Test 1
... than previously, and (b) the growth rate of M2 was much higher than the growth rate of M1. Explain how the high inflation of the decade relates to each of these facts. By the quantity theory of money, rapid growth of the money supply (relative to the growth rate of aggregate output) causes the infla ...
... than previously, and (b) the growth rate of M2 was much higher than the growth rate of M1. Explain how the high inflation of the decade relates to each of these facts. By the quantity theory of money, rapid growth of the money supply (relative to the growth rate of aggregate output) causes the infla ...
1 - Southwestern Secure Online
... “macroeconomics” different from classical economics? Explain the tradeoff in this theory. (See your deflation handout.) What is the policy implication of Keynesian economics? 18. Explain the relationship between output and income. The following questions (based on Blanchard’s Chapter 2) have been pr ...
... “macroeconomics” different from classical economics? Explain the tradeoff in this theory. (See your deflation handout.) What is the policy implication of Keynesian economics? 18. Explain the relationship between output and income. The following questions (based on Blanchard’s Chapter 2) have been pr ...
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... Japan's economy had been suffering from deflation since the mid-1990s, with the year-on-year rate of change in the consumer price index (CPI) being about zero or slightly negative. A key feature of deflation in Japan was that it was mild but persistent: the average of the year-on-year rates of chang ...
... Japan's economy had been suffering from deflation since the mid-1990s, with the year-on-year rate of change in the consumer price index (CPI) being about zero or slightly negative. A key feature of deflation in Japan was that it was mild but persistent: the average of the year-on-year rates of chang ...
20MKC.Money.APE - supply-and
... Stable means factors altering velocity (such as how frequently people are paid) change gradually and predictably and can be readily anticipated. Today velocity is higher than it was several decades ago Velocity does not change in response to changes in the money supply ...
... Stable means factors altering velocity (such as how frequently people are paid) change gradually and predictably and can be readily anticipated. Today velocity is higher than it was several decades ago Velocity does not change in response to changes in the money supply ...
ECONOMIC UPDATE Commentary Now that we have a short
... area is below 1%, and it is just a touch above 1% in the U.S. Deflation is especially dangerous in economies with high debt. This is because debt is fixed in nominal terms. If wages fall, it increases the burden of paying off the debt. Deflation also weakens an economy since once people expect price ...
... area is below 1%, and it is just a touch above 1% in the U.S. Deflation is especially dangerous in economies with high debt. This is because debt is fixed in nominal terms. If wages fall, it increases the burden of paying off the debt. Deflation also weakens an economy since once people expect price ...
AP Macroeconomics Review sheet 1. The transactions demand for
... 9. Assume that the required reserve ratio for the commercial banks is 10 percent. If the Federal Reserve Banks buy $10 billion in government securities from commercial banks we can say that, as a result of this transaction, the lending ability of the commercial banking system will increase by $100 b ...
... 9. Assume that the required reserve ratio for the commercial banks is 10 percent. If the Federal Reserve Banks buy $10 billion in government securities from commercial banks we can say that, as a result of this transaction, the lending ability of the commercial banking system will increase by $100 b ...
Interest Rates - McGraw Hill Higher Education
... Excess reserves increase Federal funds rate falls Money supply rises Interest rate falls ...
... Excess reserves increase Federal funds rate falls Money supply rises Interest rate falls ...
A rise in the price of oil imports has resulted in a decrease of short
... 7. Who has the legal power to create money in the United States? a. The Federal Reserve System. b. The President. c. The Congress of the United States. d. The U.S. Treasury Department. 8. What is the current monetary system of the United States? a. We are on a gold standard, that is we use paper mo ...
... 7. Who has the legal power to create money in the United States? a. The Federal Reserve System. b. The President. c. The Congress of the United States. d. The U.S. Treasury Department. 8. What is the current monetary system of the United States? a. We are on a gold standard, that is we use paper mo ...
AS/AD Model
... An AD will P and Q, but only in the SR. Prices rise but wages lag. Firms employment and output. Eventually, workers realize their real wages (W/P) are falling, get comparable wage, AS. ...
... An AD will P and Q, but only in the SR. Prices rise but wages lag. Firms employment and output. Eventually, workers realize their real wages (W/P) are falling, get comparable wage, AS. ...
Problem of Inflation in India
... • Monetary policy For about three decades from 1962 to 1991 RBI had employed both quantitative and qualitative measures • On recommendation of Narasimham committee CRR and SLR were reduced (SLR 25%) ...
... • Monetary policy For about three decades from 1962 to 1991 RBI had employed both quantitative and qualitative measures • On recommendation of Narasimham committee CRR and SLR were reduced (SLR 25%) ...
A rise in the price of oil imports has resulted in a decrease of short
... a. The number of times a dollar is spent in a year on final goods and services. b. The number of times a dollar is spent in a year on anything, including intermediate goods and stocks. c. How quickly we are making the goods we produce. d. How quickly we reach the long-run equilibrium. 3. What two va ...
... a. The number of times a dollar is spent in a year on final goods and services. b. The number of times a dollar is spent in a year on anything, including intermediate goods and stocks. c. How quickly we are making the goods we produce. d. How quickly we reach the long-run equilibrium. 3. What two va ...
Is Milton Friedman a Keynesian?
... K1. Keynesians believe that the interest rate, largely (if not M1. Monetarists believe that the interest rate, largely a real wholly) a monetary phenomenon, is determined by the supply of phenomenon, is determined by the supply of and demand for and demand for money. loanable funds, a market which f ...
... K1. Keynesians believe that the interest rate, largely (if not M1. Monetarists believe that the interest rate, largely a real wholly) a monetary phenomenon, is determined by the supply of phenomenon, is determined by the supply of and demand for and demand for money. loanable funds, a market which f ...
fiscal and monetary policy
... Low interest rate means more money to loan = more money in circulation High interest rate = less money to loan, less money in circulation Between 1990-2008, from 7% to 0.75% Borrowing from the Fed can signal problems with the bank, last resort ...
... Low interest rate means more money to loan = more money in circulation High interest rate = less money to loan, less money in circulation Between 1990-2008, from 7% to 0.75% Borrowing from the Fed can signal problems with the bank, last resort ...
Money
... inflation: the relative price level for products at some point in time ► Inflation is reported in terms of annual rates of change of the price level ...
... inflation: the relative price level for products at some point in time ► Inflation is reported in terms of annual rates of change of the price level ...
Chapter 30: Money Growth and Inflation Principles of Economics, 7
... If we only have a certain amount to spend and the price and the amount that we are spending on oil goes up, then we have less to spend on everything else and their prices would be expected to fall. i. There probably is little effect on the average level of prices. d. So what causes inflation: that i ...
... If we only have a certain amount to spend and the price and the amount that we are spending on oil goes up, then we have less to spend on everything else and their prices would be expected to fall. i. There probably is little effect on the average level of prices. d. So what causes inflation: that i ...
A) income. B) profits. C) as
... D) real; low 20. Equilibrium in the market for goods and services determines the ______ interest rate and the expected rate of inflation determines the ______ interest rate. A) ex ante real; ex ante nominal B) ex post real; ex post nominal C) ex ante nominal; ex post real D) ex post nominal; ex post ...
... D) real; low 20. Equilibrium in the market for goods and services determines the ______ interest rate and the expected rate of inflation determines the ______ interest rate. A) ex ante real; ex ante nominal B) ex post real; ex post nominal C) ex ante nominal; ex post real D) ex post nominal; ex post ...
Your Chapter 15-18 Questions Chapter 15 1. Money is a. a synonym
... C. The required reserve ratio, whether banks hold excess reserves, and whether there are leakages of currency. D. The federal funds rate The Federal Deposit Insurance Corporation (FDIC): A. Creates moral hazard problems in those big banks that take on more risk knowing the FDIC will consider them "t ...
... C. The required reserve ratio, whether banks hold excess reserves, and whether there are leakages of currency. D. The federal funds rate The Federal Deposit Insurance Corporation (FDIC): A. Creates moral hazard problems in those big banks that take on more risk knowing the FDIC will consider them "t ...
Measure Economic Growth
... Inflation vs. Deflation Inflation – upward price movement of goods and services in an economy. – Caused by: rise in production costs, excess printed money in circulation, national debt and international lending – Impact to consumers: standard of living decreases – Difference between inflation and n ...
... Inflation vs. Deflation Inflation – upward price movement of goods and services in an economy. – Caused by: rise in production costs, excess printed money in circulation, national debt and international lending – Impact to consumers: standard of living decreases – Difference between inflation and n ...
2013 Spring Sample Midterm 2
... could buy the bond for $1000 and ought to be able to sell it for $1047.51 since that is the bond’s “worth” in terms of present value. The implied yield at the offered price is greater than the market interest rate. Since there should be great demand for the bond at this price, we should expect the b ...
... could buy the bond for $1000 and ought to be able to sell it for $1047.51 since that is the bond’s “worth” in terms of present value. The implied yield at the offered price is greater than the market interest rate. Since there should be great demand for the bond at this price, we should expect the b ...
Jessica Ho
... price index (CPI) will decrease. In July, the outbreak of SARS has over; Hong Kong’ s tourism has recovery. In addition, due to the practice of individual visit scheme, and it was supported by the government with many promotions is given. More people want to come to Hong Kong. These have improved ou ...
... price index (CPI) will decrease. In July, the outbreak of SARS has over; Hong Kong’ s tourism has recovery. In addition, due to the practice of individual visit scheme, and it was supported by the government with many promotions is given. More people want to come to Hong Kong. These have improved ou ...