Macro-economics of balance-sheet problems and the
... that they cannot stabilise the business cycle and prevent deflationary pressures on prices by doing so. In addition, in many countries, homeowners, firms and banks have gotten into trouble due to bursts of real-estate bubbles, particularly in Ireland and Spain, but also in the Netherlands. This has ...
... that they cannot stabilise the business cycle and prevent deflationary pressures on prices by doing so. In addition, in many countries, homeowners, firms and banks have gotten into trouble due to bursts of real-estate bubbles, particularly in Ireland and Spain, but also in the Netherlands. This has ...
The Productivity Gap: Monetary Policy, the Subprime Boom
... excessively easy in the aftermath of the dot.com collapse, and that it was so to an extent unmatched since the 1970s. The Productivity Gap measure points, furthermore, to the more specific conclusion that the Fed erred by failing to raise its target rate in response to renewed productivity growth fo ...
... excessively easy in the aftermath of the dot.com collapse, and that it was so to an extent unmatched since the 1970s. The Productivity Gap measure points, furthermore, to the more specific conclusion that the Fed erred by failing to raise its target rate in response to renewed productivity growth fo ...
Economic Fluctuations, Unemployment, and Inflation
... measured by a price index such as the GDP deflator or the consumer price index. • Inflation is generally measured at an annual rate. • When inflation is high, the year-to-year changes in the inflation rate are nearly always highly variable, making them difficult to predict. ...
... measured by a price index such as the GDP deflator or the consumer price index. • Inflation is generally measured at an annual rate. • When inflation is high, the year-to-year changes in the inflation rate are nearly always highly variable, making them difficult to predict. ...
Treasury Bill Rates in the 1970s and 1980s
... On an after-tax basis, the low rates of the 1970s stand out far more than the high 1980s rates. After-tax real rates were more than a full percentage point below zero throughout the 1974-80 period, while after-tax rates in the 1980s approximated their average value for the 1960s. This paper seeks t ...
... On an after-tax basis, the low rates of the 1970s stand out far more than the high 1980s rates. After-tax real rates were more than a full percentage point below zero throughout the 1974-80 period, while after-tax rates in the 1980s approximated their average value for the 1960s. This paper seeks t ...
secondary school improvement programme (ssip) 2015 - Sci
... bigger repayment instalments. This may indicate that the business cycle could be heading for a downward cycle, businesses might have to cut down production, unemployment may increase and economic growth will decline. ...
... bigger repayment instalments. This may indicate that the business cycle could be heading for a downward cycle, businesses might have to cut down production, unemployment may increase and economic growth will decline. ...
Macroeconomic Measurements, Part I: Prices and Unemployment
... policies in order to bring down the rate of increase in prices. Specifically, suppose prices have been rising 8 percent a year and the government wants to bring the rate down to an annual increase of 1 percent a year. Looking at changes in a price index will tell the government whether or not its po ...
... policies in order to bring down the rate of increase in prices. Specifically, suppose prices have been rising 8 percent a year and the government wants to bring the rate down to an annual increase of 1 percent a year. Looking at changes in a price index will tell the government whether or not its po ...
FINALTERM EXAMINATION Fall 2009 ECO401
... ► The price level and the real domestic output purchased. ► The price level and the real domestic output produced. ► The price level which producers are willing to accept and the price level purchasers are willing to pay. ► The real domestic output purchased and the real domestic output produced. Qu ...
... ► The price level and the real domestic output purchased. ► The price level and the real domestic output produced. ► The price level which producers are willing to accept and the price level purchasers are willing to pay. ► The real domestic output purchased and the real domestic output produced. Qu ...
Inflation Dynamics in Sri Lanka: An Empirical Analysis
... significance in affecting prices (Cooray, 2008). Further, after liberalisation, there was a rapid increase in public investment. This resulted in a rapid growth in the money supply. According to Weerasekara (1992), there has been a rapid growth in the nominal money supply and continuous depreciation ...
... significance in affecting prices (Cooray, 2008). Further, after liberalisation, there was a rapid increase in public investment. This resulted in a rapid growth in the money supply. According to Weerasekara (1992), there has been a rapid growth in the nominal money supply and continuous depreciation ...
Inflation Uncertainty, Investment Spending, and Fiscal Policy
... real BFI to real GNP fell moderately for several quarters and then began to move upward, reaching their previous cyclical peaks 16 quarters and 14 quarters, respectively, after the downturn's beginning. The recent investment shortfall shown in Chart 1 has occurred during a period when inflation has ...
... real BFI to real GNP fell moderately for several quarters and then began to move upward, reaching their previous cyclical peaks 16 quarters and 14 quarters, respectively, after the downturn's beginning. The recent investment shortfall shown in Chart 1 has occurred during a period when inflation has ...
Homework for Chapter 11 answers
... The aggregate demand (AD) curve shows that as the price level drops, purchases of real domestic output increase. The AD curve slopes downward for three reasons. The first is the interest-rate effect. We assume the supply of money to be fixed. When the price level increases, more money is needed to m ...
... The aggregate demand (AD) curve shows that as the price level drops, purchases of real domestic output increase. The AD curve slopes downward for three reasons. The first is the interest-rate effect. We assume the supply of money to be fixed. When the price level increases, more money is needed to m ...
Domestic and International Macroeconomic Effects of
... liquidity includes not only domestic money, but also domestic and US government bonds. Unlike CCDLS, we distinguish between short- and long-term government bonds, the latter formalized as perpetuities following Woodford (2001). We also assume that EA sovereign bonds are internationally traded and ar ...
... liquidity includes not only domestic money, but also domestic and US government bonds. Unlike CCDLS, we distinguish between short- and long-term government bonds, the latter formalized as perpetuities following Woodford (2001). We also assume that EA sovereign bonds are internationally traded and ar ...
Chapter 21 Stabilization Policy with Backward
... even if the wedge between the marginal productivity of labour and the marginal value of leisure were to stay constant, business cycles would still cause welfare losses, because fluctuations in real output generate fluctuations in real income and consumption. Since the marginal utility of consumption ...
... even if the wedge between the marginal productivity of labour and the marginal value of leisure were to stay constant, business cycles would still cause welfare losses, because fluctuations in real output generate fluctuations in real income and consumption. Since the marginal utility of consumption ...
Document
... When economists state that in the long run prices are flexible they mean (a) inflation must be zero in the long run. (b) in the long run firms adjust their prices to reflect changes in cost or demand. (c) changes in the nominal money supply have greater impact on the level of economic activity in th ...
... When economists state that in the long run prices are flexible they mean (a) inflation must be zero in the long run. (b) in the long run firms adjust their prices to reflect changes in cost or demand. (c) changes in the nominal money supply have greater impact on the level of economic activity in th ...
Power Point-Chapter 17
... • If the Federal Reserve causes the money supply to grow too rapidly, individuals will spend the additional dollars on a limited supply of goods and services. • This increased demand will cause prices to rise. ...
... • If the Federal Reserve causes the money supply to grow too rapidly, individuals will spend the additional dollars on a limited supply of goods and services. • This increased demand will cause prices to rise. ...
July Massachusetts
... The authors thank Eric S. Rosengren, James A. Wilcox and participants at seminars at the Reserve Bank of Australia and the University of South Carolina Professor Hendershott also thanks the Australian for their helpful comments. Graduate School of Management of the University of New South Wales for ...
... The authors thank Eric S. Rosengren, James A. Wilcox and participants at seminars at the Reserve Bank of Australia and the University of South Carolina Professor Hendershott also thanks the Australian for their helpful comments. Graduate School of Management of the University of New South Wales for ...
Chapter 29
... quantity of real GDP demanded and the price level when all other influences on expenditure plans remain the same. Other things remaining the same, • When the price level rises, the quantity of real GDP demanded decreases. • When the price level falls, the quantity of real GDP demanded increases. © 2 ...
... quantity of real GDP demanded and the price level when all other influences on expenditure plans remain the same. Other things remaining the same, • When the price level rises, the quantity of real GDP demanded decreases. • When the price level falls, the quantity of real GDP demanded increases. © 2 ...
18.3 aggregate demand
... do you think real GDP is currently above, below, or at potential GDP? Talk to your class mates about where they see the U.S. economy right now. Is there a consensus? What are the main pressures on AS and AD right now? Do you think that real GDP will expand more quickly or more slowly over the coming ...
... do you think real GDP is currently above, below, or at potential GDP? Talk to your class mates about where they see the U.S. economy right now. Is there a consensus? What are the main pressures on AS and AD right now? Do you think that real GDP will expand more quickly or more slowly over the coming ...
HKUMacroch02_5e
... Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall • Macroeconomics, 5/e • Olivier Blanchard ...
... Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall • Macroeconomics, 5/e • Olivier Blanchard ...
This PDF is a selection from a published volume from
... dence of asymmetric loss functions at the Federal Reserve, at the European Central Bank, and (prior to monetary union) at the Bundesbank. Asymmetric policy preferences also underlie the opportunistic disinflation argument of Orphanides and Wilcox (2002). In this paper, all asymmetries arise from non ...
... dence of asymmetric loss functions at the Federal Reserve, at the European Central Bank, and (prior to monetary union) at the Bundesbank. Asymmetric policy preferences also underlie the opportunistic disinflation argument of Orphanides and Wilcox (2002). In this paper, all asymmetries arise from non ...
Chapter 1 : Introduction to Macroeconomics 1) Which of the
... C) Wages are inflexible. D) Wages adjust both upward and downward. Answer: D 4) According to the Classical model, unemployment A) could not persist because wages would rise to eliminate the excess supply of labor. B) could not persist because wages would fall to eliminate the excess supply of labor. ...
... C) Wages are inflexible. D) Wages adjust both upward and downward. Answer: D 4) According to the Classical model, unemployment A) could not persist because wages would rise to eliminate the excess supply of labor. B) could not persist because wages would fall to eliminate the excess supply of labor. ...
NBER WORKING PAPER SERIES HOW DO MONETARY AND FISCAL POLICY
... fiscal policy. Twelve countries – each with its own tax and spending policies – are now married by a common monetary policy. Does the common monetary policy have the same effect in each of the countries, and the same implications for fiscal policy? Or, does it affect high debt countries in a differe ...
... fiscal policy. Twelve countries – each with its own tax and spending policies – are now married by a common monetary policy. Does the common monetary policy have the same effect in each of the countries, and the same implications for fiscal policy? Or, does it affect high debt countries in a differe ...
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.