M10_ABEL4987_7E_IM_C10
... B. Should fiscal policy be used to dampen the cycle? 1. Classical economists oppose attempts to dampen the cycle, since prices and wages adjust quickly to restore equilibrium 2. Besides, fiscal policy increases output by making workers worse off, since they face higher taxes 3. Instead, government s ...
... B. Should fiscal policy be used to dampen the cycle? 1. Classical economists oppose attempts to dampen the cycle, since prices and wages adjust quickly to restore equilibrium 2. Besides, fiscal policy increases output by making workers worse off, since they face higher taxes 3. Instead, government s ...
Answers to Questions: Chapter 9
... 14. Inflation was so low in the late 1990s due to the beneficial supply shocks provided by falling oil and import prices and a rapid rise in productivity growth. The decline in import prices was due to an appreciation of the dollar during the late 1990s. Inflation started to rise after 2003 as the s ...
... 14. Inflation was so low in the late 1990s due to the beneficial supply shocks provided by falling oil and import prices and a rapid rise in productivity growth. The decline in import prices was due to an appreciation of the dollar during the late 1990s. Inflation started to rise after 2003 as the s ...
msc macro lecture slides
... - fall in asset prices reduces consumption • lenders lose if debtors go bankrupt • prices decline but wages are sticky - decline in demand for labour - fall in profits and investment • real interest rates increase - discourages investment • leads to persistent recession: consumers delay spending ...
... - fall in asset prices reduces consumption • lenders lose if debtors go bankrupt • prices decline but wages are sticky - decline in demand for labour - fall in profits and investment • real interest rates increase - discourages investment • leads to persistent recession: consumers delay spending ...
mmi04-razin 224754 en
... inflation and growth. Consequently, above certain country-specific inflation thresholds, growth is negatively affected by mean inflation. [e.g., see Barro (1995) and Khan and Senhadji (2001)]. However, this long run channel through which monetary policy affect potential output is not considered in t ...
... inflation and growth. Consequently, above certain country-specific inflation thresholds, growth is negatively affected by mean inflation. [e.g., see Barro (1995) and Khan and Senhadji (2001)]. However, this long run channel through which monetary policy affect potential output is not considered in t ...
ABOUT THE EXAM Multiple Choice Questions—two thirds of total
... savers, fixed-nominal income receivers. Helps borrowers with fixed nominal i.r. loans. a. Demand-pull -too many dollars chasing too few goods; increase in A D in intermediate or vertical range of AS curve. Expectations of inflation may bring about demandpull inflation—consumption increases, and savi ...
... savers, fixed-nominal income receivers. Helps borrowers with fixed nominal i.r. loans. a. Demand-pull -too many dollars chasing too few goods; increase in A D in intermediate or vertical range of AS curve. Expectations of inflation may bring about demandpull inflation—consumption increases, and savi ...
Examination Aids allowed
... 2.(8%) Answer the following questions. The following 3 sub-questions of 1), 2) and 3) are all related to each other, and they progress from question 1) to 2) and finally to 3): Brief verbal explanation is necessary with well-indicated (with all the appropriate indications) graphs. In drawing graphs, ...
... 2.(8%) Answer the following questions. The following 3 sub-questions of 1), 2) and 3) are all related to each other, and they progress from question 1) to 2) and finally to 3): Brief verbal explanation is necessary with well-indicated (with all the appropriate indications) graphs. In drawing graphs, ...
Aggregate Demand and Aggregate Supply
... Nonprice Determinants: Changes in Aggregate Demand (1) ...
... Nonprice Determinants: Changes in Aggregate Demand (1) ...
IS-LM
... The answer to this question is what separates classicals from Keynesians. Classical economists see rapid adjustment of the price level (1) So the economy returns quickly to full employment after a shock (2) If firms change prices instead of output in response to a change in demand, the adjus ...
... The answer to this question is what separates classicals from Keynesians. Classical economists see rapid adjustment of the price level (1) So the economy returns quickly to full employment after a shock (2) If firms change prices instead of output in response to a change in demand, the adjus ...
Why do prices change?
... Your bank offers you a five year CD with an annual interest rate of 7%; annual inflation rates are forecast at 3% for the next five years. Based on this information, which of the following statements is true: A. The nominal interest rate is 4% B. The real interest rate is 7% C. The nominal interest ...
... Your bank offers you a five year CD with an annual interest rate of 7%; annual inflation rates are forecast at 3% for the next five years. Based on this information, which of the following statements is true: A. The nominal interest rate is 4% B. The real interest rate is 7% C. The nominal interest ...
Can Phillips Curve Explain the Recent Behavior of Inflation?
... known as the “Great Recession” affecting the output produced, inflation and unemployment. Many OECD countries entered in a long recession period with significant drops of GDP and increases in unemployment rate. Data on unemployment rate and on NAIRU show that unemployment rate is higher than NAIRU a ...
... known as the “Great Recession” affecting the output produced, inflation and unemployment. Many OECD countries entered in a long recession period with significant drops of GDP and increases in unemployment rate. Data on unemployment rate and on NAIRU show that unemployment rate is higher than NAIRU a ...
Chapter 21 : The Monetary Policy and Aggregate Demand Curves
... Reserve will cause ________ in real GDP and ________ in the inflation in the long run, everything else held constant. A) no change; an increase B) no change; a decrease C) an increase; an increase D) a decrease; a decrease [Q5] (Fall 2010 Qn 10) A shift in tastes toward American goods ______ net ex ...
... Reserve will cause ________ in real GDP and ________ in the inflation in the long run, everything else held constant. A) no change; an increase B) no change; a decrease C) an increase; an increase D) a decrease; a decrease [Q5] (Fall 2010 Qn 10) A shift in tastes toward American goods ______ net ex ...
17 - Seattle Central College
... • Example of how inflation distorts savings. • Buy Microsoft stock at $10 in 1980 and sold it at $50 in 2000. • The capital gain is $40 and your taxed accordingly. But, what if prices doubled during that time? • Thus, the stock is worth $20 and essentially you only make $30 capital gain, but you’re ...
... • Example of how inflation distorts savings. • Buy Microsoft stock at $10 in 1980 and sold it at $50 in 2000. • The capital gain is $40 and your taxed accordingly. But, what if prices doubled during that time? • Thus, the stock is worth $20 and essentially you only make $30 capital gain, but you’re ...
Free 2009 Macro FRQs Click Here
... (ii) Maximum total DD could be as high as $500. This includes $100 DD in the first bank and a PMC of $400. MM [5] x ER [$80] = PMC of $400. Total DD of $500. (iii) The MS was already $100 as the $100 in cash was part of MS, so this results in an increase in money supply of $400. (b) [1 pts] Assume t ...
... (ii) Maximum total DD could be as high as $500. This includes $100 DD in the first bank and a PMC of $400. MM [5] x ER [$80] = PMC of $400. Total DD of $500. (iii) The MS was already $100 as the $100 in cash was part of MS, so this results in an increase in money supply of $400. (b) [1 pts] Assume t ...
The Radical Implications of Stable, Quiet Inflation
... VAR evidence? (A: price puzzle, includes fiscal shocks; long term debt effect.) ...
... VAR evidence? (A: price puzzle, includes fiscal shocks; long term debt effect.) ...
Problem Set 1
... (a) M1 falls $500, M2 is unchanged (remember that M1 is part of M2). (b) M1 and M2 are both unchanged. (c) M1 rises $1500, M2 is unchanged. (d) M1 is unchanged, M2 rises $2000. Chapter 8 7. What are some of the problems with using the leading indicators to forecast recessions? If you were a policyma ...
... (a) M1 falls $500, M2 is unchanged (remember that M1 is part of M2). (b) M1 and M2 are both unchanged. (c) M1 rises $1500, M2 is unchanged. (d) M1 is unchanged, M2 rises $2000. Chapter 8 7. What are some of the problems with using the leading indicators to forecast recessions? If you were a policyma ...
chapter overview
... 2. The aggregate supply and demand model can also be helpful in explaining why demand management policies might entail supply-side effects that limit the attainment of policy goals. The shifts in Figures 16-4 and 16-5 illustrate this problem. 3. Demand-pull and cost-push inflation were introduced ea ...
... 2. The aggregate supply and demand model can also be helpful in explaining why demand management policies might entail supply-side effects that limit the attainment of policy goals. The shifts in Figures 16-4 and 16-5 illustrate this problem. 3. Demand-pull and cost-push inflation were introduced ea ...
Chap31
... movements along a given short-run aggregate supply curve If aggregate demand increased, the price level increased, but unemployment fell If aggregate demand decreased, the price level decreased, but unemployment increased ...
... movements along a given short-run aggregate supply curve If aggregate demand increased, the price level increased, but unemployment fell If aggregate demand decreased, the price level decreased, but unemployment increased ...
Inflation Cycles
... The short-run Phillips curve shows the tradeoff between the inflation rate and unemployment rate, holding constant 1. The expected inflation rate 2. The natural unemployment rate ...
... The short-run Phillips curve shows the tradeoff between the inflation rate and unemployment rate, holding constant 1. The expected inflation rate 2. The natural unemployment rate ...
Macro Economics - e
... b) Fiscal policy : Fiscal policy is the policies of the government expenditure and its revenue. As Keynes believes that expenditure is the causing factor of inflation. When such expenditures are reduced, aggregate demand will be reduced and ultimately it helps to curb inflation in the economy. The o ...
... b) Fiscal policy : Fiscal policy is the policies of the government expenditure and its revenue. As Keynes believes that expenditure is the causing factor of inflation. When such expenditures are reduced, aggregate demand will be reduced and ultimately it helps to curb inflation in the economy. The o ...
AP Macroeconomics Review
... Structural - results from changes in technology or a business restructure (ex. Merger) Seasonal- occurs when industries slow or shut down for a season Cyclical - results from a decline in the business cycle. ...
... Structural - results from changes in technology or a business restructure (ex. Merger) Seasonal- occurs when industries slow or shut down for a season Cyclical - results from a decline in the business cycle. ...