Multiple Choice: Circle the answer the best completes each question
... 25. One necessary characteristic of money is that it must be unlimited in supply. 26. Commercial banks like Wells Fargo and Washington Mutual make a profit by loaning money. 27. Money is anything that is accepted for payment for goods and services. 28. Using a contractionary fiscal policy results in ...
... 25. One necessary characteristic of money is that it must be unlimited in supply. 26. Commercial banks like Wells Fargo and Washington Mutual make a profit by loaning money. 27. Money is anything that is accepted for payment for goods and services. 28. Using a contractionary fiscal policy results in ...
Note: Solve this test. In a separate sheet, explain very briefly your
... a) A country's inflation is always motivated by aggregate demand, which increases production above the natural level. b) Inflation in one country may be motivated by demand or supply shocks. c) For the classics, following the quantity equation of money with V = constant, i ...
... a) A country's inflation is always motivated by aggregate demand, which increases production above the natural level. b) Inflation in one country may be motivated by demand or supply shocks. c) For the classics, following the quantity equation of money with V = constant, i ...
Econ 375 Sample Exam 3 Questions 1. Some firms do not instantly
... 20. Economic research finds that greater central-bank independence is ______ correlated with lower and more stable inflation as well as ______ correlated with the average growth and variability of real GDP. A) strongly; strongly B) strongly; not C) not; strongly D) not; not 21. Historically, the pri ...
... 20. Economic research finds that greater central-bank independence is ______ correlated with lower and more stable inflation as well as ______ correlated with the average growth and variability of real GDP. A) strongly; strongly B) strongly; not C) not; strongly D) not; not 21. Historically, the pri ...
Measuring Health, Unemployment, Inflation
... when inflation rates change greatly from year to year. Purchasing Power In an inflationary economy, a dollar loses value. It will not buy the same amount of goods that it did in years past. Interest Rates When a bank's interest rate matches the inflation rate, savers break even. When a bank's in ...
... when inflation rates change greatly from year to year. Purchasing Power In an inflationary economy, a dollar loses value. It will not buy the same amount of goods that it did in years past. Interest Rates When a bank's interest rate matches the inflation rate, savers break even. When a bank's in ...
Unemployment and Inflation
... • It is the lowest possible unemployment rate with the economy growing (maximum potential employment) . • It takes into account unavoidable unemployment such as structural, frictional and seasonal, but not cyclical. • The full employment rate is considered to be about 5% unemployed. ...
... • It is the lowest possible unemployment rate with the economy growing (maximum potential employment) . • It takes into account unavoidable unemployment such as structural, frictional and seasonal, but not cyclical. • The full employment rate is considered to be about 5% unemployed. ...
Insert title here
... when inflation rates change greatly from year to year. Purchasing Power – In an inflationary economy, a dollar loses value. It will not buy the same amount of goods that it did in years past. Interest Rates – When a bank's interest rate matches the inflation rate, savers break even. When a bank's in ...
... when inflation rates change greatly from year to year. Purchasing Power – In an inflationary economy, a dollar loses value. It will not buy the same amount of goods that it did in years past. Interest Rates – When a bank's interest rate matches the inflation rate, savers break even. When a bank's in ...
Economics 330 (Kelly)
... UNCERTAIN: First, this depends on your view of money demand. Generally, though, changes in money supply do affect Y. However, the direction of causation in practice is not at all obvious. One can justify that output growth leads money supply growth. See Ch. 25 for a complete explanation. 8. If an ec ...
... UNCERTAIN: First, this depends on your view of money demand. Generally, though, changes in money supply do affect Y. However, the direction of causation in practice is not at all obvious. One can justify that output growth leads money supply growth. See Ch. 25 for a complete explanation. 8. If an ec ...
Macroeconomics
... Consumer Price Index The Consumer Price Index is what we use to measure the cost of living in the United States It is a measure of 300 goods and services that is referred to as a “market basket” This is how we measure the difference between nominal and real costs This is also how we measure ...
... Consumer Price Index The Consumer Price Index is what we use to measure the cost of living in the United States It is a measure of 300 goods and services that is referred to as a “market basket” This is how we measure the difference between nominal and real costs This is also how we measure ...
HW4 - IS MU
... Show the resulting change in interest rate. d) Draw a graph similar to the one in part a) to show the effect of open-market operation on output and the price level. 2. Suppose economists observe that an increase in government spending of $10 billion raises the total demand for goods and services by ...
... Show the resulting change in interest rate. d) Draw a graph similar to the one in part a) to show the effect of open-market operation on output and the price level. 2. Suppose economists observe that an increase in government spending of $10 billion raises the total demand for goods and services by ...
ANSWERS TO END-OF-CHAPTER QUESTIONS
... A noted television comedian once defined inflation as follows: “Inflation? That means your money today won’t buy as much as it would have during the depression when you didn’t have any.” Was his definition accurate? Humorous, but largely correct! (Last Word) Suppose that stock prices fall by 10 perc ...
... A noted television comedian once defined inflation as follows: “Inflation? That means your money today won’t buy as much as it would have during the depression when you didn’t have any.” Was his definition accurate? Humorous, but largely correct! (Last Word) Suppose that stock prices fall by 10 perc ...
File
... • Education: less educated more unemployed • Duration: long-period unemployment (at least 15 weeks) is less than overall unemployment rate, but it rises during recessions ...
... • Education: less educated more unemployed • Duration: long-period unemployment (at least 15 weeks) is less than overall unemployment rate, but it rises during recessions ...
Economics final review questions part II.
... What are some ways to measure economic performance? What are economic indicators used for? Define GDP What are the different types of economic indicators and what does each show? What is the consumer price index (CPI), how is it determined, and what does it show? Know the different parts of the busi ...
... What are some ways to measure economic performance? What are economic indicators used for? Define GDP What are the different types of economic indicators and what does each show? What is the consumer price index (CPI), how is it determined, and what does it show? Know the different parts of the busi ...
Chapter 13 - Fort Bend ISD
... indicator of the health of the economy. • The Bureau of Labor Statistics polls a sample of the population to determine how many people are employed and unemployed. • The unemployment rate is the percentage of the nation’s labor force that is unemployed. • The unemployment rate is only a national ave ...
... indicator of the health of the economy. • The Bureau of Labor Statistics polls a sample of the population to determine how many people are employed and unemployed. • The unemployment rate is the percentage of the nation’s labor force that is unemployed. • The unemployment rate is only a national ave ...
Temporarily Unstable Government Debt and Inflation
... 1/ Medium-and-long-term debt in domestic currency, non-indexed. 2/ GDP deflator inflation, average over the period as projected in the WEO. 3/ This implies an increase in inflation by 4.2 percentage points over projected average inflation of 1.8 percent. ...
... 1/ Medium-and-long-term debt in domestic currency, non-indexed. 2/ GDP deflator inflation, average over the period as projected in the WEO. 3/ This implies an increase in inflation by 4.2 percentage points over projected average inflation of 1.8 percent. ...
31 Economic Growth Holding Up, Inflation Poised To Edge Higher
... First, concerns on a possible shortfall in the Southwest monsoon may drive food prices higher. The weather estimated that India will receive only 84% of the 50-year average rainfall in the second half of the Jun-Sep monsoon season this year. The annual rain is the only source of irrigation for much ...
... First, concerns on a possible shortfall in the Southwest monsoon may drive food prices higher. The weather estimated that India will receive only 84% of the 50-year average rainfall in the second half of the Jun-Sep monsoon season this year. The annual rain is the only source of irrigation for much ...
HW 5.1 AP Macro – Modules 31 and 32 Directions: After reading
... passes a law requiring the central bank to use monetary policy to lower the unemployment rate to 3% and keep it there. How could the central bank achieve this goal in the short run? What would happen in the long run? Illustrate with a diagram 11. The effectiveness of monetary policy depends on how e ...
... passes a law requiring the central bank to use monetary policy to lower the unemployment rate to 3% and keep it there. How could the central bank achieve this goal in the short run? What would happen in the long run? Illustrate with a diagram 11. The effectiveness of monetary policy depends on how e ...
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.