Week 21
... In this case an increase in the money supply has no effect on the interest rate (the interest rate does not fall), because the public is willing to hold the additional money supply at the existing interest rate. So Monetary policy becomes powerless to lower the interest rate further – and hence powe ...
... In this case an increase in the money supply has no effect on the interest rate (the interest rate does not fall), because the public is willing to hold the additional money supply at the existing interest rate. So Monetary policy becomes powerless to lower the interest rate further – and hence powe ...
ECN 111 Chapter 13 Lecture Notes
... With an income tax levied on nominal interest, the higher the inflation rate, the lower is the after-tax interest rate received by lenders. With a low after-tax real interest rate, the incentive to save is weakened, so the supply of saving and investment decreases. B. Shoe-leather Costs The costs th ...
... With an income tax levied on nominal interest, the higher the inflation rate, the lower is the after-tax interest rate received by lenders. With a low after-tax real interest rate, the incentive to save is weakened, so the supply of saving and investment decreases. B. Shoe-leather Costs The costs th ...
ECONOMIC FLUCTUATION, AGGREGATE DEMAND I
... 5. We have the following information on an economy: C=100+0.75Y; I=800-20r; M=1100; L=100+0.5Y-40r. a) Find the equilibrium interest rate and the equilibrium level of income, if the price level is 1. b) Characterise the situation of the market for goods and services and the money market, if the act ...
... 5. We have the following information on an economy: C=100+0.75Y; I=800-20r; M=1100; L=100+0.5Y-40r. a) Find the equilibrium interest rate and the equilibrium level of income, if the price level is 1. b) Characterise the situation of the market for goods and services and the money market, if the act ...
Inflation vs. Deflation (US vs. Europe/Japan)
... the south. In the United States and Britain, the time for beginning to once again raise policy rates is approaching. Recent comparisons between different economies has been distorted by the recent drop in oil prices. Core inflation, which strips out energy and food prices, has been more consistent g ...
... the south. In the United States and Britain, the time for beginning to once again raise policy rates is approaching. Recent comparisons between different economies has been distorted by the recent drop in oil prices. Core inflation, which strips out energy and food prices, has been more consistent g ...
Asset Bubbles and Their Consequences No. 103 May 20, 2008 Executive Summary
... has an inflation target, and markets believed that to be so. The Fed is widely believed to want inflation to remain under 2 percent— low but not zero.10 CPI inflation has remained above the Fed’s notional target for some time. In February 2008, the consumer price index for all urban consumers (CPI-U ...
... has an inflation target, and markets believed that to be so. The Fed is widely believed to want inflation to remain under 2 percent— low but not zero.10 CPI inflation has remained above the Fed’s notional target for some time. In February 2008, the consumer price index for all urban consumers (CPI-U ...
eurozone inflation falls to 1.1%—so what?
... to consumers in the form of higher prices, or inflation. To summarise the differing viewpoints, the monetarist view is that the supply of money dictates demand for products and thus drives prices and inflation, whereas the resource slack view is that the availability of capital and labour dictate pr ...
... to consumers in the form of higher prices, or inflation. To summarise the differing viewpoints, the monetarist view is that the supply of money dictates demand for products and thus drives prices and inflation, whereas the resource slack view is that the availability of capital and labour dictate pr ...
market moves 12.20.2013
... This final chart further demonstrates bank lending has not grown meaningfully since the beginning of the so-called Great Recession. This further suggests that the “money creation” concerns of the monetarists have not occurred and hence their associated inflation concerns have not been realized. At s ...
... This final chart further demonstrates bank lending has not grown meaningfully since the beginning of the so-called Great Recession. This further suggests that the “money creation” concerns of the monetarists have not occurred and hence their associated inflation concerns have not been realized. At s ...
Chapter 14 Key Question Solutions
... Land is completely fixed in total supply. As population expands and the demand for land increases, rent first appears and then grows. From society’s perspective this rent is a surplus payment unnecessary for ensuring that the land is available to the economy as a whole. If rent declined or disappear ...
... Land is completely fixed in total supply. As population expands and the demand for land increases, rent first appears and then grows. From society’s perspective this rent is a surplus payment unnecessary for ensuring that the land is available to the economy as a whole. If rent declined or disappear ...
1 ECO 2013.005 Principles of Macroeconomics – Spring 2014
... The inflation-adjusted value of all goods and services produced is The GDP deflator. Nominal GDP. GDP per capita. Real GDP. ...
... The inflation-adjusted value of all goods and services produced is The GDP deflator. Nominal GDP. GDP per capita. Real GDP. ...
Economic Environment for Business (5571)
... (a) Suppose for health reasons, a tax is placed on tobacco consumption, with the objective of reducing the demand for cigarettes. The cigarette industry objects to this tax and argues that since the price elasticity of demand is very low, the only effect of the tax will be an increase in government ...
... (a) Suppose for health reasons, a tax is placed on tobacco consumption, with the objective of reducing the demand for cigarettes. The cigarette industry objects to this tax and argues that since the price elasticity of demand is very low, the only effect of the tax will be an increase in government ...
Short Macro Review
... The greater the MPC, the more total output (Y), income and spending results from an initial increase in spending ...
... The greater the MPC, the more total output (Y), income and spending results from an initial increase in spending ...
MS Word - U of T : Economics
... it to be largely endogenous, and a function of the real factors determining production and trade. iii) The classic Quantity Theory of Money, as noted earlier, assumed a normal or equilibrium state of Full Employment, meaning that all resources would be fully employed, so that any increase in monetiz ...
... it to be largely endogenous, and a function of the real factors determining production and trade. iii) The classic Quantity Theory of Money, as noted earlier, assumed a normal or equilibrium state of Full Employment, meaning that all resources would be fully employed, so that any increase in monetiz ...
14.02: Principles of Macroeconomics
... True. If investment is very sensitive to changes in the interest rate, a small decrease in interest rate will cause a large increase in investment level. Thus, the IS curve will be relatively flat. This will make monetary policy, with it direct impact on interest rate, very effective tool the gover ...
... True. If investment is very sensitive to changes in the interest rate, a small decrease in interest rate will cause a large increase in investment level. Thus, the IS curve will be relatively flat. This will make monetary policy, with it direct impact on interest rate, very effective tool the gover ...
Measuring Health, Unemployment, Inflation
... when inflation rates change greatly from year to year. Purchasing Power In an inflationary economy, a dollar loses value. It will not buy the same amount of goods that it did in years past. Interest Rates When a bank's interest rate matches the inflation rate, savers break even. When a bank's in ...
... when inflation rates change greatly from year to year. Purchasing Power In an inflationary economy, a dollar loses value. It will not buy the same amount of goods that it did in years past. Interest Rates When a bank's interest rate matches the inflation rate, savers break even. When a bank's in ...
Problem Set 9
... b. fiscal policy is the sustaining factor. c. deficits cannot persist for long, so the type of inflation cannot last long. d. none of the above are true. 14. Evidence from episodes of hyperinflation indicates that a. wage-push demands have been the ultimate source of inflationary monetary policies. ...
... b. fiscal policy is the sustaining factor. c. deficits cannot persist for long, so the type of inflation cannot last long. d. none of the above are true. 14. Evidence from episodes of hyperinflation indicates that a. wage-push demands have been the ultimate source of inflationary monetary policies. ...
Dr E`s Study Guide for ECO 011
... 6. The actual rate rises above the natural rate during a recession and falls below the natural rate during an economic boom. 7. The unemployment rates of major European countries were substantially higher in the last decade than the comparable figures for the United States and Japan. ...
... 6. The actual rate rises above the natural rate during a recession and falls below the natural rate during an economic boom. 7. The unemployment rates of major European countries were substantially higher in the last decade than the comparable figures for the United States and Japan. ...
1 - Test banks
... For many years prior to 1933, the paper money of the United States was redeemable for gold. What are some of the advantages and some of the disadvantages of having a paper currency that is convertible into gold? ...
... For many years prior to 1933, the paper money of the United States was redeemable for gold. What are some of the advantages and some of the disadvantages of having a paper currency that is convertible into gold? ...
ch05 - Whitman People
... FIGURE 5.6 Inflation Rate (Percentage Change in the GDP Deflator, Four-Quarter Average), 1970 I–2012 IV ...
... FIGURE 5.6 Inflation Rate (Percentage Change in the GDP Deflator, Four-Quarter Average), 1970 I–2012 IV ...
Risks of a deflation in the EMU. Why is this time so deceitful?
... the related evolution of inflation rate expectations (section 2). Then, we will show the 2014 structural deflationary process can be explained by the price compression in the EMU peripheral countries (section 3). Section 4 explains why the reality of the deflation in the euro area as a whole and in ...
... the related evolution of inflation rate expectations (section 2). Then, we will show the 2014 structural deflationary process can be explained by the price compression in the EMU peripheral countries (section 3). Section 4 explains why the reality of the deflation in the euro area as a whole and in ...
AP Practice Exam Part I Name: In the circular flow model of
... 19. When government borrowing increases interest rates it is known as: a. Crowding out b. Fiscal policy c. Monetary policy d. Financial regulation e. Expansionary monetary policy 20. According to the quantity theory of money, the money supply times the velocity of money is equal to: a. Nominal GDP ...
... 19. When government borrowing increases interest rates it is known as: a. Crowding out b. Fiscal policy c. Monetary policy d. Financial regulation e. Expansionary monetary policy 20. According to the quantity theory of money, the money supply times the velocity of money is equal to: a. Nominal GDP ...
File
... a. consumption and net exports would decline b. consumption and net exports would increase c. consumption would increase and net exports would decrease d. consumption would decrease and net exports would increase e. consumption and net exports would remain constant _____2) Which of the following is ...
... a. consumption and net exports would decline b. consumption and net exports would increase c. consumption would increase and net exports would decrease d. consumption would decrease and net exports would increase e. consumption and net exports would remain constant _____2) Which of the following is ...