money. (On the surface, it is hard to tell about any other variables. However, underlying this is the model of the money market, in which if the price level does rise by 10% with Y unchanged, demand for money will increase by exactly the same a ...
... with the 10% increase implied by the quantity theory of money. (On the surface, it is hard to tell about any other variables. However, underlying this is the model of the money market, in which if the price level does rise by 10% with Y unchanged, demand for money will increase by exactly the same a ...
34 The Influence of Monetary and Fiscal Policy on Aggregate Demand
... • Money demand is determined by several factors. • According to the theory of liquidity preference, one of the most important factors is the interest rate. • People choose to hold money instead of other assets that offer higher rates of return because money can be used to buy goods and services. • T ...
... • Money demand is determined by several factors. • According to the theory of liquidity preference, one of the most important factors is the interest rate. • People choose to hold money instead of other assets that offer higher rates of return because money can be used to buy goods and services. • T ...
Midterm Exam
... increase. Let γ denote growth rates. In class we showed that the growth rate of nominal GDP is approximately the growth rate of real GDP plus the growth rate of the price level, i.e.: γnom GDP = γnom GDP + γP . Therefore to find the growth rate of real GDP, just subtract the growth rate of prices (i ...
... increase. Let γ denote growth rates. In class we showed that the growth rate of nominal GDP is approximately the growth rate of real GDP plus the growth rate of the price level, i.e.: γnom GDP = γnom GDP + γP . Therefore to find the growth rate of real GDP, just subtract the growth rate of prices (i ...
Recommending a Strategy
... Implicit commitment to a low rate of inflation (a rate of inflation similar to that of the United States)—lowers inflationary expectations if credible The rate of interest and the rate of inflation will be at U.S. levels if credible Promotes long-term FDI as well as foreign portfolio investment Faci ...
... Implicit commitment to a low rate of inflation (a rate of inflation similar to that of the United States)—lowers inflationary expectations if credible The rate of interest and the rate of inflation will be at U.S. levels if credible Promotes long-term FDI as well as foreign portfolio investment Faci ...
Sample
... the rate of change in the CPI. The relationship between inflation measured from the GDP deflator and inflation measured from the CPI is very close, but not perfect. The differences arise because the two price indexes apply to different baskets of goods. GDP measures production of final goods, so inf ...
... the rate of change in the CPI. The relationship between inflation measured from the GDP deflator and inflation measured from the CPI is very close, but not perfect. The differences arise because the two price indexes apply to different baskets of goods. GDP measures production of final goods, so inf ...
Presentation to the Chicago Booth Graduate School of Business Alumni... San Francisco, California
... consumer expenditures.2 Why are these shares so low? One reason is that purchases of services, which use relatively little in the way of commodity inputs, make up two-thirds of consumption spending. And in the manufacturing sector, most of the “value added” in the U.S. economy comes from using techn ...
... consumer expenditures.2 Why are these shares so low? One reason is that purchases of services, which use relatively little in the way of commodity inputs, make up two-thirds of consumption spending. And in the manufacturing sector, most of the “value added” in the U.S. economy comes from using techn ...
Practice Questions for review. Open Book The rule of 70 states that a
... 28.Assume that the real GDP of the United States is approximately $12 trillion and the population of the United States is approximately 300 million. What is per capita real GDP? A) $4,000 B) $36,000 C) $40,000 D) Real per capita GDP can't be determined without more information. 29. A country's livi ...
... 28.Assume that the real GDP of the United States is approximately $12 trillion and the population of the United States is approximately 300 million. What is per capita real GDP? A) $4,000 B) $36,000 C) $40,000 D) Real per capita GDP can't be determined without more information. 29. A country's livi ...
The Quantity Theory of Money (review) Page 1 of 2
... happen in the economy? What would really happen is that output would begin to increase because of the availability of credit. Businesses can borrow easier, interest rates are lower and output increases, but then at some point prices begin to increase and when they do, the demand for money increases ...
... happen in the economy? What would really happen is that output would begin to increase because of the availability of credit. Businesses can borrow easier, interest rates are lower and output increases, but then at some point prices begin to increase and when they do, the demand for money increases ...
The Development of Capital Markets
... • If behavior of price level or inflation were certain, then there would be less risk for business and individuals. They would know the real rates of interest. • Real interest rate = Nominal interest rate - Rate of Inflation • But the more uncertain people are about the price level or inflation, the ...
... • If behavior of price level or inflation were certain, then there would be less risk for business and individuals. They would know the real rates of interest. • Real interest rate = Nominal interest rate - Rate of Inflation • But the more uncertain people are about the price level or inflation, the ...
Monetary policy
Monetary policy is the process by which the monetary authority of a country controls the supply of money, often targeting an inflation rate or interest rate to ensure price stability and general trust in the currency.Further goals of a monetary policy are usually to contribute to economic growth and stability, to lower unemployment, and to maintain predictable exchange rates with other currencies.Monetary economics provides insight into how to craft optimal monetary policy.Monetary policy is referred to as either being expansionary or contractionary, where an expansionary policy increases the total supply of money in the economy more rapidly than usual, and contractionary policy expands the money supply more slowly than usual or even shrinks it. Expansionary policy is traditionally used to try to combat unemployment in a recession by lowering interest rates in the hope that easy credit will entice businesses into expanding. Contractionary policy is intended to slow inflation in order to avoid the resulting distortions and deterioration of asset values.Monetary policy differs from fiscal policy, which refers to taxation, government spending, and associated borrowing.