Ch10 11e Lecture Presentation
... Expectations Expectations about future income, future inflation, and future profits change aggregate demand. Increases in expected future income increase people’s consumption today and increases aggregate demand. A rise in the expected inflation rate makes buying goods cheaper today and increases ag ...
... Expectations Expectations about future income, future inflation, and future profits change aggregate demand. Increases in expected future income increase people’s consumption today and increases aggregate demand. A rise in the expected inflation rate makes buying goods cheaper today and increases ag ...
Read Paper - Economics
... fiscal policy, either in the form of direct spending financed by taxation on the working population or via increase in public debt. Since the problem in a secular stagnation is excessive savings, the issuance of government debt is the most natural solution to raising the natural rate of interest as ...
... fiscal policy, either in the form of direct spending financed by taxation on the working population or via increase in public debt. Since the problem in a secular stagnation is excessive savings, the issuance of government debt is the most natural solution to raising the natural rate of interest as ...
Volume 71 No. 3, September 2008 Contents Themed issue: Inflation
... This article reproduces the paper for a speech given by Governor Alan Bollard on 30 July 2008. We argue that New Zealand’s flexible inflation-targeting framework serves the economy well, but one should not to ask too much of it. Inflation targeting is the best approach New Zealand and many other sim ...
... This article reproduces the paper for a speech given by Governor Alan Bollard on 30 July 2008. We argue that New Zealand’s flexible inflation-targeting framework serves the economy well, but one should not to ask too much of it. Inflation targeting is the best approach New Zealand and many other sim ...
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 ...
Helicopter money ING International Survey special report
... In Southern Europe, people are more positive. Years of economic hardship during the crisis could explain why they are more confident about the positive economic impact of helicopter money than others. It’s also consistent with economic theory: the amount of spare capacity in their economies is highe ...
... In Southern Europe, people are more positive. Years of economic hardship during the crisis could explain why they are more confident about the positive economic impact of helicopter money than others. It’s also consistent with economic theory: the amount of spare capacity in their economies is highe ...
inflation report - Bank of Mauritius
... citing rapidly slowing global activity and deteriorating global growth prospects on continuing financial sector deleveraging and falling producer and consumer confidence. Global growth is projected to decline to 0.5 per cent in 2009, the lowest since World War II. In advanced economies, economic act ...
... citing rapidly slowing global activity and deteriorating global growth prospects on continuing financial sector deleveraging and falling producer and consumer confidence. Global growth is projected to decline to 0.5 per cent in 2009, the lowest since World War II. In advanced economies, economic act ...
1 - Whitman People
... An economy's aggregate demand curve is not derived by horizontally summing the market demand curves for all the products consumed in the economy. The logic that explains why a simple demand curve slopes downward fails to explain why the aggregate demand curve also has a negative slope. Aggregate dem ...
... An economy's aggregate demand curve is not derived by horizontally summing the market demand curves for all the products consumed in the economy. The logic that explains why a simple demand curve slopes downward fails to explain why the aggregate demand curve also has a negative slope. Aggregate dem ...
Chapter 14
... do you think real GDP is currently above, below, or at potential GDP? Talk to your class mates about where they see the U.S. economy right now. Is there a consensus? What are the main pressures on AS and AD right now? Do you think that real GDP will expand more quickly or more slowly over the coming ...
... do you think real GDP is currently above, below, or at potential GDP? Talk to your class mates about where they see the U.S. economy right now. Is there a consensus? What are the main pressures on AS and AD right now? Do you think that real GDP will expand more quickly or more slowly over the coming ...
A Monetary Explanation of the Great Stagflation
... forces, ultimately driven by monetary conditions. For example, during the period of the 1973/74 oil price increase, oil prices were only the last in a long line of commodity prices to experience dramatic increases, and ultimately rose only slightly more than the average raw industrial commodity. Ou ...
... forces, ultimately driven by monetary conditions. For example, during the period of the 1973/74 oil price increase, oil prices were only the last in a long line of commodity prices to experience dramatic increases, and ultimately rose only slightly more than the average raw industrial commodity. Ou ...
Bade_Parkin_Macro_Lecture_CH14
... Aggregate demand is the relationship between the quantity of real GDP demanded and the price level when all other influences on expenditure plans remain the same. Other things remaining the same, • When the price level rises, the quantity of real GDP demanded decreases. • When the price level falls, ...
... Aggregate demand is the relationship between the quantity of real GDP demanded and the price level when all other influences on expenditure plans remain the same. Other things remaining the same, • When the price level rises, the quantity of real GDP demanded decreases. • When the price level falls, ...
Digression: The European Debt Crisis
... causes a higher credit default probability. ■ As soon as capital markets become aware of this, risk premiums in the interest rates start to grow an cause higher real interest rates for the high inflation country. ■ This sets an incentive for the high inflation country to reduce its demand for debt. ...
... causes a higher credit default probability. ■ As soon as capital markets become aware of this, risk premiums in the interest rates start to grow an cause higher real interest rates for the high inflation country. ■ This sets an incentive for the high inflation country to reduce its demand for debt. ...
problems and solutions revized
... Problem 3.6A. Derive an expression for the marginal product of labor. How does an increase in the amount of human capital affect the marginal product of labor? Problem 3.6B. Derive an expression for the marginal product of human capital. How does an increase in the amount of human capital affect the ...
... Problem 3.6A. Derive an expression for the marginal product of labor. How does an increase in the amount of human capital affect the marginal product of labor? Problem 3.6B. Derive an expression for the marginal product of human capital. How does an increase in the amount of human capital affect the ...
Chapter 28
... quantity of real GDP demanded and the price level when all other influences on expenditure plans remain the same. Other things remaining the same, • When the price level rises, the quantity of real GDP demanded decreases. • When the price level falls, the quantity of real GDP demanded increases. ...
... quantity of real GDP demanded and the price level when all other influences on expenditure plans remain the same. Other things remaining the same, • When the price level rises, the quantity of real GDP demanded decreases. • When the price level falls, the quantity of real GDP demanded increases. ...
Exercise 6 (+additional question) in Mankiw
... Problem 3.6A. Derive an expression for the marginal product of labor. How does an increase in the amount of human capital affect the marginal product of labor? Problem 3.6B. Derive an expression for the marginal product of human capital. How does an increase in the amount of human capital affect the ...
... Problem 3.6A. Derive an expression for the marginal product of labor. How does an increase in the amount of human capital affect the marginal product of labor? Problem 3.6B. Derive an expression for the marginal product of human capital. How does an increase in the amount of human capital affect the ...
The Science of Monetary Policy
... McCallum 1997a). We demonstrate, however, that there may be gains from commitment simply if current price setting depends on expectations of the future. In this instance, a credible commitment to fight inflation in the future can improve the current output/inflation trade-off that a central bank fac ...
... McCallum 1997a). We demonstrate, however, that there may be gains from commitment simply if current price setting depends on expectations of the future. In this instance, a credible commitment to fight inflation in the future can improve the current output/inflation trade-off that a central bank fac ...
Chapter 1: Introduction
... same as the outward shift in the IS curve. If the LM curve is very steeply sloped--if ...
... same as the outward shift in the IS curve. If the LM curve is very steeply sloped--if ...
Understanding Non-Inflationary Demand Driven Business Cycles
... view is supported by the fact that both TFP and measured investment specific technological progress were either counter-cyclical or at most a-cyclical over the period, making a pure supply side explanation unlikely. While the real economy experienced these cycles, inflation was very stable over the ...
... view is supported by the fact that both TFP and measured investment specific technological progress were either counter-cyclical or at most a-cyclical over the period, making a pure supply side explanation unlikely. While the real economy experienced these cycles, inflation was very stable over the ...
Inflation in the Euro Area
... years after their introduction. However, it may take several years before new goods and services are included in the basket of goods and services used to calculate the price index, and thus the fall in their prices may be missed. An important problem in handling new goods and services is also that ...
... years after their introduction. However, it may take several years before new goods and services are included in the basket of goods and services used to calculate the price index, and thus the fall in their prices may be missed. An important problem in handling new goods and services is also that ...
MacroPractice
... 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 by some commodity (e.g. gold) before it can ...
... 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 by some commodity (e.g. gold) before it can ...
NBER WORKING PAPER SERIES TARGETING NOMINAL INCOME: A NOTE Kenneth D. West
... directly to more complicated and dynamic versions of the supply and demand curves. I considered two dynamic versions under the ground rules of the third comment, i.e., rational expectations, with the shocks seen by the authorities ...
... directly to more complicated and dynamic versions of the supply and demand curves. I considered two dynamic versions under the ground rules of the third comment, i.e., rational expectations, with the shocks seen by the authorities ...
Lesson 4 - uwcentre
... have been falling relative to their 30-year averages. •If interest rates on these securities rose back to their historical averages, holders of bonds would suffer losses. •Not surprisingly, many financial advisers have warned investors that buying bonds could be risky. •In this lesson, we study how ...
... have been falling relative to their 30-year averages. •If interest rates on these securities rose back to their historical averages, holders of bonds would suffer losses. •Not surprisingly, many financial advisers have warned investors that buying bonds could be risky. •In this lesson, we study how ...
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.