... price stabilization scheme. In order to guard against deflation, the government must hold an expensive stockpile of the resource. At all times, there will be political pressure from producers to purchase more of the resource and opposition to sales when the policy rule calls for sales. Further, beca ...
Taxation and the Taylor Principle
... the central bank’s inflation target. When depreciation allowances are incorporated into the model, the results are modified in an interesting way. The discounted present value of depreciation allowances enters the user cost of capital. However, because the tax system measures depreciation in histori ...
... the central bank’s inflation target. When depreciation allowances are incorporated into the model, the results are modified in an interesting way. The discounted present value of depreciation allowances enters the user cost of capital. However, because the tax system measures depreciation in histori ...
Chapter: Practice Exam for Macro Indicators Instruction:
... D) occurred in the United States in the 1970s. E) is a synonym for cost-push inflation. Ans: A Difficulty: Easy FQ: 5 SectionDef: 3-D Test Bank Version: A Topic: Hyperinflation Type: Factual ...
... D) occurred in the United States in the 1970s. E) is a synonym for cost-push inflation. Ans: A Difficulty: Easy FQ: 5 SectionDef: 3-D Test Bank Version: A Topic: Hyperinflation Type: Factual ...
Document
... So money demand doesn't vary much, no matter how well or poorly an economy is doing, but nominal money supply growth differs across countries by hundreds of percentage points, so large inflation differences must be due to money supply, not money demand Copyright © 2005 Pearson Addison-Wesley. All ...
... So money demand doesn't vary much, no matter how well or poorly an economy is doing, but nominal money supply growth differs across countries by hundreds of percentage points, so large inflation differences must be due to money supply, not money demand Copyright © 2005 Pearson Addison-Wesley. All ...
Chapter 20 Explaining Business Cycles: Aggregate Supply and
... imported raw materials such as oil will also work very much like a negative productivity shock. If the price of oil increases relative to the general price level, an economy dependent on imported oil will have to reserve a greater fraction of domestic output for exports to maintain a given volume of ...
... imported raw materials such as oil will also work very much like a negative productivity shock. If the price of oil increases relative to the general price level, an economy dependent on imported oil will have to reserve a greater fraction of domestic output for exports to maintain a given volume of ...
Chapter 2 - Test Bank 1
... in this index is a measure of inflation. Experts suggest that the CPI overstates inflation because it does not take into account the fact that people make substitutions in the goods and services they buy when prices change. To address this problem (called “substitution bias”) the BLS now changes the ...
... in this index is a measure of inflation. Experts suggest that the CPI overstates inflation because it does not take into account the fact that people make substitutions in the goods and services they buy when prices change. To address this problem (called “substitution bias”) the BLS now changes the ...
NBER WORKING PAPER SERIES SHIFTS IN THE NINETEENTH-CENTURY PHILLIPS CURVE RELATIONSHIP
... and thereby should have forced the price—surprise coefficient downward. Other factors which may have offset the influence of these improvements in information technology on the price—surprise coefficient include the reduced general price level variability due to the gold ...
... and thereby should have forced the price—surprise coefficient downward. Other factors which may have offset the influence of these improvements in information technology on the price—surprise coefficient include the reduced general price level variability due to the gold ...
THE RELATIONSHIP BETWEEN CONSUMER PRICE INDEX (CPI
... Producer price index is differs from consumer price index. Wherefore, the two indices are similar in fashion. Change in the PPI will forecast a change in the CPI. However, when the CPI show a change of a significantly different direction compared to the PPI. The reason is the different of definition ...
... Producer price index is differs from consumer price index. Wherefore, the two indices are similar in fashion. Change in the PPI will forecast a change in the CPI. However, when the CPI show a change of a significantly different direction compared to the PPI. The reason is the different of definition ...
Beyond Lift-Off Scenarios for the Federal Funds Rate
... (Exhibit 3). Even with optimistic assumptions about the pace of jobs growth and the number of these jobs that ultimately are filled, this gap could take roughly 13 to 24 months to close. Adding to ambiguity about the health of the labor market is persistently weak wage growth. The two most commonly ...
... (Exhibit 3). Even with optimistic assumptions about the pace of jobs growth and the number of these jobs that ultimately are filled, this gap could take roughly 13 to 24 months to close. Adding to ambiguity about the health of the labor market is persistently weak wage growth. The two most commonly ...
ODCM Monthly Newsletter - March 2017
... increasingly confident to spend and should remain a key support for the U.S. economy this year as job gains eat up slack and push wages higher. The reduction in slack would also appear to be manifesting in higher prices. Both the core CPI and PPI measures surpassed expectations with the headline con ...
... increasingly confident to spend and should remain a key support for the U.S. economy this year as job gains eat up slack and push wages higher. The reduction in slack would also appear to be manifesting in higher prices. Both the core CPI and PPI measures surpassed expectations with the headline con ...
How Powerful Is Monetary Policy in the Long Run?
... believed fiscal policy was the most powerful tool a government could use to lift the economy out of a recession or depression. In fact, his theory predicted that under certain conditions increases in the money supply would be unable to drive interest rates down low enough to stimulate economic activ ...
... believed fiscal policy was the most powerful tool a government could use to lift the economy out of a recession or depression. In fact, his theory predicted that under certain conditions increases in the money supply would be unable to drive interest rates down low enough to stimulate economic activ ...
THE LAGS IN EFFECT OF MONETARY POLICY: A CASE STUDY
... monetary and supply side factors of inflation in Pakistan. They also identified factors that helped to explain and forecast inflation in Pakistan. This study applied Cointegration and Vector Error correction mechanism covering a high frequency data set over the period of January 1998 to June 2005 to ...
... monetary and supply side factors of inflation in Pakistan. They also identified factors that helped to explain and forecast inflation in Pakistan. This study applied Cointegration and Vector Error correction mechanism covering a high frequency data set over the period of January 1998 to June 2005 to ...
Monetary Policy Statement December 2008 Contents
... Inflation is abating here and overseas as a consequence of these developments. We now have more confidence that annual inflation will return comfortably inside the target band of 1 to 3 percent some time in the first half of 2009 and remain there over the medium term. However, we still have concerns ...
... Inflation is abating here and overseas as a consequence of these developments. We now have more confidence that annual inflation will return comfortably inside the target band of 1 to 3 percent some time in the first half of 2009 and remain there over the medium term. However, we still have concerns ...
ECON-205: Principles of Macroeconomics (Classroom)
... 35. Discuss the Federal Reserve System 36. Define when it was established and why. DISCUSS THE TOOLS OF MONETARY POLICY INCLUDING THE DISCOUNT RATE AND RESERVE REQUIREMENTS 37. Discuss monetary policy and what tools are required are used to expand or contract the money supply. 38. Define the discoun ...
... 35. Discuss the Federal Reserve System 36. Define when it was established and why. DISCUSS THE TOOLS OF MONETARY POLICY INCLUDING THE DISCOUNT RATE AND RESERVE REQUIREMENTS 37. Discuss monetary policy and what tools are required are used to expand or contract the money supply. 38. Define the discoun ...
article - Federal Reserve Bank of Richmond
... monetary outcomes tend to come from having a fiscal authorincorrectly. ity lean on the central bank to print money. People think there’s this slippery slope in that if the Federal Reserve starts Leeper: All the active/passive framework is saying is that for to pay attention to debt, then the next th ...
... monetary outcomes tend to come from having a fiscal authorincorrectly. ity lean on the central bank to print money. People think there’s this slippery slope in that if the Federal Reserve starts Leeper: All the active/passive framework is saying is that for to pay attention to debt, then the next th ...
Document
... GDP, but consumption tends to be less volatile and investment more volatile than GDP. ...
... GDP, but consumption tends to be less volatile and investment more volatile than GDP. ...
PL 1 - Alvinisd.net
... SHORT AND LONG RUN PHILLIPS CURVES • In the years following Phillips' 1958 paper, many economists in the advanced industrial countries believed that his results showed that there was a permanently stable relationship between inflation and unemployment. • One implication of this for government policy ...
... SHORT AND LONG RUN PHILLIPS CURVES • In the years following Phillips' 1958 paper, many economists in the advanced industrial countries believed that his results showed that there was a permanently stable relationship between inflation and unemployment. • One implication of this for government policy ...
Inflation targeting, economic performance, and income distribution: a
... growth, higher levels of capacity utilization, and a somehow less unbalanced functional and personal distribution of income. Although several mainstream economists consider output stabilization to some extent, they usually neglect capacity utilization and income distribution, especially with respect ...
... growth, higher levels of capacity utilization, and a somehow less unbalanced functional and personal distribution of income. Although several mainstream economists consider output stabilization to some extent, they usually neglect capacity utilization and income distribution, especially with respect ...
This PDF is a selection from an out-of-print volume from... of Economic Research Volume Title: Exchange Rate Theory and Practice
... in fact lead to an increase in interest rates for a sustained period of time because of a liquidity squeeze. The squeeze could result from the persistence of inflation either because monetary restraint has no effect on price expectations or because long-term contracts prevent wages and prices from a ...
... in fact lead to an increase in interest rates for a sustained period of time because of a liquidity squeeze. The squeeze could result from the persistence of inflation either because monetary restraint has no effect on price expectations or because long-term contracts prevent wages and prices from a ...
Measuring Inflation
... basket. Consumers spend less to attain the same (or higher) standard of living. CPI does not reflect this change in the purchasing power of a dollar. 3. Unmeasured Quality change: If quality improves, the value of the dollar rises. ...
... basket. Consumers spend less to attain the same (or higher) standard of living. CPI does not reflect this change in the purchasing power of a dollar. 3. Unmeasured Quality change: If quality improves, the value of the dollar rises. ...
15.1 the consumer price index
... The CPI in YOUR Life Think about your student loan—or if you don’t have one, think about Gus’s $80,000 loan. Suppose that the CPI rises by 3 percent a year, each year from now through 2025. How much will a $100 repayment cost you, in 2005 dollars, when you start to pay off your loan in 2015? How mu ...
... The CPI in YOUR Life Think about your student loan—or if you don’t have one, think about Gus’s $80,000 loan. Suppose that the CPI rises by 3 percent a year, each year from now through 2025. How much will a $100 repayment cost you, in 2005 dollars, when you start to pay off your loan in 2015? How mu ...
Chapter 6
... decreases the real value of money and raises the interest rate. Faced with a higher interest rate, people try to borrow and spend less so the quantity of real GDP demanded decreases. Similarly, a fall in the price level increases the real value of money and lowers the interest rate. Faced with a low ...
... decreases the real value of money and raises the interest rate. Faced with a higher interest rate, people try to borrow and spend less so the quantity of real GDP demanded decreases. Similarly, a fall in the price level increases the real value of money and lowers the interest rate. Faced with a low ...
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.