Preview File Edit View Go Tools Window Help O 8 Fri Nov 11 8:47 PM ... arnold chapter 14 class activity questions-6.pdf Page 2 of 8 1 Q Q J Z ~ D' A Q Search Chapter 14 Money and The Economy : Pre-Class & In-Class Activities Packet Name/I.D. Number : Section: Date: Part 1. Video Questions on "Tracking Inflation: How Fast Are Prices Rising?" 1. What kind of Data is collected to measure inflation? 2. What rate of inflation was detected during that period? 3. How often Government monitors inflation? 4. How many commodity prices are recorded by the Bureau of Labor Statistics (BLS)? 5. How long does it take to see the effect of Energy price on every other related price in the economy? 6. What do we call the Federal Reserve policy of pumping dollars into the economy to keep us from falling back into recession? 7. What kind of measure was taken by President Nixon in 1971 when inflation rate was 4%? 8. What kind of incomes are indexed to inflation? 9. What is the difference between HEADLINE inflation and CORE Inflation? 10. Why is that food and energy prices are excluded from the CORE Inflation? 11. What new things did you learn from the video? (Circle one: All, Some, Few, None: Specify at least one in the space provided) 12. What question(s) do you have after watching the video about "Tracking Inflation: How Fast Are Prices Rising" or the Infographics in this Packet? Specify at least one. 17 tv 4 51 WPreview File Edit View Go Tools Window Help O 8 Fri Nov 11 8:47 PM ... arnold chapter 14 class activity questions-6.pdf Page 3 of 8 Qu Search Chapter 14 Money and The Economy: Pre-Class & In-Class Activities Packet Name/ I.D. Number: Section: Date: Part 2. Matching: Match the Key terms in Column "A" with the definitions in Column "B" by writing the block letter of your choice from Column "B" in the space provided under "A" and match the definitions in column "B" with the meanings or formulas or examples or facts in column "C" by writing the lower letter case of your choice in the space provided under column "B". Column "A" Column "B' Column "C" 1. Equation of A. The theory assuming that velocity (V) and a. Equal to Nominal GDP (PQ)/Money supply(M2). Real GDP (Q) are constant and predicting that b. Also known as the "Fisher effect", named after Irving Fisher Exchange changes in the money supply (M) lead to strictly AMT(Money SS) - ATExpected Inflation Rate - 1DD for LF & ISS 2. Velocity proportional changes in the price level (P). of LF -> Al 1 1 (Interest Rate) B. A continued increase in the price level. c. Year-to-year or Back-to-back increase in the price level for 2 or more 3. Simple Quantity C. The change in the interest rate due to a consecutive years due to demand-side(demand-pull: Tin Aggregate Theory of change in Real GDP DD for G&S) or supply side (cost- push: Tin the cost of prod'n) factors. Money D. The change in the interest rate due to a change in the expected inflation rate. d. Changes in the money supply that affects interest rate by way of E. An identity stating that the money supply (M) changes in the loanable funds (LF). 4. One-Shot times velocity (V) must be equal to the price AM1(Money SS) > ATSLF(SS of LF) All ( Interest rate) Inflation level (P) times Real GDP(Q) ; MV = PQ 5. Continued F. The change in the interest rate due to a e. It is an identity not a theory. It is a Truism, i.e., 2 + 2 = 4 f. The rate quoted on newspapers or on web pages for loans and Inflation change in the supply of loanable funds. deposits by commercial banks and other depository institutions. 6. Liquidity Effect G. The change in the interest rate due to a g. Changes in the money supply that affect the interest rate by way of changes in the price level 7. Income Effect change in the price level AM1(Money SS) -> (DD for LF => ATP(Price Level) > Ati(Interest Rate) H. The interest rate actually charged (or paid) in 8. Price-Level the market; the market interest rate: Nominal . One time increase in the price level, say, from 100 this year Effect interest rate = Real interest rate + Expected inflation rate to 105 in the following year due to demand or supply side factors. 9. Expectations I. A one-time increase in the price level; an i. The theory that asserts, when the money supply increases (decreases) by 5%, the price level goes up(down) by 5%. Effect increase in the price level that does not continue. j. Changes in the money supply that affect the interest rate by way of 10. Nominal Interest J. The average number of times a dollar is spent changes in Real GDP to buy final goods and services in a year. AMT(Money SS) > AT DD for LF>ATSS of LF1- Q 1(Real GDP) W Rate Ai1 (Interest Rate) " tv 4 W