Econ 102 - UM Personal World Wide Web Server
... than consuming it right away? How many extra gallons of ice cream do you get to purchase after one year of waiting? What, in this case, is the percentage increase in the number of gallons of ice cream you will be able to consume? Since the nominal interest rate is unchanged, your nominal return from ...
... than consuming it right away? How many extra gallons of ice cream do you get to purchase after one year of waiting? What, in this case, is the percentage increase in the number of gallons of ice cream you will be able to consume? Since the nominal interest rate is unchanged, your nominal return from ...
Chapter 11 Aggregate Demand and Supply
... C) a substantial decline in the stock market. D) increased spending by government for social programs. E) an expansionary monetary policy. Answer: C 9) An increase in aggregate demand could be caused by all of the following EXCEPT A) increased government spending on highways. B) Federal Reserve poli ...
... C) a substantial decline in the stock market. D) increased spending by government for social programs. E) an expansionary monetary policy. Answer: C 9) An increase in aggregate demand could be caused by all of the following EXCEPT A) increased government spending on highways. B) Federal Reserve poli ...
A Panel Approach for Developing Countries
... than those of the central government, and the time, savings and foreign currency deposits of resident sectors other than the central government. The theory predicts a positive sign for the coefficient of this variable. The GDP in this study is the gross domestic product calculated in terms of the Sp ...
... than those of the central government, and the time, savings and foreign currency deposits of resident sectors other than the central government. The theory predicts a positive sign for the coefficient of this variable. The GDP in this study is the gross domestic product calculated in terms of the Sp ...
Remarks by Governor Ben S. Bernanke At the meetings of the
... that the 1970s, the period of highest volatility in both output and inflation, was also a period in which monetary policy performed quite poorly, relative to both earlier and later periods (Romer and Romer, 2002).4 Few disagree that monetary policy has played a large part in stabilizing inflation, a ...
... that the 1970s, the period of highest volatility in both output and inflation, was also a period in which monetary policy performed quite poorly, relative to both earlier and later periods (Romer and Romer, 2002).4 Few disagree that monetary policy has played a large part in stabilizing inflation, a ...
1. O verview
... The CBRT has designed and implemented a new policy framework that takes into account macro financial risks since the end of 2010. Policies implemented in this period aimed at managing macro financial risks without prejudice to price stability in the medium term. To this end, additional policy instru ...
... The CBRT has designed and implemented a new policy framework that takes into account macro financial risks since the end of 2010. Policies implemented in this period aimed at managing macro financial risks without prejudice to price stability in the medium term. To this end, additional policy instru ...
This PDF is a selection from an out-of-print volume from... Bureau of Economic Research
... real product, intermediate-input prices, and sectoral demands. Some element of the international economic regime apparently is a significantly nonzero direct determinant of the rate of change of prices in every sector: Price-related factors have a significantly nonzero impact in five of the eight se ...
... real product, intermediate-input prices, and sectoral demands. Some element of the international economic regime apparently is a significantly nonzero direct determinant of the rate of change of prices in every sector: Price-related factors have a significantly nonzero impact in five of the eight se ...
Parkin-Bade Chapter 21
... income in arbitrary ways between employers and workers and between borrowers and lenders. A high inflation rate is a problem because it diverts resources from productive activities to inflation forecasting. From a social perspective, this waste of resources is a cost of inflation. At its worse, infl ...
... income in arbitrary ways between employers and workers and between borrowers and lenders. A high inflation rate is a problem because it diverts resources from productive activities to inflation forecasting. From a social perspective, this waste of resources is a cost of inflation. At its worse, infl ...
The Case for a Long-Run Inflation Target of Four Percent
... rate substantially in every recession since World War II (Romer and Romer, 1994). These actions spurred economic recoveries that usually reversed the increases in unemployment during recessions. When a central bank seeks to increase aggregate demand, it faces a constraint: it cannot reduce nominal i ...
... rate substantially in every recession since World War II (Romer and Romer, 1994). These actions spurred economic recoveries that usually reversed the increases in unemployment during recessions. When a central bank seeks to increase aggregate demand, it faces a constraint: it cannot reduce nominal i ...
How high is the natural rate of unemployment in Hong Kong? (A
... In short, the impact of economic structural change on the long-run unemployment rate actually comprises three forces at play (1) the rise of service industries lifts up labour productivity over time, and in turn lowers the natural rate of unemployment through productivity gains and job generation in ...
... In short, the impact of economic structural change on the long-run unemployment rate actually comprises three forces at play (1) the rise of service industries lifts up labour productivity over time, and in turn lowers the natural rate of unemployment through productivity gains and job generation in ...
This PDF is a selection from a published volume from... National Bureau of Economic Research
... that the labor market in Taiwan is “stable” and that the rigidity in the labor market is “not so serious.” However, it would be more useful if the authors gave more evidence to support these explanations. For example, the authors might have a small table of unemployment rate series corresponding to ...
... that the labor market in Taiwan is “stable” and that the rigidity in the labor market is “not so serious.” However, it would be more useful if the authors gave more evidence to support these explanations. For example, the authors might have a small table of unemployment rate series corresponding to ...
Chapter 24: Aggregate Demand and Aggregate Supply
... Factors that Shift the AS Curve - An increase in AS is shown by a shift to the right and a decrease is shown upward shift to the left. - A reduction in production costs will cause AS to shift right and an increase in costs will cause it to shift upward to the left. Equilibrium Real Output and the Pr ...
... Factors that Shift the AS Curve - An increase in AS is shown by a shift to the right and a decrease is shown upward shift to the left. - A reduction in production costs will cause AS to shift right and an increase in costs will cause it to shift upward to the left. Equilibrium Real Output and the Pr ...
ECN 111 Chapter 14 Lecture Notes
... When the price level rises, the demand for money increases, which increases the nominal interest rate and, in the short run, also the real interest rate. The rise in the real interest rate decreases consumption expenditure and investment. 3. The Real Prices of Exports and Imports A rise in the U.S. ...
... When the price level rises, the demand for money increases, which increases the nominal interest rate and, in the short run, also the real interest rate. The rise in the real interest rate decreases consumption expenditure and investment. 3. The Real Prices of Exports and Imports A rise in the U.S. ...
Chapter 26 Practice Quiz
... 14. In Exhibit 13, the Fed believes the economy is at AD3, how might it engineer a decline in the price level? a. By decreasing the money supply, the interest rate falls, investment rises, and aggregate demand falls, causing the price level to fall. b. By decreasing the money supply, the interest ra ...
... 14. In Exhibit 13, the Fed believes the economy is at AD3, how might it engineer a decline in the price level? a. By decreasing the money supply, the interest rate falls, investment rises, and aggregate demand falls, causing the price level to fall. b. By decreasing the money supply, the interest ra ...
Chapter 26 Practice Quiz
... 14. In Exhibit 13, the Fed believes the economy is at AD3, how might it engineer a decline in the price level? a. By decreasing the money supply, the interest rate falls, investment rises, and aggregate demand falls, causing the price level to fall. b. By decreasing the money supply, the interest ra ...
... 14. In Exhibit 13, the Fed believes the economy is at AD3, how might it engineer a decline in the price level? a. By decreasing the money supply, the interest rate falls, investment rises, and aggregate demand falls, causing the price level to fall. b. By decreasing the money supply, the interest ra ...
Distributions regardless of the - Oklahoma City Community College
... 2. If the interest rate is 4 percent a year, the quantity of money held is less than the quantity demanded. People sell bonds, the price of a bond falls, and the interest rate rises. A rise in the nominal interest rate decreases the quantity of real money demanded. 3. If the interest rate is 5 perce ...
... 2. If the interest rate is 4 percent a year, the quantity of money held is less than the quantity demanded. People sell bonds, the price of a bond falls, and the interest rate rises. A rise in the nominal interest rate decreases the quantity of real money demanded. 3. If the interest rate is 5 perce ...
Chapter 8: The Natural Rate of Unemployment and the Phillips Curve
... of Unemployment over Time p t p t 1 m z ut In the equation above, the terms m and z vary over time, leading to changes in the natural rate of unemployment. The U.S. natural rate of unemployment has decreased from 6% to between 4% and 5% today. – Maybe globalization reduces m, by ex ...
... of Unemployment over Time p t p t 1 m z ut In the equation above, the terms m and z vary over time, leading to changes in the natural rate of unemployment. The U.S. natural rate of unemployment has decreased from 6% to between 4% and 5% today. – Maybe globalization reduces m, by ex ...
28.1 money and the interest rate
... 2. If the interest rate is 4 percent a year, the quantity of money held is less than the quantity demanded. People sell bonds, the price of a bond falls, and the interest rate rises. A rise in the nominal interest rate decreases the quantity of real money demanded. 3. If the interest rate is 5 perce ...
... 2. If the interest rate is 4 percent a year, the quantity of money held is less than the quantity demanded. People sell bonds, the price of a bond falls, and the interest rate rises. A rise in the nominal interest rate decreases the quantity of real money demanded. 3. If the interest rate is 5 perce ...
Money, Interest, and Inflation C H A P T E R C H E C K L I S T
... the quantity of money held increases. Opportunity Cost of Holding Money The opportunity cost of holding money is the interest forgone on an alternative asset. Opportunity Cost: Nominal Interest is a Real Cost The opportunity cost of holding money is the nominal interest because it is the sum of the ...
... the quantity of money held increases. Opportunity Cost of Holding Money The opportunity cost of holding money is the interest forgone on an alternative asset. Opportunity Cost: Nominal Interest is a Real Cost The opportunity cost of holding money is the nominal interest because it is the sum of the ...
Chapter 11 Aggregate Supply with Imperfect Information
... that could not be observed (such as expectations) were often ignored, since it might not occur to someone following this top-down approach that unobservable variables could be important. Microeconomic theory was often neglected by macroeconomists. Few worried much about whether a particular form of ...
... that could not be observed (such as expectations) were often ignored, since it might not occur to someone following this top-down approach that unobservable variables could be important. Microeconomic theory was often neglected by macroeconomists. Few worried much about whether a particular form of ...
chapter summary
... Inflation is a sustained rise in the average price level. An increase in aggregate demand can cause demandpull inflation. A decrease in aggregate supply can cause cost-push inflation. Prior to World War II, both inflation and deflation were common, but since then the price level has increased virtua ...
... Inflation is a sustained rise in the average price level. An increase in aggregate demand can cause demandpull inflation. A decrease in aggregate supply can cause cost-push inflation. Prior to World War II, both inflation and deflation were common, but since then the price level has increased virtua ...
NBER WORKING PAPER SERIES INFLATION AND LABOR—MARKET ADJUSTMENT Working Paper No. 1153
... reduced by greater price inflation. Most of the reduction is a response to unexpected inflation: Expected inflation has little impact on dispersion. These findings hold for subperiods within the sample, and are robust to ...
... reduced by greater price inflation. Most of the reduction is a response to unexpected inflation: Expected inflation has little impact on dispersion. These findings hold for subperiods within the sample, and are robust to ...
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.