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You owe…. - Baffled Bee
... 2. With reference to Extract 1, explain the effect on GDP of the change in asset prices in 1990. 3. Explain why “deflation needn’t be all bad”? (line 28, extract 2) 4. With reference to the extracts, examine the problems associated with a long period of deflation. 5. Assess the relative effectivenes ...
... 2. With reference to Extract 1, explain the effect on GDP of the change in asset prices in 1990. 3. Explain why “deflation needn’t be all bad”? (line 28, extract 2) 4. With reference to the extracts, examine the problems associated with a long period of deflation. 5. Assess the relative effectivenes ...
Financial Cycle, Financial Stability and Monetary Policy
... • A Minsky moment follows – market participants realize the overvaluation of assets and excess level of their debts, start selling assets on a mass scale, liquidity crisis starts transforming itself into solvency crisis. • Banks increase risk margins and tighten lending standards even for financiall ...
... • A Minsky moment follows – market participants realize the overvaluation of assets and excess level of their debts, start selling assets on a mass scale, liquidity crisis starts transforming itself into solvency crisis. • Banks increase risk margins and tighten lending standards even for financiall ...
Policy Note THE FUTURE OF THE DOLLAR Has the Unthinkable Become Thinkable?
... The weak economic recovery and the ballooning current account deficit stoke expectations that the United States will eventually revert to a weak-dollar policy, the only untried demand stimulus that may keep the current economic recovery from running out of steam. The idea is that a weak dollar will ...
... The weak economic recovery and the ballooning current account deficit stoke expectations that the United States will eventually revert to a weak-dollar policy, the only untried demand stimulus that may keep the current economic recovery from running out of steam. The idea is that a weak dollar will ...
The Loanable Funds Model of Interest Rates
... The real rate of interest reflects the rate of real economic growth (i.e., the amount of reward that should accrue to the lender for lending to a productive economy). Then, an inflation premium is added to the real rate, to produce a market interest rates that protects investors against this loss of ...
... The real rate of interest reflects the rate of real economic growth (i.e., the amount of reward that should accrue to the lender for lending to a productive economy). Then, an inflation premium is added to the real rate, to produce a market interest rates that protects investors against this loss of ...
Master Thesis The Relation Between Quantitative Easing and
... Nederlandsche Bank, DNB), that quantitative easing (QE) might lead to bubbles in financial markets. This thesis aims to provide an insight in the effects of QE on bubbles in stock markets. Almost every day, financial newspapers contain some news or opinions regarding the European Central Bank’s (ECB ...
... Nederlandsche Bank, DNB), that quantitative easing (QE) might lead to bubbles in financial markets. This thesis aims to provide an insight in the effects of QE on bubbles in stock markets. Almost every day, financial newspapers contain some news or opinions regarding the European Central Bank’s (ECB ...
Consequence of Innovation: About Twenty
... What is deflation? Deflation is an economic term generally associated with decreases in pricing and spending. When and how did the current deflation begin? The introduction of the internet in the early ‘90s triggered deflation by rapidly increasing innovation. In the pre-internet world, the return o ...
... What is deflation? Deflation is an economic term generally associated with decreases in pricing and spending. When and how did the current deflation begin? The introduction of the internet in the early ‘90s triggered deflation by rapidly increasing innovation. In the pre-internet world, the return o ...
public fund management in mena
... lower return to its captive clientele of pension funds. • It is currently improving its asset management capabilities and is likely to adopt a more modern approach in the future, while its client funds may be allowed to hire other asset managers. • The real returns of one of the funds (RCAR) have be ...
... lower return to its captive clientele of pension funds. • It is currently improving its asset management capabilities and is likely to adopt a more modern approach in the future, while its client funds may be allowed to hire other asset managers. • The real returns of one of the funds (RCAR) have be ...
The causes of the Great Recession:
... The Great Recession of 20089 really was great. It was the longest and deepest in its contraction of output that the global capitalist economy, as represented by the 30 advanced capitalist nations of the OECD, has experienced since the Great Depression of 192932. From the peak of the previous b ...
... The Great Recession of 20089 really was great. It was the longest and deepest in its contraction of output that the global capitalist economy, as represented by the 30 advanced capitalist nations of the OECD, has experienced since the Great Depression of 192932. From the peak of the previous b ...
Outlook for Economic Activity and Prices (January 2017, The Bank`s
... Summary Japan's economy is likely to continue growing at a pace above its potential through the projection period -- that is, through fiscal 2018 -- on the back of highly accommodative financial conditions and the effects of the government's large-scale stimulus measures, with the growth rates in ...
... Summary Japan's economy is likely to continue growing at a pace above its potential through the projection period -- that is, through fiscal 2018 -- on the back of highly accommodative financial conditions and the effects of the government's large-scale stimulus measures, with the growth rates in ...
Commodity price increases: causes, effects and policy responses
... About 40% of the OECD area’s additional payments for oil imports return in the form of additional exports to the oil producers Most of the additional demand is within first year Additional exports to oil producers per additional imports from oil producers, ...
... About 40% of the OECD area’s additional payments for oil imports return in the form of additional exports to the oil producers Most of the additional demand is within first year Additional exports to oil producers per additional imports from oil producers, ...
Scylla and Charybdis: Navigating a Liquidity Trap
... other, they posed an inescapable threat to passing sailors; avoiding Charybdis meant passing too closely to Scylla and vice versa. Today, investors must maneuver betwixt and between the Scylla and Charybdis of deflation and inflation. Investors are fearful and anxious. The Fed has recently signaled ...
... other, they posed an inescapable threat to passing sailors; avoiding Charybdis meant passing too closely to Scylla and vice versa. Today, investors must maneuver betwixt and between the Scylla and Charybdis of deflation and inflation. Investors are fearful and anxious. The Fed has recently signaled ...
Full Text [PDF 562KB]
... While that may be partly due to statistical peculiarities, it suggests that firms anticipate a subsequent decline in spending after the consumption tax hike in April 2014 as a result of the front-loaded increase in spending to be relatively short-lived. If a shortage of aggregate demand in the econo ...
... While that may be partly due to statistical peculiarities, it suggests that firms anticipate a subsequent decline in spending after the consumption tax hike in April 2014 as a result of the front-loaded increase in spending to be relatively short-lived. If a shortage of aggregate demand in the econo ...
Powerpoint - DebtDeflation
... Keynes and Debt-deflation • Some discussion of debt-deflation when discussing reduction in money wages (neoclassical proposal): – “Since a special reduction of money-wages is always advantageous to an individual entrepreneur ... – a general reduction … may break through a vicious circle of unduly p ...
... Keynes and Debt-deflation • Some discussion of debt-deflation when discussing reduction in money wages (neoclassical proposal): – “Since a special reduction of money-wages is always advantageous to an individual entrepreneur ... – a general reduction … may break through a vicious circle of unduly p ...
Chapter 9
... • c. Inflation surged temporarily • d. All the above results are consistent with the theory • e. But the real interest rate did not rise during the 1973–1974 oil price shock (though it did during the 1979–1980 shock) ...
... • c. Inflation surged temporarily • d. All the above results are consistent with the theory • e. But the real interest rate did not rise during the 1973–1974 oil price shock (though it did during the 1979–1980 shock) ...
Module Money, Output, and Prices in the Long Run
... an Increase in the Money Supply Suppose the economy is currently in LR equilibrium. • If the Fed were to conduct expansionary monetary policy, the interest rate would fall. • A lower interest rate would shift AD to the right. • In the short run, real GDP would increase, but so would the aggregate pr ...
... an Increase in the Money Supply Suppose the economy is currently in LR equilibrium. • If the Fed were to conduct expansionary monetary policy, the interest rate would fall. • A lower interest rate would shift AD to the right. • In the short run, real GDP would increase, but so would the aggregate pr ...
A Few Thoughts on the Employment Numbers
... yield on longer-term bonds is a risk premium that is commensurate with U.S. interest-rate volatility (Japanese risk premiums are lower, but they also have nearly zero interest-rate variability). So QE at this point represents little but an effort to drive risk premiums to levels that are inadequate ...
... yield on longer-term bonds is a risk premium that is commensurate with U.S. interest-rate volatility (Japanese risk premiums are lower, but they also have nearly zero interest-rate variability). So QE at this point represents little but an effort to drive risk premiums to levels that are inadequate ...
Module1.3
... it is M1 and M2 that more directly control the real sector. • But Fed doesn’t have full control over M1 and M2. • Note that most of the money supply aggregates that comprise M1 and M2 are determined by private decisions which the Fed can’t control. Thus Fed only has monetary base to influence M1 and ...
... it is M1 and M2 that more directly control the real sector. • But Fed doesn’t have full control over M1 and M2. • Note that most of the money supply aggregates that comprise M1 and M2 are determined by private decisions which the Fed can’t control. Thus Fed only has monetary base to influence M1 and ...
AS Content Checklist Word Document
... Evaluate the microeconomic effects of exchange rate changes on households and firms Understand how monetary authorities can influence the value of an exchange rate in a floating system (a ‘managed’ or ‘dirty’ Exchange rate float) policy Evaluate the advantages and disadvantages of policies which hol ...
... Evaluate the microeconomic effects of exchange rate changes on households and firms Understand how monetary authorities can influence the value of an exchange rate in a floating system (a ‘managed’ or ‘dirty’ Exchange rate float) policy Evaluate the advantages and disadvantages of policies which hol ...
HE9091 Principles of Economics
... This course covers fundamental tools and applications of concepts in microeconomics and macroeconomics. The section on microeconomics focuses on markets as a mechanism for allocating scarce resources. Using tools of welfare economics, it analyses demand, supply, market system and the concepts of ela ...
... This course covers fundamental tools and applications of concepts in microeconomics and macroeconomics. The section on microeconomics focuses on markets as a mechanism for allocating scarce resources. Using tools of welfare economics, it analyses demand, supply, market system and the concepts of ela ...
Chapter_14_Macro_15e
... 3. both a higher price level and a higher level of real output 4. a lower price level 5. a lower level of real output ...
... 3. both a higher price level and a higher level of real output 4. a lower price level 5. a lower level of real output ...
EMBARGOED UNTIL FRIDAY, JANUARY 11, 2008 1:00 P.M. EASTERN TIME OR UPON DELIVERY
... In part, the trend towards securitizing mortgage loans allowed the financing arrangements to be driven by national rather than regional conditions. As long as investor demand for higheryielding mortgage securities and derivatives was strong, there was little of the natural “governor” that occurs whe ...
... In part, the trend towards securitizing mortgage loans allowed the financing arrangements to be driven by national rather than regional conditions. As long as investor demand for higheryielding mortgage securities and derivatives was strong, there was little of the natural “governor” that occurs whe ...
Answer: AD slopes do
... Answer. The LRAS is vertical because the price level does not affect the long-run determinants of real GDP, which include supplies of labor, capital, natural resources, and the level of available technology. This is an application of the classical dichotomy and monetary neutrality. 3. List the three ...
... Answer. The LRAS is vertical because the price level does not affect the long-run determinants of real GDP, which include supplies of labor, capital, natural resources, and the level of available technology. This is an application of the classical dichotomy and monetary neutrality. 3. List the three ...
Economic bubble
![](https://commons.wikimedia.org/wiki/Special:FilePath/South_Sea_Bubble_Cards-Tree.png?width=300)
An economic bubble (sometimes referred to as a speculative bubble, a market bubble, a price bubble, a financial bubble, a speculative mania or a balloon) is trade in an asset at a price or price range that strongly deviates from the corresponding asset's intrinsic value. It could also be described as a situation in which asset prices appear to be based on implausible or inconsistent views about the future.Because it is often difficult to observe intrinsic values in real-life markets, bubbles are often conclusively identified only in retrospect, when a sudden drop in prices appears. Such a drop is known as a crash or a bubble burst. Both the boom and the burst phases of the bubble are examples of a positive feedback mechanism, in contrast to the negative feedback mechanism that determines the equilibrium price under normal market circumstances. Prices in an economic bubble can fluctuate erratically, and become impossible to predict from supply and demand alone.While some economists deny that bubbles occur, the cause of bubbles remains disputed by those who are convinced that asset prices often deviate strongly from intrinsic values. Many explanations have been suggested, and research has recently shown that bubbles may appear even without uncertainty, speculation, or bounded rationality. In such cases, the bubbles may be argued to be rational, where investors at every point fully compensated for the possibility that the bubble might collapse by higher returns. These approaches require that the timing of the bubble collapse can only be forecast probabilistically and the bubble process is often modelled using a Markov switching model. It has also been suggested that bubbles might ultimately be caused by processes of price coordination or emerging social norms.