2. A More Realistic Aggregate Demand
... consistency requires drawing on the underlying microeconomic fundamentals of firm behavior and market adjustment. Empirical consistency requires accounting for observed changes in real national output and the aggregate price level, for example, the absence of deflation over the past half-century for ...
... consistency requires drawing on the underlying microeconomic fundamentals of firm behavior and market adjustment. Empirical consistency requires accounting for observed changes in real national output and the aggregate price level, for example, the absence of deflation over the past half-century for ...
The Aggregate Supply Curve
... Starting from wage determination and price determination in the labor market, we have derived the aggregate supply relation. This means that for a given expected price level, the price level is an increasing function of the level of output. It is represented by an upward-sloping curve, called th ...
... Starting from wage determination and price determination in the labor market, we have derived the aggregate supply relation. This means that for a given expected price level, the price level is an increasing function of the level of output. It is represented by an upward-sloping curve, called th ...
Equilibrium in the Keynesian model
... The Keynesian model assumes that high unemployment, excess capacity in firms, high levels of stocks and wage stickiness all contribute to perfectly elastic supply at low levels of income. Furthermore, markets are inherently unstable and do not necessarily clear immediately. A key element in Keynesia ...
... The Keynesian model assumes that high unemployment, excess capacity in firms, high levels of stocks and wage stickiness all contribute to perfectly elastic supply at low levels of income. Furthermore, markets are inherently unstable and do not necessarily clear immediately. A key element in Keynesia ...
chap11
... • Economist Robert Barro argues that consumers will see the budget deficit as an increase in future taxes and cut back on consumption – what matters for the determination of consumption spending this year is not what taxes are levied on you this year, but what all the changes in government policy te ...
... • Economist Robert Barro argues that consumers will see the budget deficit as an increase in future taxes and cut back on consumption – what matters for the determination of consumption spending this year is not what taxes are levied on you this year, but what all the changes in government policy te ...
Forecasting Mexico`s Inflation: the Effects of an
... Tequila effect.” In addition, “the peso devaluation and subsequent inflation surge severely damaged the Bank [of Mexico]’s credibility” (Schmidt-Hebbel and Werner, 2002). In order to regain its confidence, in 1995, the Bank of Mexico started setting official targets appeasing the “public criticism f ...
... Tequila effect.” In addition, “the peso devaluation and subsequent inflation surge severely damaged the Bank [of Mexico]’s credibility” (Schmidt-Hebbel and Werner, 2002). In order to regain its confidence, in 1995, the Bank of Mexico started setting official targets appeasing the “public criticism f ...
The Dynamics of the Hungarian Hyperinflation, 1945-6
... portrayed as a demand shock that should stimulate consumption and so raise quantities supplied. Indeed, a presumption in high inflation is that there is little point in holding money and so it is rapidly converted into goods, and, in turn, existing capital is utilized more fully. However, in this ca ...
... portrayed as a demand shock that should stimulate consumption and so raise quantities supplied. Indeed, a presumption in high inflation is that there is little point in holding money and so it is rapidly converted into goods, and, in turn, existing capital is utilized more fully. However, in this ca ...
Effects of the Exchange Rate on Output and Price Level:Evidence
... This approach uses simulation models to analyze the impact of exchange rate changes on output. Gylfason and Schmidt (1983) constructed a small macro model of an open economy. They found that a devaluation causes expansionary effects through aggregate demand and contractionary effects through aggrega ...
... This approach uses simulation models to analyze the impact of exchange rate changes on output. Gylfason and Schmidt (1983) constructed a small macro model of an open economy. They found that a devaluation causes expansionary effects through aggregate demand and contractionary effects through aggrega ...
Notes on Keynesian models of recession and depression
... Tobin’s model has two major features. First it developes two different dynamic versions of a simple macroeconomic model, implementing keynesian views and evaluating explicitly the dynamic stability implications of Walrasian versus Marshallian assumptions about quantity adjustment. As to the choice o ...
... Tobin’s model has two major features. First it developes two different dynamic versions of a simple macroeconomic model, implementing keynesian views and evaluating explicitly the dynamic stability implications of Walrasian versus Marshallian assumptions about quantity adjustment. As to the choice o ...
Econ202 Sp14 answers 1 2 3 4 5 6 to final exam group C
... This is nothing but saying that the LM* curve is positively sloped. (ALTERNATIVE ANSWER – reverse the direction of all changes: As e decreases (domestic currency depreciates), PF / e increases (price of foreign goods measured in domestic currency increases). As a result of this, P increases (price l ...
... This is nothing but saying that the LM* curve is positively sloped. (ALTERNATIVE ANSWER – reverse the direction of all changes: As e decreases (domestic currency depreciates), PF / e increases (price of foreign goods measured in domestic currency increases). As a result of this, P increases (price l ...
Leveraged Bubbles
... finance capitalism over the last 150 years. Financial crises and asset price boom-busts are relatively rare events. Thus, any empirical study must employ very long time series and the historical experience of more than one country to have any hope of conducting a reasonable statistical analysis, as ...
... finance capitalism over the last 150 years. Financial crises and asset price boom-busts are relatively rare events. Thus, any empirical study must employ very long time series and the historical experience of more than one country to have any hope of conducting a reasonable statistical analysis, as ...
Fiscal-monetary interaction and ambiguity in the wake of the crisis Princeton University
... The monetary policy in these conditions is a threat to drive interest rates arbitrarily high as inflation rises. This can fail to violate any feasibility constraint or transversality condition. To rule out such “flight from money” equilibria, one can invoke the notion that at some price level the fi ...
... The monetary policy in these conditions is a threat to drive interest rates arbitrarily high as inflation rises. This can fail to violate any feasibility constraint or transversality condition. To rule out such “flight from money” equilibria, one can invoke the notion that at some price level the fi ...
The High Sensitivity of Economic Activity to Financial Frictions
... two features that combine to amplify the effects of driving forces to seemingly realistic levels: (1) a wedge between the output price and factor prices that declines as output rises and (2) more elastic labor supply than is found in studies of individual behavior. The second feature effectively inc ...
... two features that combine to amplify the effects of driving forces to seemingly realistic levels: (1) a wedge between the output price and factor prices that declines as output rises and (2) more elastic labor supply than is found in studies of individual behavior. The second feature effectively inc ...
Influence of Monetary Policy on Aggregate Demand
... ANSWER: b. an increase in the money supply Which of the following shifts aggregate demand to the left? a. an increase in the price level b. an increase in the money supply c. a decrease in the price level d. a decrease in the money supply ANSWER: d. a decrease in the money supply Which of the follow ...
... ANSWER: b. an increase in the money supply Which of the following shifts aggregate demand to the left? a. an increase in the price level b. an increase in the money supply c. a decrease in the price level d. a decrease in the money supply ANSWER: d. a decrease in the money supply Which of the follow ...
Inflation, Its Causes and Cures
... cycle upswings are almost always characterized by price rises. If then the long-term price trend should be horizontal, i.e., if long-run inflation is to be avoided, the price level must be allowed to fall in depressions to make up for the price rise during boom periods. It is well known that this di ...
... cycle upswings are almost always characterized by price rises. If then the long-term price trend should be horizontal, i.e., if long-run inflation is to be avoided, the price level must be allowed to fall in depressions to make up for the price rise during boom periods. It is well known that this di ...
Macroeconomic Measurement 1: Values and Prices
... markets is home production (cooking your own meal, mowing your own lawn) and the underground economy, that can be big in less developed countries especially for fiscal reasons. The size of the underground economy is difficult to measure but there have been attempts, mostly based on the use of cash o ...
... markets is home production (cooking your own meal, mowing your own lawn) and the underground economy, that can be big in less developed countries especially for fiscal reasons. The size of the underground economy is difficult to measure but there have been attempts, mostly based on the use of cash o ...
Review Questions and Answers for Chapter 11
... (1) why prices in general rise or fall; (2) what determines the level of aggregate output; and (3) what determines changes in the level of aggregate output. The aggregate model is needed to explain these changes. It simplifies the analysis of prices by combining the prices of all individual goods an ...
... (1) why prices in general rise or fall; (2) what determines the level of aggregate output; and (3) what determines changes in the level of aggregate output. The aggregate model is needed to explain these changes. It simplifies the analysis of prices by combining the prices of all individual goods an ...
Dynamic Stochastic General Equilibrium Models as a Tool for Policy
... unique. Various types of imperfections and rigidities in the markets for goods, for factors of production and for financial assets have been introduced alongside a broader set of random disturbances. The current generation of DSGE models has also been successfully used to address normative issues co ...
... unique. Various types of imperfections and rigidities in the markets for goods, for factors of production and for financial assets have been introduced alongside a broader set of random disturbances. The current generation of DSGE models has also been successfully used to address normative issues co ...
Reading Graphs and Making Graphs
... the horizontal distance) then the percentage increase was the same. For example, we have superimposed two identical red triangles to show that the percentage increase in stock prices between 1950 and 1958 was about the same as between 1982 and 1990. The red triangles are identical so over the same 8 ...
... the horizontal distance) then the percentage increase was the same. For example, we have superimposed two identical red triangles to show that the percentage increase in stock prices between 1950 and 1958 was about the same as between 1982 and 1990. The red triangles are identical so over the same 8 ...
Economics 100 Spring 2015 Answers to Homework #5 Due May 7
... 200 + 350 = 550 people. Notice that the 50 part-time workers who wish to work full-time change their status in the calculation of the labor force from being considered "employed" to now being considered "unemployed" due to the change in the definition of unemployed. New unemployment rate = [(new num ...
... 200 + 350 = 550 people. Notice that the 50 part-time workers who wish to work full-time change their status in the calculation of the labor force from being considered "employed" to now being considered "unemployed" due to the change in the definition of unemployed. New unemployment rate = [(new num ...
The Trade-off between dollar value and oil price on
... Substantial foreign reserves to support government expenditure..........11 ...
... Substantial foreign reserves to support government expenditure..........11 ...