MacroPractice
... 66. Describe the circumstances under which the M1 money supply could fall while the M2 money supply remains constant at the same time. 67. List and describe the three functions of money. 68. Describe the differences between M1 and M2. 69. Explain why it is not necessary for paper money to be backed ...
... 66. Describe the circumstances under which the M1 money supply could fall while the M2 money supply remains constant at the same time. 67. List and describe the three functions of money. 68. Describe the differences between M1 and M2. 69. Explain why it is not necessary for paper money to be backed ...
The Economics of Housing Bubbles
... demand—“when people become willing to spend more on houses,” but that the actual cause of the change in the demand for housing—“say because of a fall in mortgage rates”—is downplayed, as if anything might have ignited the bubble. The more Krugman tries to provide an economic rationale for the bubble ...
... demand—“when people become willing to spend more on houses,” but that the actual cause of the change in the demand for housing—“say because of a fall in mortgage rates”—is downplayed, as if anything might have ignited the bubble. The more Krugman tries to provide an economic rationale for the bubble ...
Complete Student Study Guide
... e. The role of government in manipulating taxation to stimulate aggregate demand. ...
... e. The role of government in manipulating taxation to stimulate aggregate demand. ...
Is time ripe for price level path stability?
... According to the conventional wisdom in central banking circles, price level path stability is not an appropriate goal to delegate to an independent central bank. There is strong intuition behind this claim. The idea is that, under a regime of price level path stability, a shock to the price level, ...
... According to the conventional wisdom in central banking circles, price level path stability is not an appropriate goal to delegate to an independent central bank. There is strong intuition behind this claim. The idea is that, under a regime of price level path stability, a shock to the price level, ...
The Aggregate Supply and Aggregate Demand Model
... The macroeconomic long run is a time frame that is sufficiently long for all adjustments to be made so that real GDP equals potential GDP and there is full employment. The long-run aggregate supply curve (LAS) is the relationship between the quantity of real GDP supplied and the price level when rea ...
... The macroeconomic long run is a time frame that is sufficiently long for all adjustments to be made so that real GDP equals potential GDP and there is full employment. The long-run aggregate supply curve (LAS) is the relationship between the quantity of real GDP supplied and the price level when rea ...
A Path-Dependent Deadlock: Institutional
... and convergence, the asymmetric design of the EMU has exacerbated divergence in growth models, which ultimately translated into “destabilizing macroeconomic imbalances.”6 On the one hand, the periphery has become highly dependent on an expansion of private credit and on increasing asset prices in th ...
... and convergence, the asymmetric design of the EMU has exacerbated divergence in growth models, which ultimately translated into “destabilizing macroeconomic imbalances.”6 On the one hand, the periphery has become highly dependent on an expansion of private credit and on increasing asset prices in th ...
Is the Phillips curve still dead?
... trade-off between inflation and unemployment”. Nobel laureate Joseph Stiglitz (2008: 3) argues that inflation targeting brings a “weaker economy and higher unemployment”. Rochon and Rossi (2006: 616) question “why inflation targeting [is] seen as a superior policy over a policy of, say, supporting e ...
... trade-off between inflation and unemployment”. Nobel laureate Joseph Stiglitz (2008: 3) argues that inflation targeting brings a “weaker economy and higher unemployment”. Rochon and Rossi (2006: 616) question “why inflation targeting [is] seen as a superior policy over a policy of, say, supporting e ...
Document
... implies that an increase in the interest rate leads to a decrease in output. This is represented by the IS curve. Equilibrium in financial markets implies that an increase in output leads to an increase in the interest rate. This is represented by the LM curve. Only at point A, which is on both curv ...
... implies that an increase in the interest rate leads to a decrease in output. This is represented by the IS curve. Equilibrium in financial markets implies that an increase in output leads to an increase in the interest rate. This is represented by the LM curve. Only at point A, which is on both curv ...
Fiscal Policy
... the general public. The buyer of the bonds (the Reserve Bank of Australia or the private sector) determines the nature of the finance obtained. ...
... the general public. The buyer of the bonds (the Reserve Bank of Australia or the private sector) determines the nature of the finance obtained. ...
macroeconomic effects of exchange rate volatility in zambia
... exchange rate. This is in contrast to the domestically generated factors such as monetary which authorities have reasonable control over. If the sources are monetary in nature, the policy response is to reduce the trend rate in monetary expansion and/or raise trend rate in real output growth. This e ...
... exchange rate. This is in contrast to the domestically generated factors such as monetary which authorities have reasonable control over. If the sources are monetary in nature, the policy response is to reduce the trend rate in monetary expansion and/or raise trend rate in real output growth. This e ...
Should the Central Bank Be Concerned About Housing Prices?
... that excludes sectors with flexible prices such as commodities, asset prices, and housing prices (Aoki, 2001). In practice, however, many central banks target the inflation rate measured by the consumer price index (CPI), specifically the core CPI of all items excluding food and energy. An important co ...
... that excludes sectors with flexible prices such as commodities, asset prices, and housing prices (Aoki, 2001). In practice, however, many central banks target the inflation rate measured by the consumer price index (CPI), specifically the core CPI of all items excluding food and energy. An important co ...
Model for Analysis and Simulations (MAS)
... of perfect competitive labor service assemblers that hire labor from each household and combine it into an aggregate labor services unit, lt , that is then used by the intermediate goods producers. The labor service unit is defined as, µZ 1 ¶ ² ²L−1 ²L −1 L ²L lt = lt (j) dj ...
... of perfect competitive labor service assemblers that hire labor from each household and combine it into an aggregate labor services unit, lt , that is then used by the intermediate goods producers. The labor service unit is defined as, µZ 1 ¶ ² ²L−1 ²L −1 L ²L lt = lt (j) dj ...
Aggregate Supply and Aggregate Demand
... If the Fed increases interest rates, households and firms reduce their borrowing, lending, and spending plans, particularly on durable goods. Remember, interest rates are the opportunity cost of consumption and investment spending. ...
... If the Fed increases interest rates, households and firms reduce their borrowing, lending, and spending plans, particularly on durable goods. Remember, interest rates are the opportunity cost of consumption and investment spending. ...
Optimal fiscal and monetary policy action in a closed economy!
... imperfect competition, Calvo-type price …xities and wage rigidities. The model is solved numerically employing commonly used parameter values and …scal data from the euro area. The steady state solution of this model (called the status quo) serves as a point of departure to study the implications o ...
... imperfect competition, Calvo-type price …xities and wage rigidities. The model is solved numerically employing commonly used parameter values and …scal data from the euro area. The steady state solution of this model (called the status quo) serves as a point of departure to study the implications o ...
Short-Run Aggregate Supply
... supply curves. Figure 7-7. if firms are to raise employment to N1 real wage rate must be reduced (at point C). • Employers need to find some factor that will make workers willing to provide more work than shown by their labor supply curve. Otherwise we would never observe changes in employment over ...
... supply curves. Figure 7-7. if firms are to raise employment to N1 real wage rate must be reduced (at point C). • Employers need to find some factor that will make workers willing to provide more work than shown by their labor supply curve. Otherwise we would never observe changes in employment over ...
NOTES 1: Real and Nominal Variables
... The CPI above, for 1994, says that if you had $1 in 1982 (base year) you would need $1.48 to buy the same amount of goods in 1994. That says that for 1.48 (1994 dollars) you would need 1.00 (1982 dollar) or, mathematically, we can express this as 1.48 (94$)/(82$). The units on the 1994 CPI are (94$/ ...
... The CPI above, for 1994, says that if you had $1 in 1982 (base year) you would need $1.48 to buy the same amount of goods in 1994. That says that for 1.48 (1994 dollars) you would need 1.00 (1982 dollar) or, mathematically, we can express this as 1.48 (94$)/(82$). The units on the 1994 CPI are (94$/ ...
irving fisher`s debt deflation analysis
... rate of interest and to bring the level of investment and global output back towards its long run equilibrium value. However, changing price causes also change in expected inflation and thus changes in real interest rate. Because adjustments of nominal interest rates to inflation can take a long tim ...
... rate of interest and to bring the level of investment and global output back towards its long run equilibrium value. However, changing price causes also change in expected inflation and thus changes in real interest rate. Because adjustments of nominal interest rates to inflation can take a long tim ...
chapter summary
... lose their jobs. Society as a whole, however, loses output because of underutilization of resources. Crime rates rise during this time. Government budget deficits, which also rise during this time, typically create political pressure for tax hikes to balance the budget (however misguided this policy ...
... lose their jobs. Society as a whole, however, loses output because of underutilization of resources. Crime rates rise during this time. Government budget deficits, which also rise during this time, typically create political pressure for tax hikes to balance the budget (however misguided this policy ...
Three essays about monetary policy in China - ROS Home
... examined through different econometric approaches. One feature of the policy stance index derived in Chapter 1 is that it takes account of all the central bank’s monetary policy instruments at the same time. It is reasonable to infer that China’s monetary policy affects aggregate demand through more ...
... examined through different econometric approaches. One feature of the policy stance index derived in Chapter 1 is that it takes account of all the central bank’s monetary policy instruments at the same time. It is reasonable to infer that China’s monetary policy affects aggregate demand through more ...
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.