HW6-sol
... When inflation expectations increase workers will demand higher wage increases, which makes costs rise faster, and therefore firms raise prices more quickly. So inflation becomes persistent, that is, the higher expectation of inflation becomes “self fulfilling.” d) Describe the most obvious event fr ...
... When inflation expectations increase workers will demand higher wage increases, which makes costs rise faster, and therefore firms raise prices more quickly. So inflation becomes persistent, that is, the higher expectation of inflation becomes “self fulfilling.” d) Describe the most obvious event fr ...
Practice Quizzes (Word)
... 1. Which of the following will result if there is a decrease in aggregate demand? a. expansion; inflation c. expansion; deflation b. recession; deflation d. recession; inflation 2. Which of the following scenarios can cause cost-push inflation (and therefore stagflation)? a. an increase in taxes on ...
... 1. Which of the following will result if there is a decrease in aggregate demand? a. expansion; inflation c. expansion; deflation b. recession; deflation d. recession; inflation 2. Which of the following scenarios can cause cost-push inflation (and therefore stagflation)? a. an increase in taxes on ...
Globalisation and Inflation
... But this downward pressure on the wage of unskilled labour relative to that of skilled labour does not imply that unskilled labour in the industrialised economies is necessarily worse off. The resulting exploitation of the gains from trade means that the developed economies have access to some goods ...
... But this downward pressure on the wage of unskilled labour relative to that of skilled labour does not imply that unskilled labour in the industrialised economies is necessarily worse off. The resulting exploitation of the gains from trade means that the developed economies have access to some goods ...
Quiz #3 - Christopher R. Zapalski
... 11. The intersection of the aggregate demand and aggregate supply curves determines the: A. shape of the aggregate supply curve. B. shape of the aggregate demand curve. C. per-unit cost of production in the economy. D. equilibrium level of real domestic output and prices. ...
... 11. The intersection of the aggregate demand and aggregate supply curves determines the: A. shape of the aggregate supply curve. B. shape of the aggregate demand curve. C. per-unit cost of production in the economy. D. equilibrium level of real domestic output and prices. ...
NBER WORKING PAPER SERIES MACROECONOMICS OF STAGFLATION UNDER FLEXIBLE EXCHANGE RATES
... Thus, far from implying "monetary independence", flexible exchange rates make the domestic economy even more sensitive to monetary policies abroad, a dependence that the 1980/81 experience with an appreciating dollar clearly illustrates. ...
... Thus, far from implying "monetary independence", flexible exchange rates make the domestic economy even more sensitive to monetary policies abroad, a dependence that the 1980/81 experience with an appreciating dollar clearly illustrates. ...
Department of Economics Working Papers
... suitable increases in the rate of monetary expansion. In the new Classical interpretation that began with Edmund Phelps (1967), Milton Friedman (1968)9 and Lucas and Rapping (1969), each point was an equilibrium point because demands and supplies of agents were shifted from their full-information lo ...
... suitable increases in the rate of monetary expansion. In the new Classical interpretation that began with Edmund Phelps (1967), Milton Friedman (1968)9 and Lucas and Rapping (1969), each point was an equilibrium point because demands and supplies of agents were shifted from their full-information lo ...
Interest rates: are investors in for a nasty shock?
... Important information: The views and opinions contained herein are those of the authors, and may not necessarily represent views expressed or reflected in other Schroders communications, strategies or funds. This document is intended to be for information purposes only and it is not intended as prom ...
... Important information: The views and opinions contained herein are those of the authors, and may not necessarily represent views expressed or reflected in other Schroders communications, strategies or funds. This document is intended to be for information purposes only and it is not intended as prom ...
Lecture 11: Inflation: Its Causes and Costs
... monetary debtors and creditors. This may result in wealth transfers that would not otherwise be acceptable. ...
... monetary debtors and creditors. This may result in wealth transfers that would not otherwise be acceptable. ...
Student Study Guide for Chapter 12
... turn bids up prices as producers try to cover their higher cost of production, which then puts further upward pressure on wages as workers demand compensation for higher prices, etc., the result is what is called a _____________. 6. At least two times in U.S. economic history, during WWII and the ea ...
... turn bids up prices as producers try to cover their higher cost of production, which then puts further upward pressure on wages as workers demand compensation for higher prices, etc., the result is what is called a _____________. 6. At least two times in U.S. economic history, during WWII and the ea ...
6 Aggregate Supply: Wages, Prices, and Unemployment
... markup over labor costs. For example, suppose that the unit labor costthe cost of paying someone to produce 1 unit of outputis $5. Firms might add $.50 to cover other costs, and set their price at $5 + $.50 = $5.50. Prices will rise with wages. Using these two rules to transform unemployment and w ...
... markup over labor costs. For example, suppose that the unit labor costthe cost of paying someone to produce 1 unit of outputis $5. Firms might add $.50 to cover other costs, and set their price at $5 + $.50 = $5.50. Prices will rise with wages. Using these two rules to transform unemployment and w ...
What else is at the NY Fed?
... rate, so when the Fed buys bonds, the demand for bonds rises, which increases their prices and lowers interest rates — when the Fed sells bonds, the supply of bonds rises, lowering their prices and raising interest rates ...
... rate, so when the Fed buys bonds, the demand for bonds rises, which increases their prices and lowers interest rates — when the Fed sells bonds, the supply of bonds rises, lowering their prices and raising interest rates ...
DEFLATION: AN OLD SPECTRE NOW COMING BACK TO HAUNT US
... • WITH DEFLATION/LOWFLATION, EMPLOYERS HAVE A POWERFUL ARGUMENT NOT TO INCREASE WAGES … • …. « INFLATION IS LOW OR ZERO, SO WHY INCREASE NOMINAL WAGES AT ALL »…. • ….HOWEVER, IF WAGE INCREASES ARE ZERO/VERY LOW….INFLATION WILL BE ZERO/NEGATIVE IN THE NEXT ROUND • ALREADY INDICATIONS OF THIS STARTING ...
... • WITH DEFLATION/LOWFLATION, EMPLOYERS HAVE A POWERFUL ARGUMENT NOT TO INCREASE WAGES … • …. « INFLATION IS LOW OR ZERO, SO WHY INCREASE NOMINAL WAGES AT ALL »…. • ….HOWEVER, IF WAGE INCREASES ARE ZERO/VERY LOW….INFLATION WILL BE ZERO/NEGATIVE IN THE NEXT ROUND • ALREADY INDICATIONS OF THIS STARTING ...
out-infl-dyn-partI
... In BJM, Aggregate Prices, which is our variable, P, don’t fall. That is, the BJM model is New Keynesian. BJM “model” this fact by having Prices set by mark-up pricing. See Figures 9-4, 9-5, and Figure 1 in the “Focus” at the end of Chapter 9. So the MAS curve we use exclusively is the New Keynsian c ...
... In BJM, Aggregate Prices, which is our variable, P, don’t fall. That is, the BJM model is New Keynesian. BJM “model” this fact by having Prices set by mark-up pricing. See Figures 9-4, 9-5, and Figure 1 in the “Focus” at the end of Chapter 9. So the MAS curve we use exclusively is the New Keynsian c ...
Document
... households to work or save depends largely on which of the following? a. What philosophies are taught in school b. The nature of the people in a particular geographic area c. The government’s tax policy and the economic outlook d. The availability of government subsides ANSWER: c 24. An unstable eco ...
... households to work or save depends largely on which of the following? a. What philosophies are taught in school b. The nature of the people in a particular geographic area c. The government’s tax policy and the economic outlook d. The availability of government subsides ANSWER: c 24. An unstable eco ...
price level
... i. Recall real growth rates are adjusted for inflation. If prices double, GDP should double. But GDP adjusted for inflation should be the same. ii. One of the most fundamental assumptions of the LRAS is that wages and prices are completely flexible—that’s what the “long-run” means. iii. Thus higher ...
... i. Recall real growth rates are adjusted for inflation. If prices double, GDP should double. But GDP adjusted for inflation should be the same. ii. One of the most fundamental assumptions of the LRAS is that wages and prices are completely flexible—that’s what the “long-run” means. iii. Thus higher ...
The production possibilities curve illustrates which two of the
... There are external benefits associated with its consumption. The private sector usually produces flood control projects. It is not divisible and therefore cannot be kept from people who do not pay. Flood control is paid for by taxpayers. ...
... There are external benefits associated with its consumption. The private sector usually produces flood control projects. It is not divisible and therefore cannot be kept from people who do not pay. Flood control is paid for by taxpayers. ...
Solutions to PSET 4 1. Why does the AS curve slope up, at least in
... curve is always vertical. What is this argument? The aggregate supply curve describes the relationship between the price level and the total quantity of output produced by firms. Because firms have market power (as in monopolistic competition) they may raise output and prices in response to an incre ...
... curve is always vertical. What is this argument? The aggregate supply curve describes the relationship between the price level and the total quantity of output produced by firms. Because firms have market power (as in monopolistic competition) they may raise output and prices in response to an incre ...
Lucas Imperfect-Information Model
... when output changes. Empirically, there is a negative relationship between unemployment and output in the short-run, according to an expectations-augmented Phillips Curve. Friedman (1968) and Phelps (1968). This implies a positive relationship between inflation and output. This chapter focuses on th ...
... when output changes. Empirically, there is a negative relationship between unemployment and output in the short-run, according to an expectations-augmented Phillips Curve. Friedman (1968) and Phelps (1968). This implies a positive relationship between inflation and output. This chapter focuses on th ...
Inflation, Unemployment, and Stabilization Policies: Macroeconomic
... Keynes presents his explanation of what was wrong with the economy during the Great Depression in a book titled The General Theory of Employment, Interest, and Money. (Note: I’m not testing on this, but if for some reason the title of the book shows up on the AP exam, think Keynes.) Keynesian econom ...
... Keynes presents his explanation of what was wrong with the economy during the Great Depression in a book titled The General Theory of Employment, Interest, and Money. (Note: I’m not testing on this, but if for some reason the title of the book shows up on the AP exam, think Keynes.) Keynesian econom ...