The IS-LM/AD-AS Model: A General Framework for Macroeconomic
... • The aggregate demand curve: ¾ The AD curve shows the relationship between the quantity of goods demanded and the price level when the goods market and the asset market are in equilibrium. ...
... • The aggregate demand curve: ¾ The AD curve shows the relationship between the quantity of goods demanded and the price level when the goods market and the asset market are in equilibrium. ...
Aggregate Demand and Aggregate Supply
... around long-run trends. • These fluctuations are irregular and largely unpredictable. • When recessions occur, real GDP and other measures of income, spending, and production fall, and unemployment rises. ...
... around long-run trends. • These fluctuations are irregular and largely unpredictable. • When recessions occur, real GDP and other measures of income, spending, and production fall, and unemployment rises. ...
CHAPTER 8 Introduction to Economic Growth and
... 25. The production of durable goods varies more than the production of nondurable goods because: A) durables purchases are nonpostponable. B) durables purchases are postponable. C) the producers of nondurables have monopoly power. D) producers of durables are highly competitive. ...
... 25. The production of durable goods varies more than the production of nondurable goods because: A) durables purchases are nonpostponable. B) durables purchases are postponable. C) the producers of nondurables have monopoly power. D) producers of durables are highly competitive. ...
IOSR Journal of Economics and Finance (IOSR-JEF)
... income of economic agents who in turn are expected to boost their expenditures of domestic goods and services thereby inducing an increase in output and prices. Tax cuts increase output. Fiscal authorities can provide money-financed tax cuts in collaboration with monetary authorities. Eggerston cont ...
... income of economic agents who in turn are expected to boost their expenditures of domestic goods and services thereby inducing an increase in output and prices. Tax cuts increase output. Fiscal authorities can provide money-financed tax cuts in collaboration with monetary authorities. Eggerston cont ...
the research on the impact of the changes of commodity price level
... influence of price changes of commodities to general price level in Lithuania. The aim of the research is to analyze the variation of general price level in Lithuania and changes the prices of commodities in the world„s commodity exchange markets, identify the influence of the price changes of commo ...
... influence of price changes of commodities to general price level in Lithuania. The aim of the research is to analyze the variation of general price level in Lithuania and changes the prices of commodities in the world„s commodity exchange markets, identify the influence of the price changes of commo ...
Chapter 12 Essentials of Economics Paul Gregory 6t Lecture Notes
... powerful analytical tools of macro-economy. At the macro level it is the price level and the economy’s total output that are determined by the interaction of aggregate supply and aggregate demand. Because total output determines the amount of employment and unemployment, movements in them (employmen ...
... powerful analytical tools of macro-economy. At the macro level it is the price level and the economy’s total output that are determined by the interaction of aggregate supply and aggregate demand. Because total output determines the amount of employment and unemployment, movements in them (employmen ...
2 AGGREGATE SUPPLY AND DEMAND: A SIMPLE FRAMEWORK
... nature of elastic short-run supply. One possibility is that firms face costs of changing their prices. These costs are often called “menu costs,” as in the costs a restaurant faces when it is forced to reprint all of its menus to reflect changed prices. In that case, if there is upward pressure on n ...
... nature of elastic short-run supply. One possibility is that firms face costs of changing their prices. These costs are often called “menu costs,” as in the costs a restaurant faces when it is forced to reprint all of its menus to reflect changed prices. In that case, if there is upward pressure on n ...
NBER WORKING PAPER SERIES CROSS-BORDER BANKING Jonathan Eaton Working Paper No. 4686
... A second form competition is between alternative currencies of denomination. Banks may offer loans or accept deposits denominated in foreign currencies. Examples are the dollar-denominated deposits introduced at various points in Mexico and Peru, and the array of deposit and loan denominations provi ...
... A second form competition is between alternative currencies of denomination. Banks may offer loans or accept deposits denominated in foreign currencies. Examples are the dollar-denominated deposits introduced at various points in Mexico and Peru, and the array of deposit and loan denominations provi ...
Practice Set 1
... 2. The short-run aggregate supply curve is positively sloped because: A. business people suffer from money illusion. B. wages are sticky or don't readily adjust to changes in economic conditions in the short run. C. workers care about nominal wages, not real wages. D. of diminishing returns to labor ...
... 2. The short-run aggregate supply curve is positively sloped because: A. business people suffer from money illusion. B. wages are sticky or don't readily adjust to changes in economic conditions in the short run. C. workers care about nominal wages, not real wages. D. of diminishing returns to labor ...
Macro Economics - RuralNaukri.com
... September 11 terrorist attacks, growth rates fell further. In India, the GDP growth rate dropped to 5.2 percent in 2000-01 from 6.4 percent in 1999-2000. However, despite fluctuations in the short run, most of the world’s economies have recorded a steady growth in real GDP in the recent past. Intere ...
... September 11 terrorist attacks, growth rates fell further. In India, the GDP growth rate dropped to 5.2 percent in 2000-01 from 6.4 percent in 1999-2000. However, despite fluctuations in the short run, most of the world’s economies have recorded a steady growth in real GDP in the recent past. Intere ...
Macro Economics
... September 11 terrorist attacks, growth rates fell further. In India, the GDP growth rate dropped to 5.2 percent in 2000-01 from 6.4 percent in 1999-2000. However, despite fluctuations in the short run, most of the world’s economies have recorded a steady growth in real GDP in the recent past. Intere ...
... September 11 terrorist attacks, growth rates fell further. In India, the GDP growth rate dropped to 5.2 percent in 2000-01 from 6.4 percent in 1999-2000. However, despite fluctuations in the short run, most of the world’s economies have recorded a steady growth in real GDP in the recent past. Intere ...
NBER WORKING PAPER SERIES USING MONETARY CONTROL 10 DAMPEN THE
... postwar business cycles. The remaining 86 percent is accounted for by changes in the growth rate of the "velocity" of money, i.e., how much ...
... postwar business cycles. The remaining 86 percent is accounted for by changes in the growth rate of the "velocity" of money, i.e., how much ...
Basic Definitions
... The GDP deflator measures the average price of output, while the consumer price index (CPI) measures the average price of consumption, or equivalently, the cost of living. – The CPI gives the cost in dollars of a specific list of goods and services over time, which attempts to represent the consum ...
... The GDP deflator measures the average price of output, while the consumer price index (CPI) measures the average price of consumption, or equivalently, the cost of living. – The CPI gives the cost in dollars of a specific list of goods and services over time, which attempts to represent the consum ...
macroeconomic policy - Faculty of Business and Economics Courses
... idle (unemployed) resources such as labor and physical capital which can be put into production process if necessary. ...
... idle (unemployed) resources such as labor and physical capital which can be put into production process if necessary. ...
In a mixed economy, what to produce and how much to produce are
... c. The federal government spends more than it collects in taxes in a given year d. High levels of unemployment use up tax collections e. Interest payments on the national debt increase from one year to the next 6. Under which of the following conditions would consumer spending most likely increase? ...
... c. The federal government spends more than it collects in taxes in a given year d. High levels of unemployment use up tax collections e. Interest payments on the national debt increase from one year to the next 6. Under which of the following conditions would consumer spending most likely increase? ...
Deflation August26
... A. A fall in the general price level, but harmful deflation is about more than that Technically, deflation is defined as a decline in the general price level. However, not all forms of deflation are created equal. As illustrated in 2009, total inflation can be pushed below zero because of large fluc ...
... A. A fall in the general price level, but harmful deflation is about more than that Technically, deflation is defined as a decline in the general price level. However, not all forms of deflation are created equal. As illustrated in 2009, total inflation can be pushed below zero because of large fluc ...
Document
... If output prices rise but money wages do not go up as quickly or as much, real wages fall. At the lower real wage, unemployment is less because the lower wage makes it profitable to hire more, now cheaper, employees than before. Hence, with increased inflation, one might expect lower unemployment in ...
... If output prices rise but money wages do not go up as quickly or as much, real wages fall. At the lower real wage, unemployment is less because the lower wage makes it profitable to hire more, now cheaper, employees than before. Hence, with increased inflation, one might expect lower unemployment in ...
course syllabus - Description
... 69. Explain the Keynesian fixed-price model and compare it to the possibility of rising prices. 70. Explain the Keynesian fixed-price model and compare it to the possibility of rising prices. 71. Demonstrate by use of a graph how government spending or reduction in taxes will shift the aggregate dem ...
... 69. Explain the Keynesian fixed-price model and compare it to the possibility of rising prices. 70. Explain the Keynesian fixed-price model and compare it to the possibility of rising prices. 71. Demonstrate by use of a graph how government spending or reduction in taxes will shift the aggregate dem ...
Chapter 8
... There are two main ways in which RGDP can grow. 1. Increase in inputs [land, labor, or capital] {33%} 2. Increase in productivity of these inputs {66%} • Size of employed labor force • Quantity of real capital • Discovery of new raw materials • Average hours of work ...
... There are two main ways in which RGDP can grow. 1. Increase in inputs [land, labor, or capital] {33%} 2. Increase in productivity of these inputs {66%} • Size of employed labor force • Quantity of real capital • Discovery of new raw materials • Average hours of work ...
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.