Chapter 1: Human Misery
... Inflation rate measures the percentage change of the general price level (e.g., the CPI) ...
... Inflation rate measures the percentage change of the general price level (e.g., the CPI) ...
Money Growth and Inflation
... THE CLASSICAL THEORY OF INFLATION • Inflation: Historical Aspects • Over the past 60 years, prices have risen on average about 4 percent per year. • Deflation, meaning decreasing average prices, occurred in the U.S. in the nineteenth century. • Hyperinflation refers to high rates of inflation such ...
... THE CLASSICAL THEORY OF INFLATION • Inflation: Historical Aspects • Over the past 60 years, prices have risen on average about 4 percent per year. • Deflation, meaning decreasing average prices, occurred in the U.S. in the nineteenth century. • Hyperinflation refers to high rates of inflation such ...
Makeup for Second 2006 Prelim
... a) a movement along the AS curve; cost-push inflation b) a leftward shift in the AS curve; demand-pull inflation c) a rightward shift in the AS curve; cost-push inflation d) a leftward shift in the AS curve; cost-push inflation Answer: d 2. In the 1930s, when Keynes was alive, a expansionary fiscal ...
... a) a movement along the AS curve; cost-push inflation b) a leftward shift in the AS curve; demand-pull inflation c) a rightward shift in the AS curve; cost-push inflation d) a leftward shift in the AS curve; cost-push inflation Answer: d 2. In the 1930s, when Keynes was alive, a expansionary fiscal ...
Measuring Inflation and Unemployment
... – Changes in technology makes some types of jobs obsolete. – Changes in international trade shrink some industries. – Changes in tastes and preferences. • Cyclical unemployment: caused by declines in total spending in the economy. – Unemployment that increases during recessions, decreases during exp ...
... – Changes in technology makes some types of jobs obsolete. – Changes in international trade shrink some industries. – Changes in tastes and preferences. • Cyclical unemployment: caused by declines in total spending in the economy. – Unemployment that increases during recessions, decreases during exp ...
EOCT Study Guide for Economics
... 8. Opportunity cost-value of the next best alternative (the thing you did not choose) 9. Marginal cost- the cost of getting or making one more item. 10. Marginal benefit-the benefit associated with one additional item 11. Marginal benefit=marginal cost; then no more will be made, its not worth it to ...
... 8. Opportunity cost-value of the next best alternative (the thing you did not choose) 9. Marginal cost- the cost of getting or making one more item. 10. Marginal benefit-the benefit associated with one additional item 11. Marginal benefit=marginal cost; then no more will be made, its not worth it to ...
Fiscal policy
... fiscal drag The negative effect on the economy that occurs when average tax rates increase because taxpayers have moved into higher income brackets during an expansion. ...
... fiscal drag The negative effect on the economy that occurs when average tax rates increase because taxpayers have moved into higher income brackets during an expansion. ...
Inflation
... for value of $100. CPI =125 ($100/$80 x 100 = 125% for 2001)] So, the CPI increased by 25%. ...
... for value of $100. CPI =125 ($100/$80 x 100 = 125% for 2001)] So, the CPI increased by 25%. ...
Dejan Krusec
... Research background: not much VAR method research in this area, some cross-section studies, e.g. Studies of Melitz (1997) and Wyplosz (1999) find that monetary and fiscal policy tend to move in the opposite directions. Melitz (1997, 5) uses in his study two-stage least squares and threestage least s ...
... Research background: not much VAR method research in this area, some cross-section studies, e.g. Studies of Melitz (1997) and Wyplosz (1999) find that monetary and fiscal policy tend to move in the opposite directions. Melitz (1997, 5) uses in his study two-stage least squares and threestage least s ...
Chapter 23: Unemployment and Inflation
... - Classical Economists thought that flexible wages and prices would lead to full employment. The Classical Theory of Unemployment - The classical economists claimed that the wage rate would fall to restore full employment. - Say’s Law states that supply creates its own demand. ...
... - Classical Economists thought that flexible wages and prices would lead to full employment. The Classical Theory of Unemployment - The classical economists claimed that the wage rate would fall to restore full employment. - Say’s Law states that supply creates its own demand. ...
Document
... The workings of supply and demand mean that the prices of some goods increase while some decrease, e.g., the relative prices of goods and services change Changes in relative prices occur when the prices of various goods change by different amounts and describe the terms at which individual goods exc ...
... The workings of supply and demand mean that the prices of some goods increase while some decrease, e.g., the relative prices of goods and services change Changes in relative prices occur when the prices of various goods change by different amounts and describe the terms at which individual goods exc ...
PDF
... According to these estimates we are currently passing from a stimulative budget phase into a restrictive phase with 1979 essentially impact neutral if fiscal policies in effect at the beginning of this year are not changed. These policies include (1) the increases in social security tax rates in Jan ...
... According to these estimates we are currently passing from a stimulative budget phase into a restrictive phase with 1979 essentially impact neutral if fiscal policies in effect at the beginning of this year are not changed. These policies include (1) the increases in social security tax rates in Jan ...
CSC Volume 1, Section 2 (Chapter 4, 5) Total score: 11/14 = 78
... General Feedback: There are three general types of unemployment: cyclical, frictional and structural. Unemployment rises when the economy weakens and firms lay off workers in response to lower sales. This type of unemployment is called cyclical unemployment. The other three statements can lead to an ...
... General Feedback: There are three general types of unemployment: cyclical, frictional and structural. Unemployment rises when the economy weakens and firms lay off workers in response to lower sales. This type of unemployment is called cyclical unemployment. The other three statements can lead to an ...
A “HOW-TO” GUIDE: UNDERSTANDING AND MEASURING
... weighting placed on the prices of expensive restaurants, fine wine, or international luxury travel – but a CPI for very high-income consumers will include those factors. Some more specialized adjusted CPI indices are also reported in many countries. For example, central bankers are often interested ...
... weighting placed on the prices of expensive restaurants, fine wine, or international luxury travel – but a CPI for very high-income consumers will include those factors. Some more specialized adjusted CPI indices are also reported in many countries. For example, central bankers are often interested ...
This PDF is a selection from an out-of-print volume from... Bureau of Economic Research
... let's think about the effect of trade with China, which is an important trading partner with the United States. Controversially, Chinese monetary policy seems to mainly involve keeping its currency low and stable vis-a-vis the U.S. The key point built into the theory is that changes in the levels of ...
... let's think about the effect of trade with China, which is an important trading partner with the United States. Controversially, Chinese monetary policy seems to mainly involve keeping its currency low and stable vis-a-vis the U.S. The key point built into the theory is that changes in the levels of ...
chapter 3 - College of Micronesia
... the Great Depression was the last time the U.S. experienced a general period of deflation. iii. Currently, the prices of some items are falling while the prices of other items are rising. e. Measuring inflation i. The Consumer Price Index (CPI) measures the monthly average change in the prices of a ...
... the Great Depression was the last time the U.S. experienced a general period of deflation. iii. Currently, the prices of some items are falling while the prices of other items are rising. e. Measuring inflation i. The Consumer Price Index (CPI) measures the monthly average change in the prices of a ...
The Phillips Curve
... government bonds and some of these bonds were bought by the Fed as it tried to keep down the nominal interest rate. As the Fed bought government debt, it created new money to pay for it, and the rate of money creation began to climb. ...
... government bonds and some of these bonds were bought by the Fed as it tried to keep down the nominal interest rate. As the Fed bought government debt, it created new money to pay for it, and the rate of money creation began to climb. ...
Interactive Tool
... Can you evaluate the question and answer? A better analysis focuses on the definition of inflation. Inflation is a sustained increase in the overall level of prices. In a market economy, prices vary in different seasons and in different areas. There are always some prices increasing and others decre ...
... Can you evaluate the question and answer? A better analysis focuses on the definition of inflation. Inflation is a sustained increase in the overall level of prices. In a market economy, prices vary in different seasons and in different areas. There are always some prices increasing and others decre ...
SU14_2630_Study Guid..
... 37. What is the difference between gross and net public debt? Gross public debt includes the total amount owed to all holders of government securities. Net public debt is equal to gross public debt minus intragovernmental debt (the amount owed to holders of public securities outside of the governmen ...
... 37. What is the difference between gross and net public debt? Gross public debt includes the total amount owed to all holders of government securities. Net public debt is equal to gross public debt minus intragovernmental debt (the amount owed to holders of public securities outside of the governmen ...
Ch. 11: Inflation and Unemployment
... E.g. More cell phones and CD players were steadily bought in the 1990s. As prices rise consumers tend to buy fewer items. These products have too high a weight in the CPI basket, meaning that the index overstates the rate of inflation. Product Quality. A product’s tremendous improvement in q ...
... E.g. More cell phones and CD players were steadily bought in the 1990s. As prices rise consumers tend to buy fewer items. These products have too high a weight in the CPI basket, meaning that the index overstates the rate of inflation. Product Quality. A product’s tremendous improvement in q ...
Inflation
... (M) what will happen to prices (P)? Ex: Assume money supply is $5 and it is being used to buy 10 products with a price of $2 each. 1. How much is the velocity of money? 2. If the velocity and output stay the same, what will happen if the amount of money is increase to $10? Notice, doubling the money ...
... (M) what will happen to prices (P)? Ex: Assume money supply is $5 and it is being used to buy 10 products with a price of $2 each. 1. How much is the velocity of money? 2. If the velocity and output stay the same, what will happen if the amount of money is increase to $10? Notice, doubling the money ...
Measuring The Business Cycle
... nation’s standard of living. - It is measured by the average rate of change of the real gross domestic product per person. ...
... nation’s standard of living. - It is measured by the average rate of change of the real gross domestic product per person. ...
Modern Principles, Macroeconomics
... 2) Does an analysis of real shocks add to an analysis of aggregate demand shocks? Absolutely. In our view, a key problem with many textbooks is that they make fiscal and monetary policy look too easy. In the standard P,Y model the economy can always be restored to full employment by shifting the rig ...
... 2) Does an analysis of real shocks add to an analysis of aggregate demand shocks? Absolutely. In our view, a key problem with many textbooks is that they make fiscal and monetary policy look too easy. In the standard P,Y model the economy can always be restored to full employment by shifting the rig ...
Chapter 10 Notes - FIU Faculty Websites
... Another key indicator of how well the economy is performing in the unemployment rate. Another way of understanding what is happening with the economy. If GDP is negative, unemployment will be or is increasing in the near future, and vice versa. ...
... Another key indicator of how well the economy is performing in the unemployment rate. Another way of understanding what is happening with the economy. If GDP is negative, unemployment will be or is increasing in the near future, and vice versa. ...
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.