Tutorial 2
... produced domestically, whereas the consumers price index reflects the prices of all goods and services bought by consumers. The consumers price index compares the price of a fixed basket of goods and services to the price of the basket in the base year (Statistics NZ only change the basket occasiona ...
... produced domestically, whereas the consumers price index reflects the prices of all goods and services bought by consumers. The consumers price index compares the price of a fixed basket of goods and services to the price of the basket in the base year (Statistics NZ only change the basket occasiona ...
II. Measurement of Economic Performance (12
... GDP is calculated as the production done within the borders of a country. If it was produced in the U.S., it belongs in U.S. GDP. It doesn’t matter where it is actually consumed, or where the actual company is headquartered. Example 3. General Motors Counts Krugerand. General Motors, an American com ...
... GDP is calculated as the production done within the borders of a country. If it was produced in the U.S., it belongs in U.S. GDP. It doesn’t matter where it is actually consumed, or where the actual company is headquartered. Example 3. General Motors Counts Krugerand. General Motors, an American com ...
I Is Inflation Dead?
... rate for men aged 35 to 54 as a function of the group’s population share and participation rate. This new series portrays how the unemployment rate varies through time relative to the early 1960s, based on changes in basic demographics. These demographic shifts do not have a huge impact. The highest ...
... rate for men aged 35 to 54 as a function of the group’s population share and participation rate. This new series portrays how the unemployment rate varies through time relative to the early 1960s, based on changes in basic demographics. These demographic shifts do not have a huge impact. The highest ...
1.The aggregate demand curve shows the relationship between
... A) the Fed reacts to the lower inflation by lowering interest rates. B) the reduction in wealth, resulting from the reduced real value of money, restrains spending. C) resources are redistributed from high-spending households to low-spending households. D) the prices of domestic goods sold abroad in ...
... A) the Fed reacts to the lower inflation by lowering interest rates. B) the reduction in wealth, resulting from the reduced real value of money, restrains spending. C) resources are redistributed from high-spending households to low-spending households. D) the prices of domestic goods sold abroad in ...
working paper - Mercatus Center
... approved by the Senate. The chair position is renewed every four years, so any chair who strays too far from what Congress or the president wishes runs the risk of losing his job. The chair is required to testify in front of Congress on a regular basis and will be held responsible for any perceived ...
... approved by the Senate. The chair position is renewed every four years, so any chair who strays too far from what Congress or the president wishes runs the risk of losing his job. The chair is required to testify in front of Congress on a regular basis and will be held responsible for any perceived ...
Bank of England Inflation Report May 2011
... Charts 5.1 and 5.4 depict the probability of various outcomes for CPI inflation in the future. They have been conditioned on the assumption that the stock of purchased assets financed by the issuance of central bank reserves remains at £200 billion throughout the forecast period. If economic circums ...
... Charts 5.1 and 5.4 depict the probability of various outcomes for CPI inflation in the future. They have been conditioned on the assumption that the stock of purchased assets financed by the issuance of central bank reserves remains at £200 billion throughout the forecast period. If economic circums ...
Slide 1
... Natural rate of unemployment = 5% Expected inflation = 2% Coefficient a in PC equation = 0.5 A. Plot the long-run Phillips curve. B. Find the u-rate for each of these values of actual inflation: 0%, 6%. Sketch the short-run PC. C. Suppose expected inflation rises to 4%. ...
... Natural rate of unemployment = 5% Expected inflation = 2% Coefficient a in PC equation = 0.5 A. Plot the long-run Phillips curve. B. Find the u-rate for each of these values of actual inflation: 0%, 6%. Sketch the short-run PC. C. Suppose expected inflation rises to 4%. ...
History of Economics Society Meeting in Toronto, June 25
... determinant of monetary policy decisions; and in an analysis of inflation dynamics in such cases, the transactions frictions that give rise to a money demand function would play a crucial role. But the framework proposed in Interest and Prices can easily be extended to include such frictions; as I h ...
... determinant of monetary policy decisions; and in an analysis of inflation dynamics in such cases, the transactions frictions that give rise to a money demand function would play a crucial role. But the framework proposed in Interest and Prices can easily be extended to include such frictions; as I h ...
Forecasting Interest Rates
... Main determinants of household savings are Some funds are supplied by governments and businesses Foreign funds suppliers examine the same factors as U.S. funds suppliers ...
... Main determinants of household savings are Some funds are supplied by governments and businesses Foreign funds suppliers examine the same factors as U.S. funds suppliers ...
Document
... response of the nominal and real exchange rates to the following shocks: (a) a permanent increase in the rate of money growth; (b) a permanent increase in the full employment output level. Distinguish between the case in which the elasticity of desired expenditure to the real exchange rate (h) is: ( ...
... response of the nominal and real exchange rates to the following shocks: (a) a permanent increase in the rate of money growth; (b) a permanent increase in the full employment output level. Distinguish between the case in which the elasticity of desired expenditure to the real exchange rate (h) is: ( ...
chapter outline
... than discretionary policy because it would tie the Fed’s hands when there are shocks to the economy. For example, in response to a stock-market crash, the rule would prevent the Fed from easing monetary policy, even if it saw the economy slipping into recession. 3. The benefits of reducing inflation ...
... than discretionary policy because it would tie the Fed’s hands when there are shocks to the economy. For example, in response to a stock-market crash, the rule would prevent the Fed from easing monetary policy, even if it saw the economy slipping into recession. 3. The benefits of reducing inflation ...
C:\Documents and Settings\Ivan
... raise P). (Recall that a pair of actions, (s1,s2) is a Nash equilibrium if s1 is a best response to s2 and s2 is a best response to s1. Here, for instance, (Raise M, Raise P) is a Nash equilibrium because if the Fed raises M, then the best thing the Firm can do is to raise P; and if the Firm raises ...
... raise P). (Recall that a pair of actions, (s1,s2) is a Nash equilibrium if s1 is a best response to s2 and s2 is a best response to s1. Here, for instance, (Raise M, Raise P) is a Nash equilibrium because if the Fed raises M, then the best thing the Firm can do is to raise P; and if the Firm raises ...
Macroeconomics
... effectively control money supply & maintain price stability Political pressures on Congress & Executive Branch result in inflationary fiscal policy, including tax cuts & special-interest spending, but Fed can take actions to increase interest rates when higher rates are needed to stem inflation Coun ...
... effectively control money supply & maintain price stability Political pressures on Congress & Executive Branch result in inflationary fiscal policy, including tax cuts & special-interest spending, but Fed can take actions to increase interest rates when higher rates are needed to stem inflation Coun ...
1. A buyer of a newly-issued bond A) is a borrower of funds. C) is
... C) interest rates rise, which in turn, stimulate investment. D) interest rates fall, which in turn, stimulate investment. ...
... C) interest rates rise, which in turn, stimulate investment. D) interest rates fall, which in turn, stimulate investment. ...
MULTIPLE CHOICE. Choose the one alternative
... 7) A decrease in the expected rate of inflation will _____ the expected return on bonds relative to that on _____ assets. A) reduce; real ...
... 7) A decrease in the expected rate of inflation will _____ the expected return on bonds relative to that on _____ assets. A) reduce; real ...
Chapter 23
... • Since nominal interest rates can't fall below zero, this places a significant restriction on what monetary policymakers can do • The most effective way to expand the monetary base when the overnight interest rate has fallen to zero is to shift to targeting longer-term rates. ...
... • Since nominal interest rates can't fall below zero, this places a significant restriction on what monetary policymakers can do • The most effective way to expand the monetary base when the overnight interest rate has fallen to zero is to shift to targeting longer-term rates. ...
The Poolean Consensus Model: The Strategic Scope of Monetary
... scheme in connection with the static AS-AD analysis as well; thus, the Fisher interest parity continues to hold, even if changes in the output price level occur. Incidentally, the traditional static AS-AD analysis discusses one-off rises or reductions in the price level and not a process of continui ...
... scheme in connection with the static AS-AD analysis as well; thus, the Fisher interest parity continues to hold, even if changes in the output price level occur. Incidentally, the traditional static AS-AD analysis discusses one-off rises or reductions in the price level and not a process of continui ...
Money and Inflation Adapted for EC 204 by Prof. Bob Murphy
... (Chap. 3) In the long run, the real wage is determined by labor supply and the marginal product of labor, not the price level or inflation rate. ...
... (Chap. 3) In the long run, the real wage is determined by labor supply and the marginal product of labor, not the price level or inflation rate. ...
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.