Risk of deflation?
... growth and weak money and credit creation, this decline has triggered discussions about the extent to which there is a risk of deflation in the euro area. In this context, it is important to distinguish between the different definitions of the term deflation. Taking a very narrow definition, some ob ...
... growth and weak money and credit creation, this decline has triggered discussions about the extent to which there is a risk of deflation in the euro area. In this context, it is important to distinguish between the different definitions of the term deflation. Taking a very narrow definition, some ob ...
Test #2
... Think, for example, how increased availability and use of credit and debit cards, ATMs, and internet or electronic banking might affect cash management and the transactions demand for money by households. And what about recent and historical changes in financial and cash management practices in busi ...
... Think, for example, how increased availability and use of credit and debit cards, ATMs, and internet or electronic banking might affect cash management and the transactions demand for money by households. And what about recent and historical changes in financial and cash management practices in busi ...
Inflation and deflation
... What is inflation? Inflation is a sustained rise in the price level. This means that, on average, the prices of products in an economy are going up over time. As the price level rises each pound buys fewer products. This means the value or purchasing power of money falls. What is deflation? Deflatio ...
... What is inflation? Inflation is a sustained rise in the price level. This means that, on average, the prices of products in an economy are going up over time. As the price level rises each pound buys fewer products. This means the value or purchasing power of money falls. What is deflation? Deflatio ...
Bank of England Inflation Report May 2011
... (a) Charts 5.9 and 5.10 represent cross-sections of the GDP growth fan chart in 2012 Q2 and 2013 Q2 for the market interest rate projection. They have been conditioned on the assumption that the stock of purchased assets financed by the issuance of central bank reserves remains at £200 billion throu ...
... (a) Charts 5.9 and 5.10 represent cross-sections of the GDP growth fan chart in 2012 Q2 and 2013 Q2 for the market interest rate projection. They have been conditioned on the assumption that the stock of purchased assets financed by the issuance of central bank reserves remains at £200 billion throu ...
Home Country Macroeconomic Influences on Outward Cross
... supported by Tolentino (2010) who argued that, relatively low interest rates are associated with a home country’s capital abundance and forms an important impetus for capital investment outflow abroad to diversify and enhance the level of profitability. Empirical studies that examined the effect of ...
... supported by Tolentino (2010) who argued that, relatively low interest rates are associated with a home country’s capital abundance and forms an important impetus for capital investment outflow abroad to diversify and enhance the level of profitability. Empirical studies that examined the effect of ...
Disposable income
... – Large MPC results in larger increases in spending • Multiplier and MPS inversely related – Large MPS results in smaller increases in spending ...
... – Large MPC results in larger increases in spending • Multiplier and MPS inversely related – Large MPS results in smaller increases in spending ...
Fixed Exchange Rates and Currency Unions
... Government or central bank becomes a monopolist controlling all sales of foreign currency at set price Easy to “fix” the price of foreign exchange ...
... Government or central bank becomes a monopolist controlling all sales of foreign currency at set price Easy to “fix” the price of foreign exchange ...
Labor Market Equilibrium and the FE curve
... • Given a fixed supply of real balances (M/P) each interest rate will have a corresponding level of output so that money demand equals money supply ( M/P = k*Y) • Suppose interest rates fall. How is the equilibrium affected? – Real Money Supply is assumed to be fixed – Money demand will, however, ri ...
... • Given a fixed supply of real balances (M/P) each interest rate will have a corresponding level of output so that money demand equals money supply ( M/P = k*Y) • Suppose interest rates fall. How is the equilibrium affected? – Real Money Supply is assumed to be fixed – Money demand will, however, ri ...
Outline of Lecture 1 – Basic Economics Concepts
... Reason 2 - The Price Level and Investment: The Interest-Rate Effect A decrease in the price level less money households need to buy goods and services households try to convert some of their money into interest-bearing assets the interest rate will drop encourage borrowing by firms on invest ...
... Reason 2 - The Price Level and Investment: The Interest-Rate Effect A decrease in the price level less money households need to buy goods and services households try to convert some of their money into interest-bearing assets the interest rate will drop encourage borrowing by firms on invest ...
Chapter 10
... investment to do things like replace old factories and equipment, or to buy more and better capital goods. Plays a major role in our nation’s longterm economic growth and future living standards. Higher savings and investment contribute to increased productivity and stronger economic growth. ...
... investment to do things like replace old factories and equipment, or to buy more and better capital goods. Plays a major role in our nation’s longterm economic growth and future living standards. Higher savings and investment contribute to increased productivity and stronger economic growth. ...
Copyright © 2001 by Harcourt, Inc. All rights reserved.
... We will have more to say about the cost of equity later (a lot more, in fact) but first, more about interest rates ...
... We will have more to say about the cost of equity later (a lot more, in fact) but first, more about interest rates ...
M09_ABEL4987_7E_IM_C09
... a. How rapidly does the economy reach general equilibrium? b. What are the effects of monetary policy on the economy? 2. Price adjustment and the self-correcting economy a. The economy is brought into general equilibrium by adjustment of the price level b. The speed at which this adjustment occurs i ...
... a. How rapidly does the economy reach general equilibrium? b. What are the effects of monetary policy on the economy? 2. Price adjustment and the self-correcting economy a. The economy is brought into general equilibrium by adjustment of the price level b. The speed at which this adjustment occurs i ...
Monetary Policy - Macmillan Learning
... holding money fell. The last two rows of Table 15-2 summarize this comparison: they give the differences between the interest rates on demand deposits and on currency and the interest rate on CDs. These differences—the opportunity cost of holding money rather than interest-bearing assets—declined sh ...
... holding money fell. The last two rows of Table 15-2 summarize this comparison: they give the differences between the interest rates on demand deposits and on currency and the interest rate on CDs. These differences—the opportunity cost of holding money rather than interest-bearing assets—declined sh ...
No:10 Research Department Working Paper
... over monetary aggregates. Priority was given to financial stability rather than controlling inflation in the face of increasing currency substitution as seen from a rise in the share of foreign currency denominated bank deposits in total deposits from 24% in 1989 to 46% in 1999. Monetary policy has ...
... over monetary aggregates. Priority was given to financial stability rather than controlling inflation in the face of increasing currency substitution as seen from a rise in the share of foreign currency denominated bank deposits in total deposits from 24% in 1989 to 46% in 1999. Monetary policy has ...
Mankiw 6e PowerPoints
... Over sufficiently long periods, all firms should be able to adjust their prices So in long run, s = 0 and should have no relationship between P and Y : LRAS vertical at Y Would also be case in “short run" if α = 0 ...
... Over sufficiently long periods, all firms should be able to adjust their prices So in long run, s = 0 and should have no relationship between P and Y : LRAS vertical at Y Would also be case in “short run" if α = 0 ...
Practise Final Exam Spring 2013.tst
... E) must lower the target exchange rate. 50) Suppose that a country's government expenditures are $500 billion, net taxes are $400 billion, saving is $200 billion, and investment is $250 billion. The country has a government budget A) surplus and a private sector surplus. B) surplus and a private sec ...
... E) must lower the target exchange rate. 50) Suppose that a country's government expenditures are $500 billion, net taxes are $400 billion, saving is $200 billion, and investment is $250 billion. The country has a government budget A) surplus and a private sector surplus. B) surplus and a private sec ...
We’re all in this together: the transmission of international 1
... the importance of understanding how shocks (unanticipated changes in economic variables) in one or more countries can affect the stability of others has grown. The recent global crisis has also brought into sharp relief the connectedness between different economies – financial disruptions centred in ...
... the importance of understanding how shocks (unanticipated changes in economic variables) in one or more countries can affect the stability of others has grown. The recent global crisis has also brought into sharp relief the connectedness between different economies – financial disruptions centred in ...
U.S. federal budget deficits are back big time. What will be their long
... Rubin raised taxes in 1993, the 10-year note bottomed at 5.25 percent. Today, with large tax cuts and rising deficit forecasts on the horizon, the 10-year is at 3.5 percent. Doesn’t this tell us something? The preponderance of research argues strongly that inflation expectations and expected real in ...
... Rubin raised taxes in 1993, the 10-year note bottomed at 5.25 percent. Today, with large tax cuts and rising deficit forecasts on the horizon, the 10-year is at 3.5 percent. Doesn’t this tell us something? The preponderance of research argues strongly that inflation expectations and expected real in ...
Short-Term Finance and Planning
... levels of current assets, the costs to store and finance the assets Shortage costs – decrease with increased levels of current assets Trading or order costs Costs related to safety reserves, i.e., lost sales and customers, and production stoppages ...
... levels of current assets, the costs to store and finance the assets Shortage costs – decrease with increased levels of current assets Trading or order costs Costs related to safety reserves, i.e., lost sales and customers, and production stoppages ...
Speech by Charles Bean at Oxonia Distinguished
... structural link between house prices and consumption – housing wealth is, after all, the key source of collateral for most households – but rather that one cannot necessarily rely on past data correlations to be maintained in such circumstances. Uncertainty about the structure of the economy The thi ...
... structural link between house prices and consumption – housing wealth is, after all, the key source of collateral for most households – but rather that one cannot necessarily rely on past data correlations to be maintained in such circumstances. Uncertainty about the structure of the economy The thi ...
CH07 - U of L Class Index
... which does vary over time ◦ Have to estimate beta, which also varies over time ◦ We are relying on the past to predict the future, which is not always reliable ...
... which does vary over time ◦ Have to estimate beta, which also varies over time ◦ We are relying on the past to predict the future, which is not always reliable ...
Fiscal-monetary interaction and ambiguity in the wake of the crisis Princeton University
... Various subsets of these authors, in a series of papers, have shown that treating “fiscal dominant” or “monetary dominant” as mutually exclusive categories is unrealistic. Suppose policy does currently have an apparently “monetary dominant” configuration. The required fiscal behavior is that nominal ...
... Various subsets of these authors, in a series of papers, have shown that treating “fiscal dominant” or “monetary dominant” as mutually exclusive categories is unrealistic. Suppose policy does currently have an apparently “monetary dominant” configuration. The required fiscal behavior is that nominal ...
... policy should “lean against the wind,” with policy expansionary when output and inflation are below their equilibrium levels and contractionary when they are above their equilibrium levels. The interaction of monetary and fiscal policy Monetary policy rules are often expressed such that the choice v ...
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.