Practice—for each one write how AD will change and how PL
... • Productivity rises for fourth straight year • President cuts defense spending by 20% • The dollar depreciates ...
... • Productivity rises for fourth straight year • President cuts defense spending by 20% • The dollar depreciates ...
The Realities of Modern Hyperinflation
... economies succumbed to hyperinflation. Austria, Germany, Hungary, Poland, and Russia all racked up enormous price increases, with Germany recording an astronomical 3.25 million percent in a single month in 1923. But, since the 1950s, hyperinflation has been confined to the developing world and the t ...
... economies succumbed to hyperinflation. Austria, Germany, Hungary, Poland, and Russia all racked up enormous price increases, with Germany recording an astronomical 3.25 million percent in a single month in 1923. But, since the 1950s, hyperinflation has been confined to the developing world and the t ...
GDP: Gross Domestic Product (GDP) and the unemployment rate
... resources were fully employed. During recessions when unemployment is high, some labor is sitting idle and that lost work can not be made up. There are also significant, noneconomic costs of unemployment such as individual and family stress. Potential Output: the level of output the economy could ...
... resources were fully employed. During recessions when unemployment is high, some labor is sitting idle and that lost work can not be made up. There are also significant, noneconomic costs of unemployment such as individual and family stress. Potential Output: the level of output the economy could ...
Notes Inflation and Interest Rates in the Medium Run
... unemployment has to be 6 percentage points above the natural rate during one year; or unemployment has to be 3 percentage points above the natural rate during two years; or unemployment has to be 2 percentage points above the natural rate during three years; or unemployment has to be 1 percentage ...
... unemployment has to be 6 percentage points above the natural rate during one year; or unemployment has to be 3 percentage points above the natural rate during two years; or unemployment has to be 2 percentage points above the natural rate during three years; or unemployment has to be 1 percentage ...
Practice Problems on NIPA and Key Prices
... 4- Define private saving. How is private saving used in the economy? What is the relationship between private saving and national saving? Private saving is private disposable income minus consumption. Private disposable income is total output minus taxes paid plus transfers and interest received fro ...
... 4- Define private saving. How is private saving used in the economy? What is the relationship between private saving and national saving? Private saving is private disposable income minus consumption. Private disposable income is total output minus taxes paid plus transfers and interest received fro ...
Europe Regional - Scotiabank Global Banking and Markets
... This material, its content, or any copy of it, may not be altered in any way, transmitted to, copied or distributed to any other party without the prior express written consent of ScotiabankTM. This material has not been prepared by a member of the research department of Scotiabank, it is solely for ...
... This material, its content, or any copy of it, may not be altered in any way, transmitted to, copied or distributed to any other party without the prior express written consent of ScotiabankTM. This material has not been prepared by a member of the research department of Scotiabank, it is solely for ...
Parkin-Bade Chapter 28
... business cycles and is consistent with the facts about economic growth. RBC theory is a single theory that explains both growth and cycles. 2. RBC theory is consistent with a wide range of microeconomic evidence about labor supply decisions, labor demand and investment demand decisions, and informat ...
... business cycles and is consistent with the facts about economic growth. RBC theory is a single theory that explains both growth and cycles. 2. RBC theory is consistent with a wide range of microeconomic evidence about labor supply decisions, labor demand and investment demand decisions, and informat ...
The Dynamics of the Hungarian Hyperinflation, 1945-6
... portrayed as a demand shock that should stimulate consumption and so raise quantities supplied. Indeed, a presumption in high inflation is that there is little point in holding money and so it is rapidly converted into goods, and, in turn, existing capital is utilized more fully. However, in this ca ...
... portrayed as a demand shock that should stimulate consumption and so raise quantities supplied. Indeed, a presumption in high inflation is that there is little point in holding money and so it is rapidly converted into goods, and, in turn, existing capital is utilized more fully. However, in this ca ...
part ii concepts and problems
... aggregate output The total quantity of goods and services produced in an economy in a given period. recession A period during which aggregate output declines. Conventionally, a period in which aggregate output declines for two consecutive quarters. depression A prolonged and deep recession. expansio ...
... aggregate output The total quantity of goods and services produced in an economy in a given period. recession A period during which aggregate output declines. Conventionally, a period in which aggregate output declines for two consecutive quarters. depression A prolonged and deep recession. expansio ...
Money & Banking
... policymakers can choose the extent to which inflation shocks translate into changes in output or changes in inflation • By reacting aggressively to inflation shocks, policymakers force current inflation back to target quickly, but at a cost of substantial decreases in output ...
... policymakers can choose the extent to which inflation shocks translate into changes in output or changes in inflation • By reacting aggressively to inflation shocks, policymakers force current inflation back to target quickly, but at a cost of substantial decreases in output ...
M09_Gordon8014701_12_Macro_C09
... the future behavior of an economic variable using economic models – Backward-looking Expectations use only information on the past behavior of economic variables. – Adaptive Expectations base expectations for next period’s values on an average of actual values during previous periods. ...
... the future behavior of an economic variable using economic models – Backward-looking Expectations use only information on the past behavior of economic variables. – Adaptive Expectations base expectations for next period’s values on an average of actual values during previous periods. ...
Define and Discuss on Monetary Policy
... argue that the velocity of circulation of money tends to remain constant so that V can also be regarded as fixed. Assuming that both Y and V are fixed, it follows that if the Fed were to engage in expansionary (or contractionary) monetary policy, leading to an increase (or decrease) in M, the only e ...
... argue that the velocity of circulation of money tends to remain constant so that V can also be regarded as fixed. Assuming that both Y and V are fixed, it follows that if the Fed were to engage in expansionary (or contractionary) monetary policy, leading to an increase (or decrease) in M, the only e ...
Quick Links
... 2. Suppose we experience a 10% rise in gas prices in the UK. What are the consequences on the consumer price index (CPI) and the GDP (dross domestic product) deflator? a) Both the CPI and the GDP deflator will rise by 10%. b) Both the CPI and the GDP deflator will rise by less than 5%. c) The CPI wi ...
... 2. Suppose we experience a 10% rise in gas prices in the UK. What are the consequences on the consumer price index (CPI) and the GDP (dross domestic product) deflator? a) Both the CPI and the GDP deflator will rise by 10%. b) Both the CPI and the GDP deflator will rise by less than 5%. c) The CPI wi ...
2004 2005 Price Quantity Price Quantity Oranges DVD players Unit
... a. Firms produce more output than is socially desirable. b. The output produced by a typical firm is less than what would occur at the minimum point on its ATC curve. c. Due to product differentiation, firms choose output levels where P > ATC. d. Firms keep some surplus output on hand in case there ...
... a. Firms produce more output than is socially desirable. b. The output produced by a typical firm is less than what would occur at the minimum point on its ATC curve. c. Due to product differentiation, firms choose output levels where P > ATC. d. Firms keep some surplus output on hand in case there ...
philipscurve
... wages or prices and still keep their jobs or sell their goods. The losers are people who can’t raise their wages or prices. Three types of inflationary expectations are: – Rational – expectations based on economic models – Adaptive – expectations based on the past – Extrapolative – expectations that ...
... wages or prices and still keep their jobs or sell their goods. The losers are people who can’t raise their wages or prices. Three types of inflationary expectations are: – Rational – expectations based on economic models – Adaptive – expectations based on the past – Extrapolative – expectations that ...
lecture3_2008 - Dr. Rajeev Dhawan
... – The index for different regions within the country. – The producer price index, which measures the cost of a basket of goods and services bought by firms rather than consumers. ...
... – The index for different regions within the country. – The producer price index, which measures the cost of a basket of goods and services bought by firms rather than consumers. ...
1. O verview
... The first quarter of 2015 was marked by the ongoing turbulence in global financial markets, which was attributed to the continued divergence among global monetary policies, the uncertainties over the normalization process and the feeble economic activity. In this context, portfolio flows to emerging ...
... The first quarter of 2015 was marked by the ongoing turbulence in global financial markets, which was attributed to the continued divergence among global monetary policies, the uncertainties over the normalization process and the feeble economic activity. In this context, portfolio flows to emerging ...
Chapter 15 Macro Stabilization Policy
... B) The Phillips Curve shows an inverse relationship between the rate of inflation and the unemployment rate. This negative trade-off between inflation and unemployment suggested society faced a hard decision: to reduce inflation, unemployment would have to increase, or to reduce unemployment, inflat ...
... B) The Phillips Curve shows an inverse relationship between the rate of inflation and the unemployment rate. This negative trade-off between inflation and unemployment suggested society faced a hard decision: to reduce inflation, unemployment would have to increase, or to reduce unemployment, inflat ...
... The charts show actual values and projections for three economic variables: Change in Real Gross Domestic Product (GDP)—as measured from the fourth quarter of the previous year to the fourth quarter of the year indicated, with values plotted at the end of each year. Unemployment Rate—the average ...
Problem Set 7
... a. An increase in government spending and an increase in taxes. b. An increase in government spending and a decrease in taxes. c. A decrease in government spending and an increase in taxes. d. A decrease in government spending and an decrease in taxes. 7. Evidence suggesting that prices and wages ar ...
... a. An increase in government spending and an increase in taxes. b. An increase in government spending and a decrease in taxes. c. A decrease in government spending and an increase in taxes. d. A decrease in government spending and an decrease in taxes. 7. Evidence suggesting that prices and wages ar ...
The Relationship between Inflation and Unemployment: A
... harmful. The Government's policy in the face of the Central Bank should be regulated. By the early 1980s, the interpretation of the Phillips curve made by neoclassical and monetarist school, started to be questioned by the various economists, primarily representatives of various Keynesian school, th ...
... harmful. The Government's policy in the face of the Central Bank should be regulated. By the early 1980s, the interpretation of the Phillips curve made by neoclassical and monetarist school, started to be questioned by the various economists, primarily representatives of various Keynesian school, th ...
Inflation
In economics, inflation is a sustained increase in the general price level of goods and services in an economy over a period of time.When the price level rises, each unit of currency buys fewer goods and services. Consequently, inflation reflects a reduction in the purchasing power per unit of money – a loss of real value in the medium of exchange and unit of account within the economy. A chief measure of price inflation is the inflation rate, the annualized percentage change in a general price index (normally the consumer price index) over time. The opposite of inflation is deflation.Inflation affects an economy in various ways, both positive and negative. Negative effects of inflation include an increase in the opportunity cost of holding money, uncertainty over future inflation which may discourage investment and savings, and if inflation were rapid enough, shortages of goods as consumers begin hoarding out of concern that prices will increase in the future.Inflation also has positive effects: Fundamentally, inflation gives everyone an incentive to spend and invest, because if they don't, their money will be worth less in the future. This increase in spending and investment can benefit the economy. However it may also lead to sub-optimal use of resources. Inflation reduces the real burden of debt, both public and private. If you have a fixed-rate mortgage on your house, your salary is likely to increase over time due to wage inflation, but your mortgage payment will stay the same. Over time, your mortgage payment will become a smaller percentage of your earnings, which means that you will have more money to spend. Inflation keeps nominal interest rates above zero, so that central banks can reduce interest rates, when necessary, to stimulate the economy. Inflation reduces unemployment to the extent that unemployment is caused by nominal wage rigidity. When demand for labor falls but nominal wages do not, as typically occurs during a recession, the supply and demand for labor cannot reach equilibrium, and unemployment results. By reducing the real value of a given nominal wage, inflation increases the demand for labor, and therefore reduces unemployment.Economists generally believe that high rates of inflation and hyperinflation are caused by an excessive growth of the money supply. However, money supply growth does not necessarily cause inflation. Some economists maintain that under the conditions of a liquidity trap, large monetary injections are like ""pushing on a string"". Views on which factors determine low to moderate rates of inflation are more varied. Low or moderate inflation may be attributed to fluctuations in real demand for goods and services, or changes in available supplies such as during scarcities. However, the consensus view is that a long sustained period of inflation is caused by money supply growing faster than the rate of economic growth.Today, most economists favor a low and steady rate of inflation. Low (as opposed to zero or negative) inflation reduces the severity of economic recessions by enabling the labor market to adjust more quickly in a downturn, and reduces the risk that a liquidity trap prevents monetary policy from stabilizing the economy. The task of keeping the rate of inflation low and stable is usually given to monetary authorities. Generally, these monetary authorities are the central banks that control monetary policy through the setting of interest rates, through open market operations, and through the setting of banking reserve requirements.