Goldilocks and stagflation
... stagnation, as suggested by former US Treasury Secretary Larry Summers, among others. But first, some background on this debate. Ever since the financial crisis started, economists have been debating its causes and consequences. While there is agreement that the recovery is disappointing and uneven, ...
... stagnation, as suggested by former US Treasury Secretary Larry Summers, among others. But first, some background on this debate. Ever since the financial crisis started, economists have been debating its causes and consequences. While there is agreement that the recovery is disappointing and uneven, ...
Economic Indicators
... circulating in the economy at a point of time. It includes the money in the hands of non bank public as well as in the bank accounts as deposits and other savings. Increased money supply results in increased GDP. A decrease slows down the economy. It should not rise uncontrollably as it result ...
... circulating in the economy at a point of time. It includes the money in the hands of non bank public as well as in the bank accounts as deposits and other savings. Increased money supply results in increased GDP. A decrease slows down the economy. It should not rise uncontrollably as it result ...
Monetary and Fiscal Policy
... to the banks. Because it is easier to make gradual changes in the supply of money, open market operations are use more regularly than monetary policy. When member banks want to raise money, they can borrow from Federal Reserve Banks. Just like other loans, there is an interest rate, or a discount ra ...
... to the banks. Because it is easier to make gradual changes in the supply of money, open market operations are use more regularly than monetary policy. When member banks want to raise money, they can borrow from Federal Reserve Banks. Just like other loans, there is an interest rate, or a discount ra ...
FedViews
... (http://www.frbsf.org/publications/economics/ papers/2011/wp11-01bk.pdf) finds that the Fed’s large-scale asset purchases will boost real GDP by nearly 3% in 2012 relative to what would have occurred absent the program. This translates into 3 million additional jobs and a 1.5 percentage point reduct ...
... (http://www.frbsf.org/publications/economics/ papers/2011/wp11-01bk.pdf) finds that the Fed’s large-scale asset purchases will boost real GDP by nearly 3% in 2012 relative to what would have occurred absent the program. This translates into 3 million additional jobs and a 1.5 percentage point reduct ...
Final Exam - Element Education
... A. Medium of Exchange B. Unit of Account C. Store of Value D. Above of the Above E. None of the Above 16. Coins and paper bills used as money are called this. A. Currency ...
... A. Medium of Exchange B. Unit of Account C. Store of Value D. Above of the Above E. None of the Above 16. Coins and paper bills used as money are called this. A. Currency ...
Speech to the Hong Kong Association of Northern California
... With this strong performance, we also have seen the slack in labor and product markets dwindle. For example, the civilian unemployment rate dropped by 1 percentage point to 4.6 percent in September. This rate is a bit lower than conventional estimates of so-called “full employment” and, therefore, s ...
... With this strong performance, we also have seen the slack in labor and product markets dwindle. For example, the civilian unemployment rate dropped by 1 percentage point to 4.6 percent in September. This rate is a bit lower than conventional estimates of so-called “full employment” and, therefore, s ...
Lahore School of Economics
... for financing higher planned investment. The final change in the identity can only be seen when the magnitude of increase in the ‘savings’ and ‘investments’ is known. b. Higher taxes decrease the disposable profits of the business sector which decreases the desired investments. Lower investments wil ...
... for financing higher planned investment. The final change in the identity can only be seen when the magnitude of increase in the ‘savings’ and ‘investments’ is known. b. Higher taxes decrease the disposable profits of the business sector which decreases the desired investments. Lower investments wil ...
Monetary Policy
... - Unemployment insurance claims have large effect , as families on unemployment insurance maintain necessary spending more than saving. How!! ...
... - Unemployment insurance claims have large effect , as families on unemployment insurance maintain necessary spending more than saving. How!! ...
XIV. Current issues in economic policy
... – How to deal with short term fluctuations (described by Keynesian model) to help the economy to follow the long term development path, without undermining the potential? ...
... – How to deal with short term fluctuations (described by Keynesian model) to help the economy to follow the long term development path, without undermining the potential? ...
(G – T) + (X – M)
... good X in terms of good Y implies a fall in the relative price of the good Y in terms of the good X at the same time. Thus, there cannot be a general rise in relative prices. ...
... good X in terms of good Y implies a fall in the relative price of the good Y in terms of the good X at the same time. Thus, there cannot be a general rise in relative prices. ...
Money
... 1. Open market operations: CB purchases and sells government bonds. Increases / decreases M through change of B 2. Reserve requirements: CB sets minimum. Affects creation of money by banks (rr) 3. Discount rate: charged on loans by CB for banks (if do not have enough R, or want more loans ) Affects ...
... 1. Open market operations: CB purchases and sells government bonds. Increases / decreases M through change of B 2. Reserve requirements: CB sets minimum. Affects creation of money by banks (rr) 3. Discount rate: charged on loans by CB for banks (if do not have enough R, or want more loans ) Affects ...
Test 4
... 18. In the early 1970s, President Nixon inherited an economy that was operating with an inflationary gap. The Nixon administration rationalized that through a combination of a government spending cuts and a decrease in the money growth rate, it could successfully A) reduce inflation, which would th ...
... 18. In the early 1970s, President Nixon inherited an economy that was operating with an inflationary gap. The Nixon administration rationalized that through a combination of a government spending cuts and a decrease in the money growth rate, it could successfully A) reduce inflation, which would th ...
Money, output and Prices in LR Macro_Module_32 money
... What you will learn in this Module: • The effects of an inappropriate monetary policy • The concept of monetary neutrality and its relationship to the long-term economic effects of monetary policy ...
... What you will learn in this Module: • The effects of an inappropriate monetary policy • The concept of monetary neutrality and its relationship to the long-term economic effects of monetary policy ...
View/Open
... been hit with many shocks in the 70's. What are the appropriate policies? Aggregate demand restraint is an obvious policy to deal with the economic system. It is clear that if the Fed did not increase the money supply, forced interest rates to rise, let home building decline, and let investment and ...
... been hit with many shocks in the 70's. What are the appropriate policies? Aggregate demand restraint is an obvious policy to deal with the economic system. It is clear that if the Fed did not increase the money supply, forced interest rates to rise, let home building decline, and let investment and ...
Econ 2 UT3 F16 - Bakersfield College
... do with the money that comes in? a. Spend it on roads. b. Destroy it. c. Pay back some of the national debt. d. Either a or c. 9. When the purchase price of a $100 bond falls, it’s interest rate has just: a. risen. b. fallen. c. stayed the same. 10. What is the real rate of interest? a. the inflatio ...
... do with the money that comes in? a. Spend it on roads. b. Destroy it. c. Pay back some of the national debt. d. Either a or c. 9. When the purchase price of a $100 bond falls, it’s interest rate has just: a. risen. b. fallen. c. stayed the same. 10. What is the real rate of interest? a. the inflatio ...
View - face
... an institution over a reasonable period of time, three, four, five years. They have used the insecurity in the equity market to ‘Market’ investments that pay a reasonable return as long as the investor will place their monies over these longer periods. Nothing wrong with that at all, investors and t ...
... an institution over a reasonable period of time, three, four, five years. They have used the insecurity in the equity market to ‘Market’ investments that pay a reasonable return as long as the investor will place their monies over these longer periods. Nothing wrong with that at all, investors and t ...
AD shifts left.
... most commonly used tool. (Make sure to identify what this tool is called in your answer.) ...
... most commonly used tool. (Make sure to identify what this tool is called in your answer.) ...
Chapter 5 - An Introduction to Macroeconomics
... – Production: geographic boundaries of U.S. – Organized markets ...
... – Production: geographic boundaries of U.S. – Organized markets ...
Mr - TeacherWeb
... A) Is it possible for "free market economies" (such as that found in the U.S.) to provide a job for all Americans? 1. No, it is not possible without government intervention. ...
... A) Is it possible for "free market economies" (such as that found in the U.S.) to provide a job for all Americans? 1. No, it is not possible without government intervention. ...
No: 2013 – 4 Release date: 29 January 2013
... forthcoming period, necessitating a cautious stance against macro financial risks. The Committee stated that, in order to contain the risks on financial stability, the proper policy would be to keep interest rates at low levels while continuing with macroprudential measures. Accordingly, it was deem ...
... forthcoming period, necessitating a cautious stance against macro financial risks. The Committee stated that, in order to contain the risks on financial stability, the proper policy would be to keep interest rates at low levels while continuing with macroprudential measures. Accordingly, it was deem ...
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.