All Matches

Solution Library

Expert Answer

Textbooks

Search Textbook questions, tutors and Books

Oops, something went wrong!

Change your search query and then try again

Result Not Found

Books FREE
Tutors
Study Help
Hire a Tutor
AI Study Help New

Search
Sign In
Register

study help
business
economics of money banking and financial markets

Questions and Answers of Economics Of Money Banking And Financial Markets

What does the Lucas critique say about the limitations of our current understanding of the way the economy works?
It can be an interesting exercise to compare the purchasing power of the dollar over different periods in history. Go to www.bls.gov/cpi/ and scroll down to the link to the inflation calculator. Use
Delete all but the first and last column (date and annual CPI). Graph these data and compare them to the inflation data in Figure 11.a. Has inflation increased or decreased since 1982?b. When was
This chapter discusses the Great Inflation from 1965 to 1982. Go to ftp://ftp.bls.gov/pub/special.requests/cpi/cpiai.txt. Move data into Excel, using the method described at the end of Chapter
Many developing countries suffer from graft and endemic corruption. How does this help explain why these economies have typically high inflation and economic stagnation? Use a graph of aggregate
As monetary policymakers care more about inflation stabilization, the slope of the aggregate demand curve becomes flatter. How does the resulting change in the slope of the aggregate demand curve
Use a graph of aggregate demand and supply to demonstrate how lags in the policy process can result in undesirable fluctuations in output and inflation.
Suppose the current administration decides to decrease government expenditures as a means to cut the existing government budget deficit.a. Using a graph of aggregate demand and supply, show what the
How can demand-pull inflation lead to cost-push inflation?
What will happen if policymakers erroneously believe that the natural rate of unemployment is 7%, when it is actually 5%, and pursue stabilization policy?
How can monetary authorities target any inflation rate they want to?
“Because government policymakers do not consider inflation desirable, their policies cannot be the source of inflation.” Is this statement true, false, or uncertain?Explain your answer.
Given a relatively steep and a relatively flat short-run aggregate supply curve, which one supports the case for nonactivist policy? Why?
Suppose one could measure the welfare gains derived from eliminating output (and unemployment) fluctuations in the economy. Assuming these gains are relatively small for the average individual, how
If the economy’s self-correcting mechanism works slowly, should the government necessarily pursue discretionary policy to eliminate unemployment? Why or why not?
Why do activists believe the economy’s self-correcting mechanism is slow?
“If the data and recognition lags could be reduced, activist policy would more likely be beneficial to the economy.” Is this statement true, false, or uncertain?Explain your answer.
Is stabilization policy more likely to be conducted with monetary policy or fiscal policy? Why?
If someone told you, “Congress and the Senate couldn’t vote themselves out of a phone booth,” what type of policy lag are they referring to?
The fact that it takes a long time for firms to bring new plant and equipment on line is an illustration of the concept related to what policy problem?
“Policymakers would never respond by stabilizing a temporary positive supply shock.” Is this statement true, false, or uncertain? Explain your answer.
Suppose three economies are hit with the same negative supply shock. In country A, inflation initially rises and output falls; then inflation rises more and output increases. In country B, inflation
In what way is a permanent negative supply shock worse than a temporary negative supply shock?
Why do negative supply shocks pose a dilemma for policymakers?
Why does the divine coincidence simplify the job of policy making?
During the global financial crisis, how was the Fed able to help offset the sharp increase in financial frictions, without the ability to lower interest rates further? Did it work?
For each of the following shocks, describe how monetary policymakers would respond (if at all) to stabilize economic activity. Assume the economy starts at a longrun equilibrium.a. Consumers reduce
“If autonomous spending falls, the central bank should lower its inflation target in order to stabilize inflation.”Is this statement true, false, or uncertain? Explain your answer.
What does it mean for the inflation gap to be negative?
In the beginning of 2009, the Federal Open Market Committee warned in their statement dated January 28, 2009, that “… the Committee sees some risk that inflation could persist for a time below
The financial crisis from 2007–2009 sent the United States into the worst recession since the end of World War II, with the unemployment rate rising to above 10%. Go to
During the first half of 2010, Fed officials discussed the possibility of increasing interest rates as a way of fighting potential increases in expected inflation. If the public came to expect higher
Classify each of the following as a supply or demand shock. Use a graph to show the effects on inflation and output in the short run and the long run.a. Financial frictions increase.b. Households and
Suppose the inflation rate remains relatively constant, and output decreases and the unemployment rate increases. Using an aggregate demand and supply graph, show how this is possible.
Proposals have come before Congress that advocate the implementation of a national sales tax. Predict the effect of such a tax on both the aggregate supply and demand curves, showing the effects on
Many of the resources devoted to the January 2009 U.S.stimulus package encouraged investment in research and development of new technologies (e.g., more fuelefficient cars, wind and solar power) and
Using an aggregate demand and supply graph, show and describe the effects in both the short run and the long run of the following:a. A temporary negative supply shock.b. A permanent negative supply
Why did China fare much better than the United States and the United Kingdom during the 2007–2009 financial crisis?
In what ways is the Volcker disinflation considered a success? What are the negative aspects of it?
Why did the Federal Reserve pursue inherently recessionary policies in the early 1980s?
Are there any “good” supply shocks?
What factors led to a decrease in both the unemployment rate and the inflation rate in the 1990s?
What happens to inflation and output in the short run and the long run when government spending increases?
If the unemployment rate is above the natural rate of unemployment, holding other factors constant, what will happen to inflation and output?
Suppose that the public believes that a newly announced anti-inflation program will work and so lowers its expectations of future inflation. What will happen to aggregate output and the inflation
When aggregate output is below the natural rate of output, what will happen to the inflation rate over time if the aggregate demand curve remains unchanged? Why?
Internet sites that allow people to post their resumes reduce the cost of a job search. How do you think the Internet has affected the natural rate of unemployment?
If large budget deficits cause the public to think that there will be higher inflation in the future, what is likely to happen to the short-run aggregate supply curve when budget deficits rise?
What factors shift the short-run aggregate supply curve? Do any of these factors shift the long-run aggregate supply curve? Why?
If prices and wages are perfectly flexible, then g = 0 and changes in aggregate demand have a smaller effect on output.” Is this statement true, false, or uncertain?Explain your answer.
Why are central banks so concerned about inflation expectations?
As the labor force becomes more productive over time, how does that affect the long-run aggregate supply curve?
What determines the unemployment rate when output is at potential?
“The depreciation of the dollar from December 2008 to December 2009 had a positive effect on aggregate demand in the U.S.” Is this statement true, false, or uncertain? Explain your answer.
Identify changes in three factors that will shift the aggregate demand curve to the right and changes in three different factors that will shift the aggregate demand curve to the left.
Explain why the aggregate demand curve slopes downward and the short-run aggregate supply curve slopes upward.
Go to www.federalreserve.gov/fomc/. Read the latest FOMC statement and the minutes of the most recent FOMC meeting. Are the statement and the discussion in the minutes consistent with the Taylor
Go to http://www.federalreserve.gov/pf/pdf/pf_2.pdf.Review what the Fed says its goals are for monetary policy.Explain why these are consistent with the Taylor principle.
Derive an expression for the new AD curve, and draw the new AD curve using the graph from part (a).c. What does your answer to part (b) say about the relationship between a central bank’s distaste
Suppose the MP curve is given as r 5 2 1 π, and the IS curve is given as Y 5 20 2 2r.a. Derive an expression for the AD curve, and draw a graph labeling points at π 5 0, π 5 4, and π 5 8.b.
What is the real interest rate and equilibrium level of output?c. Suppose government spending increases to $4 trillion.What happens to equilibrium output?d. If the Fed wanted to keep output constant,
Consider the economy described in Applied Problem 23.a. Derive expressions for the MP curve and AD curve.b. Assume that π 5
Calculate what happens to the real interest rate, equilibrium level of output, consumption, planned investment, and net exports.d. Considering that output, consumption, planned investment, and net
What is the real interest rate, equilibrium level of output, consumption, planned investment, and net exports?c. Suppose the Fed increases r to r =
Consider an economy described by the following:C = 3.25 trillion I = 1.3 trillion G = 3.5 trillion T = 3.0 trillion N X = -1.0 trillion f = 1 mpc = 0.75 d = 0.3 x = 0.1 l = 1 r = 1a. D erive
Consider an economy described by the following:C = 4 trillion I = 1.5 trillion G = 3.0 trillion T = 3.0 trillion N X = 1.0 trillion f = 0 mpc = 0.8 d = 0.35 x = 0.15 l = 0.5 r = 2a. Derive
Suppose the monetary policy curve is given by r = 1.5 + 0.75p, and the IS curve is Y = 13 – r.a. Calculate an expression for the aggregate demand curve.b. Calculate the real interest rate and
Use an IS curve and an MP curve to derive graphically the AD curve.
Assume the monetary policy curve is given by r = 1.5 + 0.75p.a. Calculate the real interest rate when the inflation rate is 2%, 3%, and 4%.b. Draw the graph of the MP curve, labeling the points from
“If f increases, then the Fed can keep output constant by reducing the real interest rate by the same amount as the increase in financial frictions.” Is this statement true, false, or uncertain?
Suppose that government spending is increased at the same time that an autonomous monetary policy tightening occurs. What will happen to the position of the aggregate demand curve?
If government spending increases while taxes are raised to keep the budget balanced, what happens to the aggregate demand curve?
Why does the aggregate demand curve shift when“animal spirits” change?
What would be the effect of an increase in U.S. net exports on the aggregate demand curve? Would an increase in net exports affect the monetary policy curve? Explain why or why not.
For each of the following, describe how (if at all), the IS curve, MP curve, and AD curves are affected.a. A decrease in financial frictions.b. An increase in taxes, and an autonomous easing of
How does an autonomous tightening or easing of monetary policy by the Fed affect the aggregate demand curve?
If net exports were not sensitive to changes in the real interest rate, would monetary policy be more—or less—effective in changing output?
“Autonomous monetary policy is more effective at changing output when l is higher” Is this statement true, false, or uncertain? Explain your answer.
What factors affect the slope of the aggregate demand curve?
“The Fed decreased the fed funds rate in late 2007, even though inflation was increasing. This demonstrates a violation of the Taylor principle.” Is this statement true, false, or uncertain?
Suppose that a new Fed chair is appointed, and his or her approach to monetary policy can be summarized by the following statement: “I care only about increasing employment; inflation has been at
How is an autonomous tightening or easing of monetary policy different from a change in the real interest rate due to a change in the current inflation rate?
How does an autonomous tightening or easing of monetary policy by the Fed affect the MP curve?
If l = 0, what does that imply about the relationship between the nominal interest rate and the inflation rate?
Why is it necessary for the MP curve to have an upward slope?
What is the key assumption underlying the Fed’s ability to control the real interest rate?
When the inflation rate increases, what happens to the fed funds rate? Operationally, how does the Fed adjust the fed funds rate?
John Maynard Keynes is among the most well-known economic theorists. Go to http://www.newschool.edu/nssr/het/profiles/keynes.htm and write a one-page summary of his life and contributions.
The formula for computing the velocity of money is GDP/M1. Go to www.research.stlouisfed.org/fred2 and look up the GDP. Next go to www.federalreserve.gov/Releases/h6/Current/ and find M1. Compute the
Suppose the liquidity preference function is given byCalculate velocity for each period, using the money demand equation, along with the following table of values Y L(i,Y) 1,000i 8
If velocity and aggregate output remain constant at $5 and $1,000 billion, respectively, what happens to the price level if the money supply declines from $400 billion to $300 billion?
What happens to nominal GDP if the money supply grows by 20% but velocity declines by 30%?
Calculate what happens to nominal GDP if velocity remains constant at 5 and the money supply increases from $200 billion to $300 billion.
Suppose the money supply M has been growing at 10%per year, and nominal GDP, PY, has been growing at 20% per year. The data are as follows (in billions of dollars):Calculate the velocity in each
Suppose that a plot of the values of M2 and nominal GDP for a given country over 40 years shows that these two variables are very closely related. In particular, a plot of their ratio (nominal
What evidence is used to assess the stability of the money demand function? What does the evidence suggest about the stability of money demand and how has this affected monetary policy making?
Why does the Keynesian view of the demand for money suggest that velocity is unpredictable?
Both the portfolio choice and Keynes’s theories of the demand for money suggest that as the relative expected return on money falls, demand for it will fall.Why would the portfolio choice approach
Consider the portfolio choice theory of money demand.How do you think the demand for money will be affected during a hyperinflation (i.e., monthly inflation rates in excess of 50%)?
Suppose a given country experienced low and stable inflation rates for quite some time, but then inflation picked up and over the past decade has been relatively high and quite unpredictable. Explain

Showing 200 - 300 of 5250

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
Last

Services

Sitemap
Fun
Definitions
Become Tutor
Study Help Categories
Recent Questions
Expert Questions

Company Info

Security
Copyrights
Privacy Policy
Terms & Conditions
SolutionInn Fee
Scholarship

Get In Touch

About Us
Contact Us
Career
Jobs
FAQ
Campus Ambassador

Secure Payment

Download Our App

© 2024 SolutionInn. All Rights Reserved