Midterm Exam #2 2008
... capital increases the amount of output per worker but by a smaller amount than any previous increase in the stock of capital. ...
... capital increases the amount of output per worker but by a smaller amount than any previous increase in the stock of capital. ...
Chapter 13
... • Reaganomics worked except for the fact that government spending actually _________________________ as we have studied. • Eventually ______________________ were needed to slow inflation. The 1990’s • Largest _____________________ in history. • Pledge by _________________ to balance the budget, whic ...
... • Reaganomics worked except for the fact that government spending actually _________________________ as we have studied. • Eventually ______________________ were needed to slow inflation. The 1990’s • Largest _____________________ in history. • Pledge by _________________ to balance the budget, whic ...
14.02 Principles of Macroeconomics
... Assume that in period t-1, the unemployment rate is equal to the natural rate and the inflation rate is zero. 1. What is the natural rate of unemployment in the economy? In the medium run inflation is equal to expected inflation. The natural rate of unemployment is equal to 6%. 2. Suppose that begin ...
... Assume that in period t-1, the unemployment rate is equal to the natural rate and the inflation rate is zero. 1. What is the natural rate of unemployment in the economy? In the medium run inflation is equal to expected inflation. The natural rate of unemployment is equal to 6%. 2. Suppose that begin ...
review guide for principles of macro economics
... Federal Reserve System, the importance of an independent FED 4. Monetary Policy and how it affects the money supply and interest rates. Understand the FED’s main powers: Discount Rate Reserve requirement Open Market Operations How does each of these work to increase/decrease the money supply ...
... Federal Reserve System, the importance of an independent FED 4. Monetary Policy and how it affects the money supply and interest rates. Understand the FED’s main powers: Discount Rate Reserve requirement Open Market Operations How does each of these work to increase/decrease the money supply ...
Chpt24
... Interest Rates as an Operating Target The Fed sets the discount rate on loans to banks and the deposit rate charged on reserves to form a corridor. The federal funds target rate is set in the middle of the corridor. Open market operations are used to adjust the supply of reserves to keep the ...
... Interest Rates as an Operating Target The Fed sets the discount rate on loans to banks and the deposit rate charged on reserves to form a corridor. The federal funds target rate is set in the middle of the corridor. Open market operations are used to adjust the supply of reserves to keep the ...
Ch. 10: Handout
... The lower the CPI , the higher purchasing power of nominal income The higher the CPI, the lower purchasing power of nominal income Therefore, those whose incomes increase at a higher rate than the rise in prices have a higher standard of living, visa versa Limitations of CPI 1. _____________________ ...
... The lower the CPI , the higher purchasing power of nominal income The higher the CPI, the lower purchasing power of nominal income Therefore, those whose incomes increase at a higher rate than the rise in prices have a higher standard of living, visa versa Limitations of CPI 1. _____________________ ...
Document
... Provide a brief economic explanation for the changes you showed in your diagrams above as well as the adjustment process that the economy undergoes with respect to economic output, the real interest rate, and the price level. Be sure to compare the level of economic output, the real interest rate, a ...
... Provide a brief economic explanation for the changes you showed in your diagrams above as well as the adjustment process that the economy undergoes with respect to economic output, the real interest rate, and the price level. Be sure to compare the level of economic output, the real interest rate, a ...
Midterm 3
... In the 1990’s, Argentina had a fixed exchange rate with the US dollar, but found it could not keep its economy close to full employment, keep its banking system solvent (the government had forced the banks to purchase government debt), and maintain the fixed exchange rate all at the same time. Suspe ...
... In the 1990’s, Argentina had a fixed exchange rate with the US dollar, but found it could not keep its economy close to full employment, keep its banking system solvent (the government had forced the banks to purchase government debt), and maintain the fixed exchange rate all at the same time. Suspe ...
Quick Links
... a) The real interest rate will rise, and private investment will rise. b) The nominal interest rate will rise, the real interest rate will remain the same, but private investment will rise. c) If the increase in the money supply by the Central Bank is greater than the amount borrowed by the governme ...
... a) The real interest rate will rise, and private investment will rise. b) The nominal interest rate will rise, the real interest rate will remain the same, but private investment will rise. c) If the increase in the money supply by the Central Bank is greater than the amount borrowed by the governme ...
File
... •Some forms of credit commonly used by consumers are car loans, home mortgage loans and credit cards. •Firms also use credit regularly, either by borrowing from a bank or issuing corporate bonds. •Government also uses credit when it needs to borrow money to finance a budget deficit. •Those who can b ...
... •Some forms of credit commonly used by consumers are car loans, home mortgage loans and credit cards. •Firms also use credit regularly, either by borrowing from a bank or issuing corporate bonds. •Government also uses credit when it needs to borrow money to finance a budget deficit. •Those who can b ...
Fisher Explained
... wages fall employers are more likely to hire. Why? (1) they are not paying as much in real terms, (2) the price increases help the companies to sell their product for a higher price. The higher prices lead to higher profits, higher profits lead to more hiring. The graph on the bottom right is the in ...
... wages fall employers are more likely to hire. Why? (1) they are not paying as much in real terms, (2) the price increases help the companies to sell their product for a higher price. The higher prices lead to higher profits, higher profits lead to more hiring. The graph on the bottom right is the in ...
壹 - 國立彰化師範大學圖書館
... a. make markets more equitable b. direct resources towards markets that are under-served c. distribute scarce goods to those who value them most highly d. direct resources away from "over crowded" markets e. keep consumers from buying too much 17. A price ceiling a. prevents sellers from charging le ...
... a. make markets more equitable b. direct resources towards markets that are under-served c. distribute scarce goods to those who value them most highly d. direct resources away from "over crowded" markets e. keep consumers from buying too much 17. A price ceiling a. prevents sellers from charging le ...
Community Leaders Breakfast Hotel De Anza, San Jose, CA
... And that will raise equilibrium real interest rates. ...
... And that will raise equilibrium real interest rates. ...
Costa_Rica_en.pdf
... band. In April a legal reserve requirement was established for short-term external capital inflows (less than one year) into the financial system, with a view to reducing the economy’s exposure to the volatility of such flows. (c) Trade policy In May 2010, the association agreement between Central ...
... band. In April a legal reserve requirement was established for short-term external capital inflows (less than one year) into the financial system, with a view to reducing the economy’s exposure to the volatility of such flows. (c) Trade policy In May 2010, the association agreement between Central ...
Outline of Lecture 1 – Basic Economics Concepts
... The effects of monetary policy are easy to show graphically. Begin with money supply, money demand, and an equilibrium interest rate. Show how both an increase and a decrease in the money supply affect interest rates. Definition of theory of liquidity preference: Keynes’s theory that the interest ra ...
... The effects of monetary policy are easy to show graphically. Begin with money supply, money demand, and an equilibrium interest rate. Show how both an increase and a decrease in the money supply affect interest rates. Definition of theory of liquidity preference: Keynes’s theory that the interest ra ...
Answers to Self Test Questions
... increase by $100. Although the money supply is not immediately affected by the switch, the bank will find itself over-reserved by 90 (increased actual reserves of 100 minus increased target reserves of 10% x 100 = 10). Loaning out these excess reserves will result in an increase in demand deposits, ...
... increase by $100. Although the money supply is not immediately affected by the switch, the bank will find itself over-reserved by 90 (increased actual reserves of 100 minus increased target reserves of 10% x 100 = 10). Loaning out these excess reserves will result in an increase in demand deposits, ...
ECONOMICS STUDY GUIDE, CHAPTER SIXTEEN: THE FEDERAL
... monetarism the belief that the money supply is the most important factor in macroeconomic performance (p. 430) monetary policy the actions the Federal Reserve takes to influence the level of real GDP and the rate of inflation in the economy (p. 417) money creation the process by which money enters i ...
... monetarism the belief that the money supply is the most important factor in macroeconomic performance (p. 430) monetary policy the actions the Federal Reserve takes to influence the level of real GDP and the rate of inflation in the economy (p. 417) money creation the process by which money enters i ...
Demand in the Open Economy Preliminaries and Assumptions
... Monetary policy can expand the money supply, shifting the LM curve to the right. In practice, stabilization policy can be challenging. Mistimed or inappropriate policies can create ...
... Monetary policy can expand the money supply, shifting the LM curve to the right. In practice, stabilization policy can be challenging. Mistimed or inappropriate policies can create ...
CHAPTER OVERVIEW
... 1. It is stated as a percentage, and the Truth in Lending Act of 1968 requires lenders to state the costs and terms of consumer credit in terms of an annualized interest rate. 2. Money itself is not an economic resource, but it is used to acquire capital goods, so in hiring money capital, businesses ...
... 1. It is stated as a percentage, and the Truth in Lending Act of 1968 requires lenders to state the costs and terms of consumer credit in terms of an annualized interest rate. 2. Money itself is not an economic resource, but it is used to acquire capital goods, so in hiring money capital, businesses ...
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.