the PDF File
... administered prices and inadequate growth of industrial production are some of the supply factors which cause inflation. ...
... administered prices and inadequate growth of industrial production are some of the supply factors which cause inflation. ...
Inflation
... COST PUSH INFLATION There’s no increase in aggregate demand, price may still rise. • Wage-push inflation • Profit push inflation • Increase in prices raw material PRICING POWER INFLATION Occurs when ever businesses in general decide to boost their prices to increase their profit margins. STRUCTURAL ...
... COST PUSH INFLATION There’s no increase in aggregate demand, price may still rise. • Wage-push inflation • Profit push inflation • Increase in prices raw material PRICING POWER INFLATION Occurs when ever businesses in general decide to boost their prices to increase their profit margins. STRUCTURAL ...
Ch.16-Q1. In the economy of Scottopia, policy makers want to lower
... recovery in which the unemployment rate falls only slowly, if at all. The first reason is that a company that experiences a sudden increase in demand for its products may cope by having its workers put in longer hours, rather than by hiring more workers. The second reason is that the number of worke ...
... recovery in which the unemployment rate falls only slowly, if at all. The first reason is that a company that experiences a sudden increase in demand for its products may cope by having its workers put in longer hours, rather than by hiring more workers. The second reason is that the number of worke ...
QUIZ 2: Macro – Winter 2002 - The University of Chicago Booth
... a. An increase in the nominal money supply (M), will cause real interest rates (r) to fall and will shift the IS curve to the right. b. A fall in government spending (G) will cause the IS curve to shift to the left and investment (I) to fall. c. An increase in consumer confidence will cause real int ...
... a. An increase in the nominal money supply (M), will cause real interest rates (r) to fall and will shift the IS curve to the right. b. A fall in government spending (G) will cause the IS curve to shift to the left and investment (I) to fall. c. An increase in consumer confidence will cause real int ...
Principles of Macroeconomics
... Investment = Spending in excess of current income = Supply of securities. => The same real interest rate that balances demand & supply for goods also balances demand &supply for securities (summed over all financial markets). P@;96F5=75F;IA9BH I = Y – C – G – NX = (Y-T-C) – (G-T) – NX = S + (–N ...
... Investment = Spending in excess of current income = Supply of securities. => The same real interest rate that balances demand & supply for goods also balances demand &supply for securities (summed over all financial markets). P@;96F5=75F;IA9BH I = Y – C – G – NX = (Y-T-C) – (G-T) – NX = S + (–N ...
Top of Form Name Question 1 Assuming that both the price level
... For a small economy in a fixed exchange rate system that begins in period 0 at the long-run equilibrium point A, the government cuts net taxes moving the aggregate demand curve from its initial position AD to AD´ so that the economy is in short-run equilibrium in period 1 at point B. Assume the back ...
... For a small economy in a fixed exchange rate system that begins in period 0 at the long-run equilibrium point A, the government cuts net taxes moving the aggregate demand curve from its initial position AD to AD´ so that the economy is in short-run equilibrium in period 1 at point B. Assume the back ...
Section 6 Practice Test Figure 31-1: Money Market I 1. Use the
... 15. Suppose that U.S. debt is $7 trillion dollars at the beginning of the fiscal year. During the fiscal year, the government spending and government transfers are $2 trillion and tax revenues equal $1.5 trillion. At the end of the fiscal year, the debt is: A. $10.5 trillion. B. $6.5 trillion. C. $ ...
... 15. Suppose that U.S. debt is $7 trillion dollars at the beginning of the fiscal year. During the fiscal year, the government spending and government transfers are $2 trillion and tax revenues equal $1.5 trillion. At the end of the fiscal year, the debt is: A. $10.5 trillion. B. $6.5 trillion. C. $ ...
Key Ideas by Morton
... The multiplier effects result from subsequent rounds of induced spending that occur when autonomous spending changes. Investment and its response to changes in the interest rate are important in understanding the relationship between monetary policy and GDP. Aggregate Demand (AD) and aggregate suppl ...
... The multiplier effects result from subsequent rounds of induced spending that occur when autonomous spending changes. Investment and its response to changes in the interest rate are important in understanding the relationship between monetary policy and GDP. Aggregate Demand (AD) and aggregate suppl ...
Answers to Sample Short Free-Response Questions
... 5. Recently, an economist was asked if the Great Depression could occur again. The reply was, “It is possible, but we have many more automatic stabilizers today than we had in 1929.” Describe three automatic stabilizers and explain how they might prevent a depression. Automatic stabilizers cause cha ...
... 5. Recently, an economist was asked if the Great Depression could occur again. The reply was, “It is possible, but we have many more automatic stabilizers today than we had in 1929.” Describe three automatic stabilizers and explain how they might prevent a depression. Automatic stabilizers cause cha ...
Short-Run Model Essentials
... have revolved around how we measure theses indicators of economic performance. Now we want to focus on understanding how real‐world events and government policy change these measures of economic performance. Our tool for understanding how these events and policy changes affect inflation, unemplo ...
... have revolved around how we measure theses indicators of economic performance. Now we want to focus on understanding how real‐world events and government policy change these measures of economic performance. Our tool for understanding how these events and policy changes affect inflation, unemplo ...
Question 1
... Which of the following observations will not be true of the ultimate long-run that this economy will attain after the policy change of period 1? a) All non-zero output gaps imply core and actual inflation differ. b) The fiscal expansionary policy must eventually be reversed for fiscal sustainability ...
... Which of the following observations will not be true of the ultimate long-run that this economy will attain after the policy change of period 1? a) All non-zero output gaps imply core and actual inflation differ. b) The fiscal expansionary policy must eventually be reversed for fiscal sustainability ...
Keynes and IS
... • Keynes had long been a critic of classical (long run) economic theory because it could explain only the long-run effects of policies – “In the long run we are all dead” ...
... • Keynes had long been a critic of classical (long run) economic theory because it could explain only the long-run effects of policies – “In the long run we are all dead” ...
AS/AD Model
... • Transfer payments can be included here. Recall that they are not included as G in GDP. But, we can consider these as “negative taxes.” That is, total government spending = G + TP, while total government revenue = T + TP. So an TP can be thought of as an equivalent T An TP will C and S, so ove ...
... • Transfer payments can be included here. Recall that they are not included as G in GDP. But, we can consider these as “negative taxes.” That is, total government spending = G + TP, while total government revenue = T + TP. So an TP can be thought of as an equivalent T An TP will C and S, so ove ...
Model Paper Macro Economics
... Q. 1) Can we justify the dominance of money over the barter system by the functions it performs? How can financial intermediaries play their role in this regard? Q. 2) Fiscal and Monetary policies are the two different approaches to achieve the same goal i.e. of controlling imbalances. Discuss. Also ...
... Q. 1) Can we justify the dominance of money over the barter system by the functions it performs? How can financial intermediaries play their role in this regard? Q. 2) Fiscal and Monetary policies are the two different approaches to achieve the same goal i.e. of controlling imbalances. Discuss. Also ...
AS & AD - Vincent Hogan
... • So far, we have assumed for simplicity that in the short-run, general Price and Wage levels are fixed. • This means that changes in Demand lead to changes in real GDP, and not prices. • However, it is clear that prices and wages adjust over time, and that we have to relax the fixed-price assumptio ...
... • So far, we have assumed for simplicity that in the short-run, general Price and Wage levels are fixed. • This means that changes in Demand lead to changes in real GDP, and not prices. • However, it is clear that prices and wages adjust over time, and that we have to relax the fixed-price assumptio ...
Tutorial
... c. the real interest rate is negative. d. the economy is at full employment. C. The real rate of interest is negative because the lender is receiving less money back, in real terms, then was lent out. ...
... c. the real interest rate is negative. d. the economy is at full employment. C. The real rate of interest is negative because the lender is receiving less money back, in real terms, then was lent out. ...
MONETARY AND FISCAL POLICIES
... How is the Monetary Policy different from the Fiscal Policy? • The Monetary Policy regulates the supply of money and the cost and availability of credit in the economy. It deals with both the lending and borrowing rates of interest for commercial banks. • The Monetary Policy aims to maintain price ...
... How is the Monetary Policy different from the Fiscal Policy? • The Monetary Policy regulates the supply of money and the cost and availability of credit in the economy. It deals with both the lending and borrowing rates of interest for commercial banks. • The Monetary Policy aims to maintain price ...
