Econ 130
... remember R = ER+RR, therefore ER= 0] No currency holding by depositors. – Consider the following identity: D = 1r R where R is total reserves, r is required reserve ratio, and D is total checkable deposit. Taking the change of both sides yields; D = 1r R; where 1=r is the deposit (money) multiplier. ...
... remember R = ER+RR, therefore ER= 0] No currency holding by depositors. – Consider the following identity: D = 1r R where R is total reserves, r is required reserve ratio, and D is total checkable deposit. Taking the change of both sides yields; D = 1r R; where 1=r is the deposit (money) multiplier. ...
Examination Aids allowed
... 4. (10%)Why did the Great Depression last for such a long period of time between 1929 and 1939 in the U.S.? Explain and illustrate your answer with the standard AD-Short Run ASLong Run AS curve model.. Suppose that initially before the start of the Great Depression the economy was located at the fu ...
... 4. (10%)Why did the Great Depression last for such a long period of time between 1929 and 1939 in the U.S.? Explain and illustrate your answer with the standard AD-Short Run ASLong Run AS curve model.. Suppose that initially before the start of the Great Depression the economy was located at the fu ...
This PDF is a selection from an out-of-print volume from... of Economic Research
... had reached 157 percent by the end of 2003. With an extremely large budget deficit and declining nominal GDP, this ratio was increasing by 8 to 9 points a year. Even though the net debt-GDP ratio is still at 66 percent, it is likely to surpass 100 percent by 2008. The Japanese economy was in a very ...
... had reached 157 percent by the end of 2003. With an extremely large budget deficit and declining nominal GDP, this ratio was increasing by 8 to 9 points a year. Even though the net debt-GDP ratio is still at 66 percent, it is likely to surpass 100 percent by 2008. The Japanese economy was in a very ...
Money and Inflation
... When this happens, the logical thing to do is to cut the real wage from (W /P) 1 to (W /P) 2 If prices are fixed, this implies a reduction in nominal wages However, this is hardly done in practice because workers feel offended. ...
... When this happens, the logical thing to do is to cut the real wage from (W /P) 1 to (W /P) 2 If prices are fixed, this implies a reduction in nominal wages However, this is hardly done in practice because workers feel offended. ...
Demand for bonds - Iowa State University Department of Economics
... Recession lack of investment opportunities less borrowing Bs and the Bs curve shifts to the left and there is a decrease in the interest rate. (4 points) Note that if you used one graph to show both shifts in the demand and the supply curves then the resulting interest rate (at the new equil ...
... Recession lack of investment opportunities less borrowing Bs and the Bs curve shifts to the left and there is a decrease in the interest rate. (4 points) Note that if you used one graph to show both shifts in the demand and the supply curves then the resulting interest rate (at the new equil ...
CHAPTER 11 MONETARY AND FISCAL POLICY Solutions to the
... 1.a. An open market operation is an exchange of bonds for money or vice versa by the Fed. In an open market purchase, the Fed buys bonds from the public (generally via government bond dealers) in exchange for money. This action increases the monetary base and therefore the supply of money. In an ope ...
... 1.a. An open market operation is an exchange of bonds for money or vice versa by the Fed. In an open market purchase, the Fed buys bonds from the public (generally via government bond dealers) in exchange for money. This action increases the monetary base and therefore the supply of money. In an ope ...
Instructor`s class notes
... Wage increases will be passed along through prices, so inflation is high when unemployment is low Downward-sloping Phillips curve results Problem with simple theory is that it fails to distinguish between real and nominal wages Tight labor market should increase real wages For real wages to rise ...
... Wage increases will be passed along through prices, so inflation is high when unemployment is low Downward-sloping Phillips curve results Problem with simple theory is that it fails to distinguish between real and nominal wages Tight labor market should increase real wages For real wages to rise ...
The demand for loanable funds
... increase the money supply by purchasing bonds in the bond market. Households now have bonds rather than money. But now they are holding more money than they need to meet ordinary expenses. How can the household get rid of the money? By (a) buying bonds or (b) buying things. But they just sold a bond ...
... increase the money supply by purchasing bonds in the bond market. Households now have bonds rather than money. But now they are holding more money than they need to meet ordinary expenses. How can the household get rid of the money? By (a) buying bonds or (b) buying things. But they just sold a bond ...
CASE 2 - Cengage
... 4. The demand for goods and services increases 5. Upward pressure on prices 6. Demand for money increases 7. Eventually a new equilibrium is reached (Point B in Fig. 11.2) Copyright © 2014 by Nelson Education Ltd. ...
... 4. The demand for goods and services increases 5. Upward pressure on prices 6. Demand for money increases 7. Eventually a new equilibrium is reached (Point B in Fig. 11.2) Copyright © 2014 by Nelson Education Ltd. ...
Economics 132.03 Principles of Macroeconomics
... a. When macroeconomists say that Robinson Crusoe’s productivity depends on how much training he has in the latest fishing techniques, what counterpart do they have in mind as to how productivity is determined in more complex economies like the US? b. When they say that Robinson Crusoe’s productiv ...
... a. When macroeconomists say that Robinson Crusoe’s productivity depends on how much training he has in the latest fishing techniques, what counterpart do they have in mind as to how productivity is determined in more complex economies like the US? b. When they say that Robinson Crusoe’s productiv ...
Mankiw SM Chap04 correct size:chap04.qxd.qxd
... the present to the future. As a unit of account, money provides the terms in which prices are quoted and debts are recorded. As a medium of exchange, money is what we use to buy goods and services. 2. Fiat money is established as money by the government but has no intrinsic value. For example, a U.S ...
... the present to the future. As a unit of account, money provides the terms in which prices are quoted and debts are recorded. As a medium of exchange, money is what we use to buy goods and services. 2. Fiat money is established as money by the government but has no intrinsic value. For example, a U.S ...
Lecture Notes Chapter 6
... How to combine all the different prices into a average price levelwould be a mistake to use a simple average of all prices – a proper measure must recognize that we spend very little of our incomes on some good and much more on others. CPI’s approach is to track cost of CPI market basket Collect ...
... How to combine all the different prices into a average price levelwould be a mistake to use a simple average of all prices – a proper measure must recognize that we spend very little of our incomes on some good and much more on others. CPI’s approach is to track cost of CPI market basket Collect ...
NBER WORKING PAPER SERIES LIQUIDITY TRAPS: AN INTEREST-RATE-BASED EXIT STRATEGY Stephanie Schmitt-Grohé
... trap, an increase in nominal rates tends to raise inflationary expectations without further depressing aggregate spending. The reason why this premise may be difficult to digest is also empirical. Guided by the short-run relationship between nominal rates and inflationary expectations that prevails ...
... trap, an increase in nominal rates tends to raise inflationary expectations without further depressing aggregate spending. The reason why this premise may be difficult to digest is also empirical. Guided by the short-run relationship between nominal rates and inflationary expectations that prevails ...
Chapter 13
... role of the Federal Reserve System in the economy The money multiplier and the growth of the money supply Tools of monetary policy Demand for money and money market equilibrium Policy linkages and timing of ...
... role of the Federal Reserve System in the economy The money multiplier and the growth of the money supply Tools of monetary policy Demand for money and money market equilibrium Policy linkages and timing of ...
Chapter 16 - UCSB Economics
... Overall, an increase in Y causes D to rise, but less so than in closed economy where we don’t consider CA. Discuss Fig. 16.1. The idea is that an increase in Y also stimulates demand, but part of this leaks away abroad because imports rise. So the slope is flatter than 45 degrees. Note that the D li ...
... Overall, an increase in Y causes D to rise, but less so than in closed economy where we don’t consider CA. Discuss Fig. 16.1. The idea is that an increase in Y also stimulates demand, but part of this leaks away abroad because imports rise. So the slope is flatter than 45 degrees. Note that the D li ...
Business cycle Macro activity
... Instructions: Have students draw a BIG business cycle on poster paper, on the sidewalk, on banner paper in the hallway, etc. In partners have them place these cards (cut them out!) where they belong on the business cycle. They will have to think about the concepts (DOK2-3 here) in order to place th ...
... Instructions: Have students draw a BIG business cycle on poster paper, on the sidewalk, on banner paper in the hallway, etc. In partners have them place these cards (cut them out!) where they belong on the business cycle. They will have to think about the concepts (DOK2-3 here) in order to place th ...
10th Edition Ch. 5
... At the original price level, spending would increase to E’ BUT firms can not obtain the N required to meet the increased demand As firms hire more workers, wages and costs of production increase, and firms must charge higher price Move up AS and AD curves to E’’ where AS = AD’ RESULT: Increase in AD ...
... At the original price level, spending would increase to E’ BUT firms can not obtain the N required to meet the increased demand As firms hire more workers, wages and costs of production increase, and firms must charge higher price Move up AS and AD curves to E’’ where AS = AD’ RESULT: Increase in AD ...
Reflections On Hayek’s Business Cycle Theory
... the few economists who warned about the possibility of the major economic crisis before the great crash came in the autumn of 1929. At the London School of Economics, Hayek was the center of a small but influential group of economists who argned that the Depression should be allowed to run its cours ...
... the few economists who warned about the possibility of the major economic crisis before the great crash came in the autumn of 1929. At the London School of Economics, Hayek was the center of a small but influential group of economists who argned that the Depression should be allowed to run its cours ...