lecture notes
... longer. The lower rates should reduce periods of unemployment and raise capital investment, which increases worker productivity. Aggregate supply will expand and keep inflation low. B. The Laffer Curve is an idea relating tax rates and tax revenues. It is named after economist Arthur Laffer, who ori ...
... longer. The lower rates should reduce periods of unemployment and raise capital investment, which increases worker productivity. Aggregate supply will expand and keep inflation low. B. The Laffer Curve is an idea relating tax rates and tax revenues. It is named after economist Arthur Laffer, who ori ...
The Icelandic Economy
... the influx of foreign capital to Iceland ensure the growth of capital stock at same pace as other growth inputs. Investment is forcast to grow by more than ...
... the influx of foreign capital to Iceland ensure the growth of capital stock at same pace as other growth inputs. Investment is forcast to grow by more than ...
AP Macroeconomics Review
... Includes money spent to fight crime-more police officers, more jails, etc… ...
... Includes money spent to fight crime-more police officers, more jails, etc… ...
Issues related to forecasting framework and the medium term
... 9 Relatively slow and still inefficient; 9 Monetary policy impulses transmitted through commercial banks’ interest rates; 9 Net debtor position for NBR; 9 Financial markets still lack depth but quickly “catching-up” Æ could diluted monetary policy impulses also. ¾ Exchange rate channel: relatively f ...
... 9 Relatively slow and still inefficient; 9 Monetary policy impulses transmitted through commercial banks’ interest rates; 9 Net debtor position for NBR; 9 Financial markets still lack depth but quickly “catching-up” Æ could diluted monetary policy impulses also. ¾ Exchange rate channel: relatively f ...
WORLD
... Fed. Voters and foreign holders of U.S. debt deserve a serious debate, not more political posturing. The United States faces significant fiscal imbalances and a depreciating currency. Taking a principled approach to policy is essential for the future of freedom and prosperity. In the meantime, the F ...
... Fed. Voters and foreign holders of U.S. debt deserve a serious debate, not more political posturing. The United States faces significant fiscal imbalances and a depreciating currency. Taking a principled approach to policy is essential for the future of freedom and prosperity. In the meantime, the F ...
practice 32 - Brunswick City Schools
... C. changing the money supply does not have any effect on the aggregate price level. D. aggregate demand is independent from monetary policy. E. monetary policy is effective at increasing long-run aggregate supply. ...
... C. changing the money supply does not have any effect on the aggregate price level. D. aggregate demand is independent from monetary policy. E. monetary policy is effective at increasing long-run aggregate supply. ...
A Brief Exposition of the IS-MP Curves: A Replacement for the
... The world economy is today in shambles. Equally, but perhaps less consequentially, the short-run macro models used today are in crisis. This note focuses on an updated approach to the central tool of short-run macro, the IS-LM analysis and IS-LM curves. This applies primarily to the closed economy, ...
... The world economy is today in shambles. Equally, but perhaps less consequentially, the short-run macro models used today are in crisis. This note focuses on an updated approach to the central tool of short-run macro, the IS-LM analysis and IS-LM curves. This applies primarily to the closed economy, ...
The IS – LM / AD – AS Model: A General Framework for
... The Problem of Inflation • Fighting inflation: ¾ The role of inflationary expectations: • The Keynesian prescription for disinflation is ...
... The Problem of Inflation • Fighting inflation: ¾ The role of inflationary expectations: • The Keynesian prescription for disinflation is ...
chapter 16 - Spring Branch ISD
... (a) Assume the economy is initially at point B 1 and there is an increase in aggregate demand which results in a 4% increase in prices. Describe the short-run and long-run outcomes that would result in this economy. (b) Assume the economy is initially at point B 2, and there is an increase in aggreg ...
... (a) Assume the economy is initially at point B 1 and there is an increase in aggregate demand which results in a 4% increase in prices. Describe the short-run and long-run outcomes that would result in this economy. (b) Assume the economy is initially at point B 2, and there is an increase in aggreg ...
Multiple Choice Questions
... If the theory behind an economic model fits the data poorly, you would probably want to (a) use the theory to predict what would happen if the economic setting or economic policies change. (b) start from scratch with a new model. (c) enrich the model with additional assumptions. (d) restate the rese ...
... If the theory behind an economic model fits the data poorly, you would probably want to (a) use the theory to predict what would happen if the economic setting or economic policies change. (b) start from scratch with a new model. (c) enrich the model with additional assumptions. (d) restate the rese ...
Central Bank Watch Sweden - Nordea e
... However, household inflation expectations are very volatile and rarely on the mark. Moreover, short-term inflation expectations are normally closely correlated with actual inflation. Should inflation pick up during the autumn in line with our forecast, household inflation expectations will likely ri ...
... However, household inflation expectations are very volatile and rarely on the mark. Moreover, short-term inflation expectations are normally closely correlated with actual inflation. Should inflation pick up during the autumn in line with our forecast, household inflation expectations will likely ri ...
Quiz: Introductory Macroeconomics
... equilibrium price, 2) the amount that one country is importing, and 3) the amount that one country is exporting. (9 points) B) Now show on the graphs below what equilibrium would look like if the importing country in part A) decided to put tariff of $0.30 on banana imports. Label: 1) equilibrium pri ...
... equilibrium price, 2) the amount that one country is importing, and 3) the amount that one country is exporting. (9 points) B) Now show on the graphs below what equilibrium would look like if the importing country in part A) decided to put tariff of $0.30 on banana imports. Label: 1) equilibrium pri ...
Economic Opportunities and Constraints
... Businesses are influenced by the market they operate in Perfect competition exists where there are many firms all producing similar products charging similar prices Oligopolies exist where there are few firms who have a high degree of interdependence Monopolies exist where there is one firm in the m ...
... Businesses are influenced by the market they operate in Perfect competition exists where there are many firms all producing similar products charging similar prices Oligopolies exist where there are few firms who have a high degree of interdependence Monopolies exist where there is one firm in the m ...
Economists and the Real World
... destroys jobs. Now it may indeed lead to immediate job losses in the firm where the advance occurs. But then again it may not, as the lower cost of production also allows the firm to lower its prices and boost the demand for its product. Whether employment rises or falls will then depend on how muc ...
... destroys jobs. Now it may indeed lead to immediate job losses in the firm where the advance occurs. But then again it may not, as the lower cost of production also allows the firm to lower its prices and boost the demand for its product. Whether employment rises or falls will then depend on how muc ...
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 ...
CHAPTER 27: The Role of Monetary Policy
... influence our ability to mobilize resources. But why should a change in the money supply, the price level or the inflation rate have any bearing on the willingness of people to supply labour? The simple answer is that, if people were fully informed and were able to fully and accurately anticipate th ...
... influence our ability to mobilize resources. But why should a change in the money supply, the price level or the inflation rate have any bearing on the willingness of people to supply labour? The simple answer is that, if people were fully informed and were able to fully and accurately anticipate 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.