Midterm #3
... prices and wages rise when there is more-than-usual demand for products and labor, and fall when there is lessthan-usual demand for products and labor. firms increase output when unplanned investment is positive, and decrease output when unplanned investment is ...
... prices and wages rise when there is more-than-usual demand for products and labor, and fall when there is lessthan-usual demand for products and labor. firms increase output when unplanned investment is positive, and decrease output when unplanned investment is ...
Chapter 7 Review Questions Price Indexes and Inflation Dr
... It is the tendency of people to protect themselves against inflation by purchasing more of goods which have become relatively cheaper (that may have risen in price, but less than other goods) and to avoid goods which have become relatively more expensive. _True_7. The core PCE deflator is the measur ...
... It is the tendency of people to protect themselves against inflation by purchasing more of goods which have become relatively cheaper (that may have risen in price, but less than other goods) and to avoid goods which have become relatively more expensive. _True_7. The core PCE deflator is the measur ...
The Dynamics of Inflation and Unemployment
... on its central bank to finance its debt. Instead, debt was sold to private parties who would value the debt based on the ability of the government to meet interest and principal payments from taxes. Once the governments made these reforms, there was an abrupt end to the hyperinflations and an actual ...
... on its central bank to finance its debt. Instead, debt was sold to private parties who would value the debt based on the ability of the government to meet interest and principal payments from taxes. Once the governments made these reforms, there was an abrupt end to the hyperinflations and an actual ...
Exam 3 Sample Questions
... 5. The experience of Ireland during the last several decades indicates that high rates of economic growth are unlikely to be achieved and sustained unless a. tariffs and other trade barriers restrain the inflow of goods from low-wage countries. b. sound policies including those supportive of rule of ...
... 5. The experience of Ireland during the last several decades indicates that high rates of economic growth are unlikely to be achieved and sustained unless a. tariffs and other trade barriers restrain the inflow of goods from low-wage countries. b. sound policies including those supportive of rule of ...
Inflation Fisher theory (Quantity Theory of Money)
... Another advantage of inflation is that it stimulates consumption. This is because real interest rate decreases or even in some cases it becomes negative because it does not tend to change in line with inflation. So debt burden may falls and people may be able to or encourage spending more. On the ot ...
... Another advantage of inflation is that it stimulates consumption. This is because real interest rate decreases or even in some cases it becomes negative because it does not tend to change in line with inflation. So debt burden may falls and people may be able to or encourage spending more. On the ot ...
The Radical Implications of Stable, Quiet Inflation
... Really active NK, no one expected it to last? (A: Japan?) Peg still unstable/indeterminate? Really unstable but slow to emerge (sticky wages, velocity)? Reserves didn’t leak to M1, M2. (A: My point.) More general models? (A: don’t change stability, determinacy.) Large deficits, debt, Japan? (A: Low ...
... Really active NK, no one expected it to last? (A: Japan?) Peg still unstable/indeterminate? Really unstable but slow to emerge (sticky wages, velocity)? Reserves didn’t leak to M1, M2. (A: My point.) More general models? (A: don’t change stability, determinacy.) Large deficits, debt, Japan? (A: Low ...
U.S. Monetary Policy: An Introduction
... Deflation, in contrast, means that there’s a fall in prices; and it’s not just a fall in prices in some sectors—like the familiar falling prices of a lot of computer equipment. Rather, in a deflation, prices are falling throughout the economy, so the inflation rate is negative.That may sound good, i ...
... Deflation, in contrast, means that there’s a fall in prices; and it’s not just a fall in prices in some sectors—like the familiar falling prices of a lot of computer equipment. Rather, in a deflation, prices are falling throughout the economy, so the inflation rate is negative.That may sound good, i ...
The Greenspan Legacy of Hyperinflation
... created by inflation and hyper-inflation consumption falls but is more than offset by hoarding such that composite demand increases. But this demand that is fueled by a desire to diversify out of a depreciating currency depends on someone being willing to take the other side of the trade and to acce ...
... created by inflation and hyper-inflation consumption falls but is more than offset by hoarding such that composite demand increases. But this demand that is fueled by a desire to diversify out of a depreciating currency depends on someone being willing to take the other side of the trade and to acce ...
Chapter 15
... of recession and inflation) caused by high oil prices. First serious experiment with the Monetary Rule coincided with economic instability: ...
... of recession and inflation) caused by high oil prices. First serious experiment with the Monetary Rule coincided with economic instability: ...
Aggregate Supply
... – The second is the interest rate effect of a change in aggregate the price level—a higher aggregate price level reduces the purchasing power of households’ money holdings, the BofC rises interest rates to cool the economy (also have less commercial deposits too banks raise r to attract more deposit ...
... – The second is the interest rate effect of a change in aggregate the price level—a higher aggregate price level reduces the purchasing power of households’ money holdings, the BofC rises interest rates to cool the economy (also have less commercial deposits too banks raise r to attract more deposit ...
Course Outline 1.
... Marcoeconomic policy: __________ actions that affect the economy’s performance over time Monetary policy influences the economy’s __________ __________ Fiscal policy - govt. ___________ and __________ decisions that affect the economy Structural policy affects the basic way in which the econom ...
... Marcoeconomic policy: __________ actions that affect the economy’s performance over time Monetary policy influences the economy’s __________ __________ Fiscal policy - govt. ___________ and __________ decisions that affect the economy Structural policy affects the basic way in which the econom ...
A Rise In The Price Of Oil Imports Has
... c. both of the above. d. none of the above. 28. If the government did not collect taxes but simply paid for its purchases by printing up money, this would cause: a. very high inflation. b. very high unemployment. c. both of the above. d. none of the above. 29. If we are at natural real GDP, then the ...
... c. both of the above. d. none of the above. 28. If the government did not collect taxes but simply paid for its purchases by printing up money, this would cause: a. very high inflation. b. very high unemployment. c. both of the above. d. none of the above. 29. If we are at natural real GDP, then the ...
Sample questions for Test 1
... D) the inflation rate is equal to the real output growth rate plus the monetary growth rate 16. Wages are considered to be sticky rather than flexible since A) firms encounter menu costs when changing wages but not when changing prices B) labor contracts contain cost-of-living adjustments C) firms t ...
... D) the inflation rate is equal to the real output growth rate plus the monetary growth rate 16. Wages are considered to be sticky rather than flexible since A) firms encounter menu costs when changing wages but not when changing prices B) labor contracts contain cost-of-living adjustments C) firms t ...
Videoconference Presentation to the Australian Business Economists
... recovery. First, despite signs that consumer spending is stabilizing, the chance of strong and sustained consumption growth appears low. For years prior to the recession, households went on a spending spree of major proportions. This occurred during what has come to be called the “great moderation,” ...
... recovery. First, despite signs that consumer spending is stabilizing, the chance of strong and sustained consumption growth appears low. For years prior to the recession, households went on a spending spree of major proportions. This occurred during what has come to be called the “great moderation,” ...
Measuring the Economy
... recessions during the 1959-2001 period…but it also forecasted 5 recessions that did not occur ! ...
... recessions during the 1959-2001 period…but it also forecasted 5 recessions that did not occur ! ...
What is deflation? A continual decline in the average price level of
... Transactions, precautionary, speculative ...
... Transactions, precautionary, speculative ...
inequality as determinant of growth
... their percentage coverage higher (that is, indexation was a decreasing function of income). Another factor explaining this may be that inflation rises people into higher tax brackets. Hence, the “fiscal drag.” US, 1944-65 in Beach (1977) ...
... their percentage coverage higher (that is, indexation was a decreasing function of income). Another factor explaining this may be that inflation rises people into higher tax brackets. Hence, the “fiscal drag.” US, 1944-65 in Beach (1977) ...
g - University of Ottawa
... impact on long-run equilibria. It is common to speak of ‘path-dependence’ for such a characteristic. It is possible to show that this kind of model displays hysteresis in the sense of a ‘permanent effect of a transitory shock’ (Olivier 1999). ...
... impact on long-run equilibria. It is common to speak of ‘path-dependence’ for such a characteristic. It is possible to show that this kind of model displays hysteresis in the sense of a ‘permanent effect of a transitory shock’ (Olivier 1999). ...
Problem Set 2 – Some Answers FE405 1.
... change in the timing of tax does not affect the constraint and therefore does not affect the consumption plan. No, it does not imply that high public debt is no cause for concern. High public debt can generate an important series of consequences unrelated to Ricardian equivalence: seignorage temptat ...
... change in the timing of tax does not affect the constraint and therefore does not affect the consumption plan. No, it does not imply that high public debt is no cause for concern. High public debt can generate an important series of consequences unrelated to Ricardian equivalence: seignorage temptat ...
Unemployment and Inflation
... force plus all persons marginally attached to the labor force U-6 Total unemployed, plus all persons marginally attached to the labor force, plus total employed part time for economic reasons, as a percent of the civilian labor force plus all persons marginally attached to the ...
... force plus all persons marginally attached to the labor force U-6 Total unemployed, plus all persons marginally attached to the labor force, plus total employed part time for economic reasons, as a percent of the civilian labor force plus all persons marginally attached to the ...
Final Exam Study Guide Econ 301 Intermediate Macroeconomics
... a. Probably saying that “monetary issues don’t affect A, K, or L is too strong. What if monetary policy doesn’t fight recessions so that the economy is very volatile; or if it fails to keep inflation low and stable – wouldn’t this affect technological progress or capital accumulation? b. What is the ...
... a. Probably saying that “monetary issues don’t affect A, K, or L is too strong. What if monetary policy doesn’t fight recessions so that the economy is very volatile; or if it fails to keep inflation low and stable – wouldn’t this affect technological progress or capital accumulation? b. What is the ...
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.