CHAP1.WP (Word5)
... proposition of new classical macroeconomics implies that feedback policy rules are ineffective in changing the level of output; thus, a CGRR that is expected to be maintained will minimize expectational errors and eliminate the need for activist stabilization policies. Second, new classical macro im ...
... proposition of new classical macroeconomics implies that feedback policy rules are ineffective in changing the level of output; thus, a CGRR that is expected to be maintained will minimize expectational errors and eliminate the need for activist stabilization policies. Second, new classical macro im ...
University of Lethbridge — Department of Economics
... 27) Suppose the quantity of money is expected to remain unchanged but it actually increases. The price level A) falls and real GDP increases. B) rises and real GDP stays the same. C) falls and real GDP decreases. D) rises and real GDP decreases. E) rises and real GDP increases. Topic: Inflation Cycl ...
... 27) Suppose the quantity of money is expected to remain unchanged but it actually increases. The price level A) falls and real GDP increases. B) rises and real GDP stays the same. C) falls and real GDP decreases. D) rises and real GDP decreases. E) rises and real GDP increases. Topic: Inflation Cycl ...
Document
... Money demand and the nominal interest rate • The Quantity Theory of Money assumes that the demand for real money balances depends only on real income Y. • We now consider another determinant of money demand: the nominal interest rate. • The nominal interest rate i is the opportunity cost of holding ...
... Money demand and the nominal interest rate • The Quantity Theory of Money assumes that the demand for real money balances depends only on real income Y. • We now consider another determinant of money demand: the nominal interest rate. • The nominal interest rate i is the opportunity cost of holding ...
12 INFLATION
... of the additional home runs, not an explanation that focuses on the performance of specific players. Effects of Inflation Numerical exercises can illustrate the income distribution effects very clearly. The wage example is very easy to do, simply in terms of an expected inflation rate, an agreed mon ...
... of the additional home runs, not an explanation that focuses on the performance of specific players. Effects of Inflation Numerical exercises can illustrate the income distribution effects very clearly. The wage example is very easy to do, simply in terms of an expected inflation rate, an agreed mon ...
Unemployed
... away from goods that have increased in price. Increase in quality bias: Products like cars and computers have become more durable and better quality over time. It is hard to isolate the pure-inflation part of price increases. New product bias: The basket of goods changes only every 10 years. There i ...
... away from goods that have increased in price. Increase in quality bias: Products like cars and computers have become more durable and better quality over time. It is hard to isolate the pure-inflation part of price increases. New product bias: The basket of goods changes only every 10 years. There i ...
Nonneutrality of Money in Classical Monetary Thought
... real wages, lower real profits, and thereby discourage production and employment. Henry Thornton was among the first to expound these points. He noted that declines in the stock of money would have no employment effect if wages fell as fast as prices. He then observed that wages in fact were downwar ...
... real wages, lower real profits, and thereby discourage production and employment. Henry Thornton was among the first to expound these points. He noted that declines in the stock of money would have no employment effect if wages fell as fast as prices. He then observed that wages in fact were downwar ...
Chapter 15: Monetary Policy - the School of Economics and Finance
... Although it does not directly set the federal funds rate, through open market operations the Fed can control it quite well. From December 2008, the target federal funds rate was 0-0.25%. • The low federal funds rate was designed to encourage banks to make loans instead of holding excess reserves, wh ...
... Although it does not directly set the federal funds rate, through open market operations the Fed can control it quite well. From December 2008, the target federal funds rate was 0-0.25%. • The low federal funds rate was designed to encourage banks to make loans instead of holding excess reserves, wh ...
Chapter 15: Monetary Policy - the School of Economics and Finance
... Although it does not directly set the federal funds rate, through open market operations the Fed can control it quite well. From December 2008, the target federal funds rate was 0-0.25%. • The low federal funds rate was designed to encourage banks to make loans instead of holding excess reserves, wh ...
... Although it does not directly set the federal funds rate, through open market operations the Fed can control it quite well. From December 2008, the target federal funds rate was 0-0.25%. • The low federal funds rate was designed to encourage banks to make loans instead of holding excess reserves, wh ...
Click www.ondix.com to visit our student-to
... output for the economy cannot. © Comparisons of per capital GDP between countries tell you which population is better off. Simple comparisons of per capita GDP ignore how the GDP is distributed. A country with a very high per capita GDP that is unequally distributed may well provide a standard of li ...
... output for the economy cannot. © Comparisons of per capital GDP between countries tell you which population is better off. Simple comparisons of per capita GDP ignore how the GDP is distributed. A country with a very high per capita GDP that is unequally distributed may well provide a standard of li ...
chapter outline
... If you would like, now would be a good time to discuss the debate in Chapter 36 concerning whether the central bank should aim for zero inflation. ...
... If you would like, now would be a good time to discuss the debate in Chapter 36 concerning whether the central bank should aim for zero inflation. ...
Central Bank of Nigeria Communique No. 112 of the Monetary
... policy which remained strong and persuasive. These include: the real policy rate which remains negative, upper reference band for inflation remains substantially breached and elevated demand pressure in the foreign exchange market. The reality of sustained pressures on prices (consumer prices and th ...
... policy which remained strong and persuasive. These include: the real policy rate which remains negative, upper reference band for inflation remains substantially breached and elevated demand pressure in the foreign exchange market. The reality of sustained pressures on prices (consumer prices and th ...
File
... For explaining the possible cause of an increase in aggregate demand such as an increase in consumption, investment, government expenditure or net exports (1). For stating that cost push inflation is caused by an increase in costs (1). For explaining the possible cause of an increase in costs such a ...
... For explaining the possible cause of an increase in aggregate demand such as an increase in consumption, investment, government expenditure or net exports (1). For stating that cost push inflation is caused by an increase in costs (1). For explaining the possible cause of an increase in costs such a ...
CHAPTER IX THEORIES OP INFLATION There are seven important
... Keynesian Theory of the Inflationary Gap Keynesians and believers in the quantity theory of money (implicitly or explicitly) are one in the belief that the immediate cause of inflation is excess demand, though they may disagree regarding the proximate and the ulti mate causes of excess demand itsel ...
... Keynesian Theory of the Inflationary Gap Keynesians and believers in the quantity theory of money (implicitly or explicitly) are one in the belief that the immediate cause of inflation is excess demand, though they may disagree regarding the proximate and the ulti mate causes of excess demand itsel ...
The Influence of Monetary and Fiscal Policy on Aggregate Demand
... • They suggest the economy should be left to deal with the short-run fluctuations on its own. ...
... • They suggest the economy should be left to deal with the short-run fluctuations on its own. ...
Document
... The steep upward-sloping yield curve at shorter maturities suggests that short-term interest rates are expected to rise moderately in the near future because the initial, steep upward slope indicates that the average of expected short-term interest rates in the near future are above the current shor ...
... The steep upward-sloping yield curve at shorter maturities suggests that short-term interest rates are expected to rise moderately in the near future because the initial, steep upward slope indicates that the average of expected short-term interest rates in the near future are above the current shor ...
Monetary Policy
... reserves for the new checkable deposits. e. Conclusion: When the Fed buys securities, bank reserves will increase and the money supply potentially can rise by a multiple of these reserves. f. Note: When the Fed sells securities, points a-e above will be reversed. Bank reserves will go down, and even ...
... reserves for the new checkable deposits. e. Conclusion: When the Fed buys securities, bank reserves will increase and the money supply potentially can rise by a multiple of these reserves. f. Note: When the Fed sells securities, points a-e above will be reversed. Bank reserves will go down, and even ...
FRANK WILKINSON Neo-liberalism and New Labour policy
... and other resources to their most efficient use. Competitive markets therefore function as equilibrating mechanisms delivering both optimal economic welfare and distributional justice. Consequently, neo-liberals assert that man-made laws and institutions need to conform to the laws of the market if ...
... and other resources to their most efficient use. Competitive markets therefore function as equilibrating mechanisms delivering both optimal economic welfare and distributional justice. Consequently, neo-liberals assert that man-made laws and institutions need to conform to the laws of the market if ...
Phillips curve
... unemployment, workers adjust their wage demands downward, shifting AS to the right to achieve equilibrium. But accepting lower wages shifts AD inward. • As an external shock, oil prices, shifted short run AS, it will also shift long run AS. The equilibrium is less GDP and higher price levels. © Onli ...
... unemployment, workers adjust their wage demands downward, shifting AS to the right to achieve equilibrium. But accepting lower wages shifts AD inward. • As an external shock, oil prices, shifted short run AS, it will also shift long run AS. The equilibrium is less GDP and higher price levels. © Onli ...
Quantity Theory of Money Redux? Will Inflation Be the Legacy of
... supply expands more rapidly than warranted by increases in real production. The Brief first reviews the US experience and shows that whereas rapid money growth might have been a plausible explanation of inflation in the 1960s through the early 1980s, thereafter the data have not supported such an ex ...
... supply expands more rapidly than warranted by increases in real production. The Brief first reviews the US experience and shows that whereas rapid money growth might have been a plausible explanation of inflation in the 1960s through the early 1980s, thereafter the data have not supported such an ex ...
This PDF is a selection from an out-of-print volume from... Bureau of Economic Research
... shareholding does not fall as much as the real net yield on bonds and may actually rise. In considering these interactions of inflation and tax rules, it is important to distinguish households and nontaxable institutions and to recognize that share prices represent an equilibrium for these two group ...
... shareholding does not fall as much as the real net yield on bonds and may actually rise. In considering these interactions of inflation and tax rules, it is important to distinguish households and nontaxable institutions and to recognize that share prices represent an equilibrium for these two group ...
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.