Macrohonours Lecture 10 - Lecture Notes
... – in Aug 2007 interest rates in the inter-bank market started to rise as perceived risk rose (indicative of a rising risk premium) (e.g. Fig 7.8 shows the widening spread between the interest rate on inter-bank loans and the official bank rate in the UK) – In Sept 2007, Northern Rock UK bank experie ...
... – in Aug 2007 interest rates in the inter-bank market started to rise as perceived risk rose (indicative of a rising risk premium) (e.g. Fig 7.8 shows the widening spread between the interest rate on inter-bank loans and the official bank rate in the UK) – In Sept 2007, Northern Rock UK bank experie ...
Document
... “Perhaps the greatest irony of the past decade is that the gradually unfolding success against inflation may well have contributed to the stock price bubble of the latter part of the 1990s. Looking back on those years, it is evident that technology-driven increases in productivity growth imparted s ...
... “Perhaps the greatest irony of the past decade is that the gradually unfolding success against inflation may well have contributed to the stock price bubble of the latter part of the 1990s. Looking back on those years, it is evident that technology-driven increases in productivity growth imparted s ...
Quick Links
... a) The real interest rate will rise, and private investment will rise. b) The nominal interest rate will rise, the real interest rate will remain the same, but private investment will rise. c) If the increase in the money supply by the Central Bank is greater than the amount borrowed by the governme ...
... a) The real interest rate will rise, and private investment will rise. b) The nominal interest rate will rise, the real interest rate will remain the same, but private investment will rise. c) If the increase in the money supply by the Central Bank is greater than the amount borrowed by the governme ...
Keynesians vs - Victoria Park CI
... Aggregate demand being expanded for too long at too fast a rate. ...
... Aggregate demand being expanded for too long at too fast a rate. ...
Chapter 1
... money: problem of fiduciary /credit money (more paper money than gold backing) therefore intrinsic value = 0 with only exchange value → cheque accounts + credit cards (Box 15.1) 15.3 Money in S.A. ...
... money: problem of fiduciary /credit money (more paper money than gold backing) therefore intrinsic value = 0 with only exchange value → cheque accounts + credit cards (Box 15.1) 15.3 Money in S.A. ...
CHAPTER 3 THE FED AND INTEREST RATES CHAPTER
... (Raising/Lowering) the Discount Rate may signal an attempt to stimulate economic growth. The Fed would (ease/tighten) monetary policy to stimulate a faltering economy by (buying/selling) securities on the open market, thus pressuring money market security prices (upward/downward) and short-term inte ...
... (Raising/Lowering) the Discount Rate may signal an attempt to stimulate economic growth. The Fed would (ease/tighten) monetary policy to stimulate a faltering economy by (buying/selling) securities on the open market, thus pressuring money market security prices (upward/downward) and short-term inte ...
Midterm Exam No. 2 - Answers April 1, 2004
... in the price level, and indeed the quantity theory of money tells us that the price level rises by the same 10% that the money stock increased, thus returning the real money supply (and the LM curve) to its initial level. The interest rate is determined in the loanable funds market, where both suppl ...
... in the price level, and indeed the quantity theory of money tells us that the price level rises by the same 10% that the money stock increased, thus returning the real money supply (and the LM curve) to its initial level. The interest rate is determined in the loanable funds market, where both suppl ...
M14_Gordon8014701_12_Macro_C14
... • Rules are favorable to discretionary policies because of the “long and variable” lags between changes in monetary policy instruments and the ultimate response of target variables like inflation and unemployment. • Five types of lags and their estimated duration: ...
... • Rules are favorable to discretionary policies because of the “long and variable” lags between changes in monetary policy instruments and the ultimate response of target variables like inflation and unemployment. • Five types of lags and their estimated duration: ...
Inflation
... Nominal GDP – GDP at current prices Real GDP – GDP at constant prices (base year prices – chosen year) Index – the change in the value of an indicator compared to its previous level, taken as a base (= 100) GDP deflator = (Nominal GDP : Real GDP) х 100 GDP deflator is a current year weighted i ...
... Nominal GDP – GDP at current prices Real GDP – GDP at constant prices (base year prices – chosen year) Index – the change in the value of an indicator compared to its previous level, taken as a base (= 100) GDP deflator = (Nominal GDP : Real GDP) х 100 GDP deflator is a current year weighted i ...
Handout #7 - Department of Agricultural Economics
... YFE = natural rate of full employment of capital and labor YE = planned spending YPOT = maximum potential output Inflationary gap = YE > YFE Recessionary gap = YE < YFE ...
... YFE = natural rate of full employment of capital and labor YE = planned spending YPOT = maximum potential output Inflationary gap = YE > YFE Recessionary gap = YE < YFE ...
Document
... Keynesians who began to look into the work of an economist, William Phillips, who a decade earlier had identified a negative relationship between inflation and wage growth: wages tended to rise faster when the unemployment rate was lower because workers had more bargaining power. If wages grew faste ...
... Keynesians who began to look into the work of an economist, William Phillips, who a decade earlier had identified a negative relationship between inflation and wage growth: wages tended to rise faster when the unemployment rate was lower because workers had more bargaining power. If wages grew faste ...
Practice Powerpoint - Black Hawk College
... Changing the Discount Rate • If the Federal Reserve increases the discount rate this will reduce the amount of money banks have to lend out. • With fewer reserves, bank lending will fall. • Less bank lending leads to a smaller money supply. • This leads to slower economic growth or a decline in the ...
... Changing the Discount Rate • If the Federal Reserve increases the discount rate this will reduce the amount of money banks have to lend out. • With fewer reserves, bank lending will fall. • Less bank lending leads to a smaller money supply. • This leads to slower economic growth or a decline in the ...
Exam Answers
... money supply every year for the next 100 years. He’s come to you for advice. Which of the following predictions is FALSE? a. Although this policy might be effective at first, eventually, it could have devastating effects because it will generate very high levels of inflation. b. As long as he increa ...
... money supply every year for the next 100 years. He’s come to you for advice. Which of the following predictions is FALSE? a. Although this policy might be effective at first, eventually, it could have devastating effects because it will generate very high levels of inflation. b. As long as he increa ...
FedViews
... The views expressed are those of the author, with input from the forecasting staff of the Federal Reserve Bank of San Francisco. They are not intended to represent the views of others within the Bank or within the Federal Reserve System. FedViews generally appears around the middle of the month. The ...
... The views expressed are those of the author, with input from the forecasting staff of the Federal Reserve Bank of San Francisco. They are not intended to represent the views of others within the Bank or within the Federal Reserve System. FedViews generally appears around the middle of the month. The ...
Final - Wofford
... Fed pursued from October 1979 through 1983. Discuss both the benefits and the costs of this disinflation policy. Why did unemployment rise to over 10% in 1982? And what does this tell us about the short-run tradeoff between inflation and unemployment? Did the disinflation of the 1980s confirm that t ...
... Fed pursued from October 1979 through 1983. Discuss both the benefits and the costs of this disinflation policy. Why did unemployment rise to over 10% in 1982? And what does this tell us about the short-run tradeoff between inflation and unemployment? Did the disinflation of the 1980s confirm that t ...
Zarnowitz, Victor. Business Cycles Observed and Assessed
... One of the earliest explanations of crises was the theory of “inflation”. The basis for this theory is that an increase in coin or paper money issued by the government causes an increase in prices, that later stimulates the business activity in the economy. This activity can cause extreme recklessne ...
... One of the earliest explanations of crises was the theory of “inflation”. The basis for this theory is that an increase in coin or paper money issued by the government causes an increase in prices, that later stimulates the business activity in the economy. This activity can cause extreme recklessne ...
Mankiw 6e PowerPoints
... The Fed can change the reserve-deposit ratio using reserve requirements: Fed regulations that impose a minimum reserve-deposit ratio To reduce the reserve-deposit ratio, the Fed could reduce reserve requirements interest on reserves: the Fed pays interest on bank reserves deposited with the Fe ...
... The Fed can change the reserve-deposit ratio using reserve requirements: Fed regulations that impose a minimum reserve-deposit ratio To reduce the reserve-deposit ratio, the Fed could reduce reserve requirements interest on reserves: the Fed pays interest on bank reserves deposited with the Fe ...
J
... "rule," presumes,~at least implicitly, some knowledge of how the macroeconomy works. Clearly, experts disagree on how best to model the economy. In addition, monetary policy affects the economy only after a lag. The policy decision made today has impacts months or even years in the future and theref ...
... "rule," presumes,~at least implicitly, some knowledge of how the macroeconomy works. Clearly, experts disagree on how best to model the economy. In addition, monetary policy affects the economy only after a lag. The policy decision made today has impacts months or even years in the future and theref ...
AP ch35 pt
... 1. In the short run, the price level is assumed to be: A. Fixed, along with input prices B. Flexible, but input prices are not C. Flexible, along with input prices D. Fixed, but input prices are flexible 3. The economy enters the long-run once: A. Nominal wages become equal to real wages B. Real wag ...
... 1. In the short run, the price level is assumed to be: A. Fixed, along with input prices B. Flexible, but input prices are not C. Flexible, along with input prices D. Fixed, but input prices are flexible 3. The economy enters the long-run once: A. Nominal wages become equal to real wages B. Real wag ...
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.