Lecture 2 PPT - Kleykamp in Taiwan
... (2)Pushing short term rates to zero (and making them negative in real terms) has decreased the return to private lenders at this segment of the yield curve. The effect on private financing of wage bills and inventory and cash management is difficult to sort out. The market has been distorted and thi ...
... (2)Pushing short term rates to zero (and making them negative in real terms) has decreased the return to private lenders at this segment of the yield curve. The effect on private financing of wage bills and inventory and cash management is difficult to sort out. The market has been distorted and thi ...
summary of learning goals
... measured by the output of goods and services. Thus, businesses and not-for-profit organizations help create our standard of living. Our quality of life is not simply the amount of goods and services available for consumers but rather the society’s general level of happiness. Economists refer to the ...
... measured by the output of goods and services. Thus, businesses and not-for-profit organizations help create our standard of living. Our quality of life is not simply the amount of goods and services available for consumers but rather the society’s general level of happiness. Economists refer to the ...
Inflation vs Deflation Argument
... price increases (but somehow this eventually affects consumer prices). • Admit that “printing” too much money causes inflation (Weimar Germany, Zimbabwe). • Claim interest rates below inflation rate aren’t inflationary if bank credit declining enough and inflation can’t exist without (national) wage ...
... price increases (but somehow this eventually affects consumer prices). • Admit that “printing” too much money causes inflation (Weimar Germany, Zimbabwe). • Claim interest rates below inflation rate aren’t inflationary if bank credit declining enough and inflation can’t exist without (national) wage ...
Inflation and Price Stability
... goods and services such as food, housing, transportation, furniture, clothing, recreation, and other items that Canadians typically buy. The inflation rate is expressed as the year-over-year percentage increase in the CPI. For example, if the cost of the consumer basket rises, say, from $100 in 2007 ...
... goods and services such as food, housing, transportation, furniture, clothing, recreation, and other items that Canadians typically buy. The inflation rate is expressed as the year-over-year percentage increase in the CPI. For example, if the cost of the consumer basket rises, say, from $100 in 2007 ...
Name:
... Question 1: Suppose that you are a member of the Board of Governors of the Federal Reserve System. The economy is experiencing a sharp rise in the inflation rate. What change in the Federal funds rate would you recommend? How would your recommended change get accomplished? What impact would the acti ...
... Question 1: Suppose that you are a member of the Board of Governors of the Federal Reserve System. The economy is experiencing a sharp rise in the inflation rate. What change in the Federal funds rate would you recommend? How would your recommended change get accomplished? What impact would the acti ...
Economics considerations for new and existing businesses
... card or overdraft more expensive. This will lower profit or lead to firms increasing prices. 3. If there is expectation or an increase in the interest rate it discourages firms from investing in capital goods like machinery. ...
... card or overdraft more expensive. This will lower profit or lead to firms increasing prices. 3. If there is expectation or an increase in the interest rate it discourages firms from investing in capital goods like machinery. ...
MONETARY POLICY IN UKRAINE
... relatively restrictive; as disinflation will only be slow (high inflation inertia) and inflation will stay in doubledigit territory for some time. This will also keep inflation expectations high. According to the enterprise survey conducted by the NBU, inflation expectations (CPI growth in the next ...
... relatively restrictive; as disinflation will only be slow (high inflation inertia) and inflation will stay in doubledigit territory for some time. This will also keep inflation expectations high. According to the enterprise survey conducted by the NBU, inflation expectations (CPI growth in the next ...
1. Cost-push inflation
... Description: In this case, the overall price level increases due to higher costs of production which reflects in terms of increased prices of goods and commodities which majorly use these inputs. This is inflation triggered from supply side i.e. because of less supply. (The opposite effect of this i ...
... Description: In this case, the overall price level increases due to higher costs of production which reflects in terms of increased prices of goods and commodities which majorly use these inputs. This is inflation triggered from supply side i.e. because of less supply. (The opposite effect of this i ...
... of prices and wages. What changes in their behavior are indicated by the data and how can they be explained? Next, the models that imply that price flexibility may be destabilizing are identified and assessed. This requires in particular an analysis of the role of changes in interest rates and price ...
AP Macroeconomics
... Using the above model, in the long-run nominal wages will rise so the AS curve will shift from _____________________. The equilibrium will be at point _____ with the price level at ________ and real output at ________. Using the previous model, now assume that the economy is initially in equilib ...
... Using the above model, in the long-run nominal wages will rise so the AS curve will shift from _____________________. The equilibrium will be at point _____ with the price level at ________ and real output at ________. Using the previous model, now assume that the economy is initially in equilib ...
UE and Inflation Outline
... 4. GDP Gap and Okun’s Law a. Happens when the economy fails to provide jobs for everyone who is looking for them b. GDP Gap 1. defined difference between actual and potential GDP i. when the unemployment rate is above the NRU a negative gdp gap is formed because the gdp is falling short of where it ...
... 4. GDP Gap and Okun’s Law a. Happens when the economy fails to provide jobs for everyone who is looking for them b. GDP Gap 1. defined difference between actual and potential GDP i. when the unemployment rate is above the NRU a negative gdp gap is formed because the gdp is falling short of where it ...
Inflation practice
... Consumer price index (CPI) measures a. gross domestic product. c. unemployment. b. inflation. d. aggregate demand. The “market basket” that is used by the Bureau of Labor Statistics to calculate prices is made up of which of the following? a. food items only b. nonfood items only c. typical goods an ...
... Consumer price index (CPI) measures a. gross domestic product. c. unemployment. b. inflation. d. aggregate demand. The “market basket” that is used by the Bureau of Labor Statistics to calculate prices is made up of which of the following? a. food items only b. nonfood items only c. typical goods an ...
Chapter 11 Money and the Economy
... Inflation refers to an increase in the general price level. One-shot inflation is a one-time increase in the price level. Continued inflation is continuous increases in the price level (CPI rises each year) ...
... Inflation refers to an increase in the general price level. One-shot inflation is a one-time increase in the price level. Continued inflation is continuous increases in the price level (CPI rises each year) ...
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.