Suppose the monetary-policy rule has the wrong natural rate of interest. That is, the central bank follows

Question:

Suppose the monetary-policy rule has the wrong natural rate of interest. That is, the central bank follows this rule:
it = πt + p’ + θπ(πt − πt*) + θY(Yt − t)

Fantastic news! We've Found the answer you've been seeking!

Step by Step Answer:

Related Book For book-img-for-question

Macroeconomics

ISBN: 978-1464168505

5th Canadian Edition

Authors: N. Gregory Mankiw, William M. Scarth

See More Books

Question Posted: Dec 31, 2015 01:39 AM

See More Questions

Changes in oil prices shift the short-run aggregate supply (SRAS) curve. Consider how volatility in oil prices may influence the economys short-run equilibrium, which occurs at the intersection of...
Suppose the monetary policy curve is given by r = 1.5 + 0.751(, and the IS curve is given by Y = 13 - r. a. Calculate an expression for the aggregate demand curve. b. Calculate the real interest rate...
Consider the following simple monetary policy rule: In the following questions, you are asked to gather data on inflation and short-run output to feed into this policy rule. A good resource for the...
Using the DJIA data in Problem 5-39, use exponential smooth with trend adjustment to forecast the opening DJIA value for 2014. Use Î± = 0.8 and Î² = 0.2. Compare the MSE for...
The widths of 100 elevator rails have been measured. The sample mean and standard deviation of the elevator rails are 2.05 inches and 0.01 inch. a. Find a 95% confidence interval for the average...
A steel company in Hamilton can purchase Alberta coal at C$105 per metric tonne (1000 kg) or West Virginia coal at US$95 per ton (2000 lb) (1 kg = 2.205 lb). How much cheaper in C$ per metric tonne...
How does your use of language change in social settings when meeting new people? In professional settings? How does your use of language affect other peoples first impressions of your character, your...
1. The three basic economic questions a society must answer are _________ products do we produce? _________ do we produce the products? _________ consumes the products? 2. List the five factors of...
Part 067 is used in one of Broce Corporationis products. The company's Accounting Department reports the following costs of producing the 16,600 units of the part that are needed every year Unit...
Discuss the convergence of the following sequences, where a, b satisfy 0 < a < 1; b > 1. (a) (n2an); (b) (bn/n2); (c) (bn/n!); (d) (n!/nn):
Derive the long-run equilibrium for the dynamic ADAS model. Assume there are no shocks to demand or supply (et = ut = 0) and inflation has stabilized (t = t 1), and then use the five equations to...
If a central bank wants to achieve lower nominal interest rates, it has to raise the nominal interest rate. Explain in what way this statement makes sense.
Moist air at standard conditions is at a dry bulb temperature of 93F and a wet bulb temperature of 70F. Use the psychrometric chart to find: a. The relative humidity b. The dew point temperature c....
5. Consider the classes below and determine what is printed out by the client code. public class V { public void one(){ System.out.print("it"); } public void two(){ System.out.print("go"); } } public...
Consider the following closed economy short-run IS-LM model with income taxation. The economy is described by equations (1) through (6): (1) C = 200 + 0.8(Y -T); (2) T = 800+0.25Y;(3) G = 500; (4) 1...
(30 pts) A binary search tree is given, write a method to delete a node from the tree. Assume the successor and predecessor methods are provided, partial code is provided below. Finish the reset of...
Reminder: Formatting is always important in your code (comments, indentation, variable names, etc.) And please always start your Java code file with a multi-line comment listing the name of the...
An element is the majority of a size-n array A [1...n] if it occurs more than 1 times in the array. Design a O(log n) time algorithm to find the majority of A in the EREW PRAM model using n...
Figure P2-70 shows a programmable voltage divider in which digital inputs $b_{0}$ and $b_{1}$ control complementary analog switches connecting a multitap voltage divider to the analog output...
Calculate the Lagrange polynomial P 2 (x) for the values (1.00) = 1.0000, (1.02) = 0.9888, (1.04) = 0.9784 of the gamma function [(24) in App. A3.1] and from it approximations of (1.01) and (1.03).
(Appendix) The journal entry to record Digital Systems assignment of direct labor to jobs is a. Manufacturing Wages Direct Labor Price Variance Work in Process Inventory b. Manufacturing Wages Direct...
The National Atmospheric and Space Administration (NASA) is ending its space-shuttle program, but has developed programs to encourage firms to enter the market for space flight. Once the shuttle...
For another example of signaling from advertising, consider movies. A movie distributor may produce several movies each year but advertise just a few of them. Although there are few repeat consumers...
1. A profit-maximizing firm picks the quantity of output at which ______ equals ______. 2. Arrows up or down: At a firms current level of output, marginal revenue exceeds the marginal cost. The firm...
September 1 . Purchased a new truck for $ 8 3 , 0 0 0 , paying cash. September 4 . Sold the truck purchased January 9 , Year 2 , for $ 5 3 , 6 0 0 . ( Record depreciation to date for Year 3 for the...
Find the NPV for the following project if the firm's WACC is 8%. Make sure to include the negative in your answer if you calculate a negative. it DOES matter for NPV answers
What is the value of a 10-year, $1,000 par value bond with a 12% annual coupon if its required return is 11%?

Suppose the monetary-policy rule has the wrong natural rate of interest. That is, the central bank follows

Question:

Step by Step Answer:

If the central bank has the wrong natural rate of interest then it is using a value that is different from the real value Suppose that the wrong natural rate of interest is defined as follows In this ...View the full answer

Macroeconomics

Students also viewed these Economics questions