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Chapter 006 notes
... the individual who is free to sell them for whatever price they can convince a buyer to pay The buyer is free to seek out the best deal possible 2. Free competition Businesses are free to produce whatever they want, however, many businesses can produce the same goods Competition helps keep pri ...
... the individual who is free to sell them for whatever price they can convince a buyer to pay The buyer is free to seek out the best deal possible 2. Free competition Businesses are free to produce whatever they want, however, many businesses can produce the same goods Competition helps keep pri ...
Financial crisis in Latin America
... A crawling peg type of exchange rate regime was used to bring inflation down gradually, but the system was operated flexibly to avoid extreme real appreciation. The Chilean central bank was made independent of the fiscal authorities in 1990. That action further solidified the commitment not to m ...
... A crawling peg type of exchange rate regime was used to bring inflation down gradually, but the system was operated flexibly to avoid extreme real appreciation. The Chilean central bank was made independent of the fiscal authorities in 1990. That action further solidified the commitment not to m ...
ECONOMIC GOALS
... 2. It is executed by the Federal Reserve. 3. Decisions are made by the federal open market committee. 4. Interest rates have increased by .0075 within the last year. 5. The effect will be to slow down the rate of growth of output. 6. The effect will be felt on durable goods because their purchase is ...
... 2. It is executed by the Federal Reserve. 3. Decisions are made by the federal open market committee. 4. Interest rates have increased by .0075 within the last year. 5. The effect will be to slow down the rate of growth of output. 6. The effect will be felt on durable goods because their purchase is ...
Business Cycle Theory
... – prices go up b/c workers paid more money – workers want raises to pay higher prices – prices rise – higher wages – ETC. . . ...
... – prices go up b/c workers paid more money – workers want raises to pay higher prices – prices rise – higher wages – ETC. . . ...
Economic and monetary developments 2007 was the third
... The continuing buoyant growth of the Czech economy was accompanied by an increase in demand for labour in 2007 and at the start of 2008, which created the right conditions for rising employment. Nevertheless, some sectors experienced shortages of workers in the required occupations, and these were o ...
... The continuing buoyant growth of the Czech economy was accompanied by an increase in demand for labour in 2007 and at the start of 2008, which created the right conditions for rising employment. Nevertheless, some sectors experienced shortages of workers in the required occupations, and these were o ...
Course Outline School of Business and Economics ECON 2950
... 3. Classical Theory: Money and Inflation • Quantity theory of money • Inflation and interest rates • Costs of inflation • The classical dichotomy 4. Classical Theory: The Open Economy • Savings and investment • Nominal and real exchange rates • Purchasing power parity 5. Unemployment • Natural rate ...
... 3. Classical Theory: Money and Inflation • Quantity theory of money • Inflation and interest rates • Costs of inflation • The classical dichotomy 4. Classical Theory: The Open Economy • Savings and investment • Nominal and real exchange rates • Purchasing power parity 5. Unemployment • Natural rate ...
Inflation - Murphonomics
... An extreme form of inflation occurs when prices rise at a phenomenal rate- this is known as hyperinflation. Under conditions of hyperinflation people lose confidence in money’s ability to carry out its functions and it becomes unacceptable as a medium of exchange. Often people are forced to use othe ...
... An extreme form of inflation occurs when prices rise at a phenomenal rate- this is known as hyperinflation. Under conditions of hyperinflation people lose confidence in money’s ability to carry out its functions and it becomes unacceptable as a medium of exchange. Often people are forced to use othe ...
OCM 2012 Spring Folio - Q4 Wealth Management
... multiplex. Of these, only one is a universal inflation item. (The answer in the paragraph after next. Hint: It’s not the Cheerios.) With housing cost and the associated inflation, for example, location has a bigger impact than just the macro numbers. Housing in all of North Dakota is difficult to co ...
... multiplex. Of these, only one is a universal inflation item. (The answer in the paragraph after next. Hint: It’s not the Cheerios.) With housing cost and the associated inflation, for example, location has a bigger impact than just the macro numbers. Housing in all of North Dakota is difficult to co ...
Tutorial
... 7. Which of the following would overstate the consumer price index? a. Substitution bias. b. Improving quality of products. c. Neither (a) nor (b). d. Both (a) and (b). D. Substitution bias refers to the law of demand in which people buy less when the price rises. However, the CPI is based on a fix ...
... 7. Which of the following would overstate the consumer price index? a. Substitution bias. b. Improving quality of products. c. Neither (a) nor (b). d. Both (a) and (b). D. Substitution bias refers to the law of demand in which people buy less when the price rises. However, the CPI is based on a fix ...
Study Guide 1
... macroeconomic equilibrium, fiscal and monetary policy, flexibility of prices and wages, etc.) Discuss the difference between the Keynesian and Monetarist LRAS curves and why and how their assumptions guide their respective shapes Calculate the multiplier given either MPC, MPS, or other relevant data ...
... macroeconomic equilibrium, fiscal and monetary policy, flexibility of prices and wages, etc.) Discuss the difference between the Keynesian and Monetarist LRAS curves and why and how their assumptions guide their respective shapes Calculate the multiplier given either MPC, MPS, or other relevant data ...
Price Indexes and the Inflation Rate
... When the rate exceeds 5%, the inflation rate itself becomes unstable and unpredictable. In order to study long-term trends in inflation rate, economists calculate the core inflation rate. Core inflation rate - The rate of inflation excluding the effects of food and energy prices. Hyperinflation - In ...
... When the rate exceeds 5%, the inflation rate itself becomes unstable and unpredictable. In order to study long-term trends in inflation rate, economists calculate the core inflation rate. Core inflation rate - The rate of inflation excluding the effects of food and energy prices. Hyperinflation - In ...
questions to the Lecture 5
... 17. State 4 basic differences between CPI and GDP deflator. 18. Why does CPI overstate inflation? – explain on the example 19. Why does GDP deflator understate inflation? – explain on the example 20. What is producer price index? What interesting feature, related to the prediction of overall inflati ...
... 17. State 4 basic differences between CPI and GDP deflator. 18. Why does CPI overstate inflation? – explain on the example 19. Why does GDP deflator understate inflation? – explain on the example 20. What is producer price index? What interesting feature, related to the prediction of overall inflati ...
Chapter 4 Global Economies
... this chart tell you about the United States' GDP and its economy in general? How do you think GDP would be affected by a recession? 10. Inflation Rate Inflation refers to rising prices. A low inflation rate (1-5 percent) shows that an economy is stable. Controlling inflation is one of a government's ...
... this chart tell you about the United States' GDP and its economy in general? How do you think GDP would be affected by a recession? 10. Inflation Rate Inflation refers to rising prices. A low inflation rate (1-5 percent) shows that an economy is stable. Controlling inflation is one of a government's ...
SRI LANKA UNDER EMBARGO UNTIL 07.00 GMT, WEDNESDAY, 6 AUGUST 2014
... Despite the recent improvement, the current account shortfall remains large. This is reflected in a notable national savings-investment gap. Low domestic savings are partly linked to a lack of public savings, as evident in persistent fiscal deficits. Enhancing private and public savings would help s ...
... Despite the recent improvement, the current account shortfall remains large. This is reflected in a notable national savings-investment gap. Low domestic savings are partly linked to a lack of public savings, as evident in persistent fiscal deficits. Enhancing private and public savings would help s ...
AP Macroeconomics
... Monetary policy influences AD/AS by effecting interest rates. Higher interest rates decrease AD. Lower interest rates increase AD. Theory of rational expectations-Increasing the MS on its own doesn’t increase AD because if the inflation is ...
... Monetary policy influences AD/AS by effecting interest rates. Higher interest rates decrease AD. Lower interest rates increase AD. Theory of rational expectations-Increasing the MS on its own doesn’t increase AD because if the inflation is ...
Inflation - IGCSEBus
... a general rise in prices measured against a standard level of purchasing power. The most well known measures of Inflation are the CPI which measures consumer prices, and the GDP deflator, which measures inflation in the whole of the domestic economy. ...
... a general rise in prices measured against a standard level of purchasing power. The most well known measures of Inflation are the CPI which measures consumer prices, and the GDP deflator, which measures inflation in the whole of the domestic economy. ...
Unit 6 RP
... a. What is the price level? What is the velocity of money? b. Suppose that velocity is constant and the economy’s output of goods and services rises by 5% each year. What will happen to nominal GDP and the price level the next year if the FED keeps the money supply constant? c. What money supply sho ...
... a. What is the price level? What is the velocity of money? b. Suppose that velocity is constant and the economy’s output of goods and services rises by 5% each year. What will happen to nominal GDP and the price level the next year if the FED keeps the money supply constant? c. What money supply sho ...
14.02 Principles of Macroeconomics Spring 03 Quiz 2 Thursday, April 10, 2003
... 8. The modified Phillips curve tell us that the only way to reduce inflation is through a) unemployment rates higher than the natural rate b) expansionary fiscal policy c) unemployment rates lower than the natural rate d) contractionary fiscal policy 9. Stock prices increase if: a) Money supply incr ...
... 8. The modified Phillips curve tell us that the only way to reduce inflation is through a) unemployment rates higher than the natural rate b) expansionary fiscal policy c) unemployment rates lower than the natural rate d) contractionary fiscal policy 9. Stock prices increase if: a) Money supply incr ...
Effects of Inflation
... Hyperinflation is when a nation’s currency drastically looses value. Money becomes worthless. • Control of inflation Control of inflation requires government intervention. It is not easy to achieve, given all the factors that comes to play. • Measuring inflation Inflation is measured based o ...
... Hyperinflation is when a nation’s currency drastically looses value. Money becomes worthless. • Control of inflation Control of inflation requires government intervention. It is not easy to achieve, given all the factors that comes to play. • Measuring inflation Inflation is measured based o ...
5. Approaches to policy and macroeconomic context
... Keynes shifted macroeconomic thought from a focus on AS to AD. Keynesian economists emphasise the use of demand-side policies, fiscal and monetary, to close gaps between actual and potential output. The 2008 financial crisis caused an increase in popularity of Keynesian beliefs. Keynesians believe t ...
... Keynes shifted macroeconomic thought from a focus on AS to AD. Keynesian economists emphasise the use of demand-side policies, fiscal and monetary, to close gaps between actual and potential output. The 2008 financial crisis caused an increase in popularity of Keynesian beliefs. Keynesians believe t ...
Notes on Unemployment – Chapter 13 Types of Unemployment 1
... The demand-pull theory states that inflation occurs when demand for goods and services exceeds existing supplies. (think “beanie babies” so popular it pulls the normal prices higher) ...
... The demand-pull theory states that inflation occurs when demand for goods and services exceeds existing supplies. (think “beanie babies” so popular it pulls the normal prices higher) ...
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.