Practice Questions for Midterm Examination of Economics 1.Which
... a. households decide to hold relatively more currency and relatively fewer deposits and banks decide to hold relatively more excess reserves and make fewer loans. b. households decide to hold relatively more currency and relatively fewer deposits and banks decide to hold relatively fewer excess rese ...
... a. households decide to hold relatively more currency and relatively fewer deposits and banks decide to hold relatively more excess reserves and make fewer loans. b. households decide to hold relatively more currency and relatively fewer deposits and banks decide to hold relatively fewer excess rese ...
Document
... Why, since the early 1980s, have Fed policymakers made low inflation a major goal? (a) Because high inflation rates reduce the tax revenues collected by the federal government (b) Because they wish to avoid the rapid and sustained price increases that occurred during the 1970s (c) Because Congress p ...
... Why, since the early 1980s, have Fed policymakers made low inflation a major goal? (a) Because high inflation rates reduce the tax revenues collected by the federal government (b) Because they wish to avoid the rapid and sustained price increases that occurred during the 1970s (c) Because Congress p ...
The impact of foreign interest rates on the economy: The role of the
... This paper is related to two literatures: (i) the impact of domestic monetary policy on the economy, and (ii) the impact of major economies on other countries' business cycles. While not studying monetary policy per se, we are interested in the way interest rates affect the economy. There is an exte ...
... This paper is related to two literatures: (i) the impact of domestic monetary policy on the economy, and (ii) the impact of major economies on other countries' business cycles. While not studying monetary policy per se, we are interested in the way interest rates affect the economy. There is an exte ...
How Industry Conditions Affect Firm Value
... When growth is expected to decline, financial managers reduce production, inventory, new projects, and new capital. The reduction in cash flows from existing and planned new business can cause a firm’s value to decline. Investors tend to shift their investments to those firms that are more ins ...
... When growth is expected to decline, financial managers reduce production, inventory, new projects, and new capital. The reduction in cash flows from existing and planned new business can cause a firm’s value to decline. Investors tend to shift their investments to those firms that are more ins ...
Chapter Ten
... sellers of futures contracts however must post an initial margin requirement (IMR) to enter into a futures deal. The IMR is usually set at about 3%-5% of the face value of the contract, depending on the volatility of the underlying commodity and whether there are daily price limits on the futures co ...
... sellers of futures contracts however must post an initial margin requirement (IMR) to enter into a futures deal. The IMR is usually set at about 3%-5% of the face value of the contract, depending on the volatility of the underlying commodity and whether there are daily price limits on the futures co ...
NBER WORKING PAPER SERIES DEBT/GDP DYNAMICS
... This paper shows the contributions that nominal interest payments, the maturity composition of the debt, inflation, and growth in real GDP have made to the evolution of the U.S. debt to GDP ratio since World War II. Among the questions we answer are these. Did the U.S. inflate away much of the debt ...
... This paper shows the contributions that nominal interest payments, the maturity composition of the debt, inflation, and growth in real GDP have made to the evolution of the U.S. debt to GDP ratio since World War II. Among the questions we answer are these. Did the U.S. inflate away much of the debt ...
34 The Influence of Monetary and Fiscal Policy on Aggregate Demand
... Recall, the money supply is determined by the Fed and can be fixed at whatever level the Fed chooses. Therefore, the money supply is unaffected by the interest rate and is a vertical line in Exhibit 1. People have a demand for money because money, as the economy’s most liquid asset, is a medium of e ...
... Recall, the money supply is determined by the Fed and can be fixed at whatever level the Fed chooses. Therefore, the money supply is unaffected by the interest rate and is a vertical line in Exhibit 1. People have a demand for money because money, as the economy’s most liquid asset, is a medium of e ...
Determinants of Inflation in Nigeria: An Empirical Analysis
... which is the traditional and the most common type of inflation results, form the aggregate demand exceeding the supply of goods and services in an economy. The shortage in the supply could result from underutilization of resources due to inadequate spare parts resulting form high interest and exchan ...
... which is the traditional and the most common type of inflation results, form the aggregate demand exceeding the supply of goods and services in an economy. The shortage in the supply could result from underutilization of resources due to inadequate spare parts resulting form high interest and exchan ...
The changing role of central banks, November 2010
... basis for both monetary policy (price stability) and financial stability. So long as discounts and lending were strongly directed to “real bills”, both price stability and financial stability would be jointly and simultaneously assured. Ever since this Victorian era we have lacked such a unifying th ...
... basis for both monetary policy (price stability) and financial stability. So long as discounts and lending were strongly directed to “real bills”, both price stability and financial stability would be jointly and simultaneously assured. Ever since this Victorian era we have lacked such a unifying th ...
The impact of inflation on family money income Manrique, Luis.
... famil y income distribution. The effects of these policies on unemployment, nominal wages and salaries. and price variabilities are researched and recommendations are presented. An overview of the current Venezuelan economic condition, beset with problems of past inflationary controls and measures, ...
... famil y income distribution. The effects of these policies on unemployment, nominal wages and salaries. and price variabilities are researched and recommendations are presented. An overview of the current Venezuelan economic condition, beset with problems of past inflationary controls and measures, ...
The Economics of Money, Banking, and Financial
... aggregate or the inflation rate. Its strategy revolves around using an implicit nominal anchor in the form of an overriding concern to control inflation in the long run. This involves forward-looking behavior and "pre-emptive strikes" by policy actions to prevent inflation. This forward-looking beha ...
... aggregate or the inflation rate. Its strategy revolves around using an implicit nominal anchor in the form of an overriding concern to control inflation in the long run. This involves forward-looking behavior and "pre-emptive strikes" by policy actions to prevent inflation. This forward-looking beha ...
Historic events
... • Argentina 2001 • Other stress situations during Latin America’s debt crisis in the 1980s ...
... • Argentina 2001 • Other stress situations during Latin America’s debt crisis in the 1980s ...
DETERMINANTS OF HIGH INFLATION IN AN LDC:
... 3.1. Instability in Mean Inflation: Inspection of the stability or otherwise of inflation was done using the Cumulative Sum(CUSUM) of the residuals which revealed that a number of significant structural breaks may have occurred in the periods 1975:3, 1979:4, 1982:4, 1985:2, 1988:3 and 1992:1. The Ch ...
... 3.1. Instability in Mean Inflation: Inspection of the stability or otherwise of inflation was done using the Cumulative Sum(CUSUM) of the residuals which revealed that a number of significant structural breaks may have occurred in the periods 1975:3, 1979:4, 1982:4, 1985:2, 1988:3 and 1992:1. The Ch ...
Interest Rates, Unemployment and Inflation
... the Bank of Canada had begun to set as early as in 1988. It can also be argued that, in contrast, fiscal policy had been on the right course. The structural fiscal balance had been improving every year after 1985, and as of 1989 the debt-to-GDP ratio had been stabilized. The comparison with US event ...
... the Bank of Canada had begun to set as early as in 1988. It can also be argued that, in contrast, fiscal policy had been on the right course. The structural fiscal balance had been improving every year after 1985, and as of 1989 the debt-to-GDP ratio had been stabilized. The comparison with US event ...
NBER WORKING PAPER SERIES TAX REFORM Patric H. Hendershott David C. Ling
... increase with a household's income. This well understood fact has led to periodic proposals to substitute a tax credit equal to, say, 25 percent of housing—related expenses for their current deductibility. Because all of the tax reforms considered in this paper (Hall—Rabushka, Kemp—Kasten and Bradle ...
... increase with a household's income. This well understood fact has led to periodic proposals to substitute a tax credit equal to, say, 25 percent of housing—related expenses for their current deductibility. Because all of the tax reforms considered in this paper (Hall—Rabushka, Kemp—Kasten and Bradle ...
Powerpoint Presentation
... The permanent income hypothesis is that people spend money based on perceived average life income. The life-cycle hypothesis is one variant: young and old spend more than they earn, middle age earn more than they spend. ...
... The permanent income hypothesis is that people spend money based on perceived average life income. The life-cycle hypothesis is one variant: young and old spend more than they earn, middle age earn more than they spend. ...
Chapter 10
... • This is because service prices (health care and education etc.) must rise relative to goods prices • Deflation creates bankruptcy for business in debt • With zero inflation, the only way to reduce real wages to cure unemployment would be to cut money wages, which is strongly resisted with strikes/ ...
... • This is because service prices (health care and education etc.) must rise relative to goods prices • Deflation creates bankruptcy for business in debt • With zero inflation, the only way to reduce real wages to cure unemployment would be to cut money wages, which is strongly resisted with strikes/ ...
Chapter 9: Unemployment and Inflation
... Long periods of unemployment are bad for workers, as their skills decay and they risk becoming discouraged and depressed. • During the Great Depression of the 1930s, some people were unemployed for years at a time. Since World War II, average lengths of unemployment have been relatively low; but tha ...
... Long periods of unemployment are bad for workers, as their skills decay and they risk becoming discouraged and depressed. • During the Great Depression of the 1930s, some people were unemployed for years at a time. Since World War II, average lengths of unemployment have been relatively low; but tha ...
Forecasting real GDP: what role for narrow money?
... total monetary aggregates; for example, in 2001, currency was only about 15 % of euro area M1 and only 2 % of total financial assets of the non-financial sector. It seems doubtful that such a small aggregate can have a significant impact on the economy. The judgement would be different, however, if ...
... total monetary aggregates; for example, in 2001, currency was only about 15 % of euro area M1 and only 2 % of total financial assets of the non-financial sector. It seems doubtful that such a small aggregate can have a significant impact on the economy. The judgement would be different, however, if ...
Interest rate
An interest rate is the rate at which interest is paid by borrowers (debtors) for the use of money that they borrow from lenders (creditors). Specifically, the interest rate is a percentage of principal paid a certain number of times per period for all periods during the total term of the loan or credit. Interest rates are normally expressed as a percentage of the principal for a period of one year, sometimes they are expressed for different periods such as a month or a day. Different interest rates exist parallelly for the same or comparable time periods, depending on the default probability of the borrower, the residual term, the payback currency, and many more determinants of a loan or credit. For example, a company borrows capital from a bank to buy new assets for its business, and in return the lender receives rights on the new assets as collateral and interest at a predetermined interest rate for deferring the use of funds and instead lending it to the borrower.Interest-rate targets are a vital tool of monetary policy and are taken into account when dealing with variables like investment, inflation, and unemployment. The central banks of countries generally tend to reduce interest rates when they wish to increase investment and consumption in the country's economy. However, a low interest rate as a macro-economic policy can be risky and may lead to the creation of an economic bubble, in which large amounts of investments are poured into the real-estate market and stock market. In developed economies, interest-rate adjustments are thus made to keep inflation within a target range for the health of economic activities or cap the interest rate concurrently with economic growth to safeguard economic momentum.