Monetary policy yesterday, today and tomorrow
... low, companies in general have very good liquidity and good profitability. It can also be noted that in connection with the Riksbank cutting its repo rate in June as a result of weaker economic growth than expected at the beginning of the year, some voices were raised warning that the low interest r ...
... low, companies in general have very good liquidity and good profitability. It can also be noted that in connection with the Riksbank cutting its repo rate in June as a result of weaker economic growth than expected at the beginning of the year, some voices were raised warning that the low interest r ...
The Economic Outlook and Monetary Policy
... • Employment is well below maximum sustainable level. Employment is well below maximum sustainable level. • Modest wage growth is anchoring costs and inflation pressures. • Risks to the forecast remain (energy prices, global Risks to the forecast remain (energy prices global financial conditions, ...
... • Employment is well below maximum sustainable level. Employment is well below maximum sustainable level. • Modest wage growth is anchoring costs and inflation pressures. • Risks to the forecast remain (energy prices, global Risks to the forecast remain (energy prices global financial conditions, ...
ECON366 - KONSTANTINOS KANELLOPOULOS
... different times in different areas. (Ski instructors are only needed in winter; college students tend to enter the labor force temporarily during the summer, etc.) Cyclical unemployment refers to the unemployment that occurs as the economy enters a downturn. ...
... different times in different areas. (Ski instructors are only needed in winter; college students tend to enter the labor force temporarily during the summer, etc.) Cyclical unemployment refers to the unemployment that occurs as the economy enters a downturn. ...
ECNS 251 Spring 2013 Homework 9 Answer Key 1. The labor force
... 4. a. If a firm was not providing such benefits prior to the legislation, the curve showing the demand for labor would shift down by exactly $4 at each quantity of labor, because the firm would not be willing to pay as high a wage given the increased cost of the benefits. b. If employees value the b ...
... 4. a. If a firm was not providing such benefits prior to the legislation, the curve showing the demand for labor would shift down by exactly $4 at each quantity of labor, because the firm would not be willing to pay as high a wage given the increased cost of the benefits. b. If employees value the b ...
Ch 4:Determining Interest Rates
... Systematic or market risk, common to all assets in an economy, cannot be diversified. • Some economists see the financial crisis as a black swan – a rare event that has a large impact on the economy – which might affect the conventional measure of risk. • A Wall Street Journal article “Preparing for ...
... Systematic or market risk, common to all assets in an economy, cannot be diversified. • Some economists see the financial crisis as a black swan – a rare event that has a large impact on the economy – which might affect the conventional measure of risk. • A Wall Street Journal article “Preparing for ...
14.02 Principles of Macroeconomics Problem Set 1 *Solution*
... Phillips Curve (Modified Phillips Curve) (page 32-33) → negative relationship between the unemployment rate & the CHANGE in inflation (When the unemployment rate is low, inflation tends to increase.) (We will revisit the Phillips Curve in chapter 8 again.) 4. Inflation is bad for the economy because ...
... Phillips Curve (Modified Phillips Curve) (page 32-33) → negative relationship between the unemployment rate & the CHANGE in inflation (When the unemployment rate is low, inflation tends to increase.) (We will revisit the Phillips Curve in chapter 8 again.) 4. Inflation is bad for the economy because ...
What We Hope To Accomplish
... “The gross national product does not allow for the health of our children, the quality of their education, or the joy of their play. It does not include the beauty of our poetry or the strength of our marriages, the intelligence of our public debate or the integrity of our public officials. It measu ...
... “The gross national product does not allow for the health of our children, the quality of their education, or the joy of their play. It does not include the beauty of our poetry or the strength of our marriages, the intelligence of our public debate or the integrity of our public officials. It measu ...
c=0 - UNEC
... output and the price level, assuming policymakers take no action: a) The stock market declines sharply, reducing consumers’ wealth; b) The federal government increases spending on national defense; c) A technological improvement raises productivity; d) A recession overseas causes foreigners to buy f ...
... output and the price level, assuming policymakers take no action: a) The stock market declines sharply, reducing consumers’ wealth; b) The federal government increases spending on national defense; c) A technological improvement raises productivity; d) A recession overseas causes foreigners to buy f ...
Solutions
... divided by the price of a market basket of goods = the number of market baskets that can be bought with the total money stock. Money demand should be in real terms because what matters to people is the purchasing power of their money, not the number of dollars. A change in the price level would chan ...
... divided by the price of a market basket of goods = the number of market baskets that can be bought with the total money stock. Money demand should be in real terms because what matters to people is the purchasing power of their money, not the number of dollars. A change in the price level would chan ...
Lecture 15: Money - Development of e
... pressure of aggregate demand for goods and services exceeds the available supply of output. i) Causes of Inflation a) Increase in demand and decrease in supply of goods cause inflation. Increase in demand is caused by increase in aggregate spending on consumption and investment goods. Decrease in ou ...
... pressure of aggregate demand for goods and services exceeds the available supply of output. i) Causes of Inflation a) Increase in demand and decrease in supply of goods cause inflation. Increase in demand is caused by increase in aggregate spending on consumption and investment goods. Decrease in ou ...
The Quantity Theory of Money
... Example of Crude QTOM If the money supply is increased by 15% (remembering level of GDP assumed to be fixed), this will mean that there is MORE money in circulation chasing the same quantity of goods. This in turn bids up prices as the purchasing power of each dollar falls. The end result will ...
... Example of Crude QTOM If the money supply is increased by 15% (remembering level of GDP assumed to be fixed), this will mean that there is MORE money in circulation chasing the same quantity of goods. This in turn bids up prices as the purchasing power of each dollar falls. The end result will ...
Macroeconomics
... -"P" is Price Level and "Q" is Output (P x Q = Nominal GDP) -Monetary Rule: Fed should increase money supply by a fixed expected growth rate ...
... -"P" is Price Level and "Q" is Output (P x Q = Nominal GDP) -Monetary Rule: Fed should increase money supply by a fixed expected growth rate ...
The Quantity Theory of Money
... Example of Crude QTOM If the money supply is increased by 15% (remembering level of GDP assumed to be fixed), this will mean that there is MORE money in circulation chasing the same quantity of goods. This in turn bids up prices as the purchasing power of each dollar falls. The end result will ...
... Example of Crude QTOM If the money supply is increased by 15% (remembering level of GDP assumed to be fixed), this will mean that there is MORE money in circulation chasing the same quantity of goods. This in turn bids up prices as the purchasing power of each dollar falls. The end result will ...
chapter 13
... Example: To reduce inflation from 6 to 2 percent, must sacrifice 20 percent of one year’s GDP: GDP loss = (inflation reduction) x (sacrifice ratio) ...
... Example: To reduce inflation from 6 to 2 percent, must sacrifice 20 percent of one year’s GDP: GDP loss = (inflation reduction) x (sacrifice ratio) ...
Economics 101 Multiple Choice Questions for Final Examination Miller
... This course has involved a macroeconomic history of the 20th century. This century has seen major economic problems, including inflation, recessions and a Great Depression, slow economic growth, budget deficits, and trade deficits. 1. Let us consider first the problem of inflation. The United States ...
... This course has involved a macroeconomic history of the 20th century. This century has seen major economic problems, including inflation, recessions and a Great Depression, slow economic growth, budget deficits, and trade deficits. 1. Let us consider first the problem of inflation. The United States ...
Restoring the Pre-WWI Economy
... pound sterling was worth only $3.81, some twenty-five percent less than its pre-World War I parity of $4.86. Why was the gold standard not restored immediately after the end of the war? Because of the enormous debts that had been run up during the war. The chief problem of European governments was d ...
... pound sterling was worth only $3.81, some twenty-five percent less than its pre-World War I parity of $4.86. Why was the gold standard not restored immediately after the end of the war? Because of the enormous debts that had been run up during the war. The chief problem of European governments was d ...
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.