Chapter 1: Introduction
... system adopted, or by the central bank--at a level Ms. Then equilibrium in the money market means that the nominal interest rate i=r+π has to be at that level where the curves cross: where the nominal interest rate is such that the quantity of money that households and businesses wish to hold is jus ...
... system adopted, or by the central bank--at a level Ms. Then equilibrium in the money market means that the nominal interest rate i=r+π has to be at that level where the curves cross: where the nominal interest rate is such that the quantity of money that households and businesses wish to hold is jus ...
The German Labor Market During the Great Recession
... More expected STW in recessions provides an insurance for firms in recessions, i.e., they know that they can use this instrument with higher probability in case of negative aggregate and idiosyncratic shocks. This smooths their present value of an existing match over the business cycle and thereby t ...
... More expected STW in recessions provides an insurance for firms in recessions, i.e., they know that they can use this instrument with higher probability in case of negative aggregate and idiosyncratic shocks. This smooths their present value of an existing match over the business cycle and thereby t ...
ECONOMICS
... Starting from point E, a negative demand shock shifts the AD curve to AD2, lowering GDP and the price level. In the short-run, output is below the full-employment level at point N. With unemployed labor available, wages and unit costs will fall, causing firms to lower their prices. The AS curve shif ...
... Starting from point E, a negative demand shock shifts the AD curve to AD2, lowering GDP and the price level. In the short-run, output is below the full-employment level at point N. With unemployed labor available, wages and unit costs will fall, causing firms to lower their prices. The AS curve shif ...
Inflation
... the entire curve shifts upwards. 3) Thus, the long-run Phillips curve is a vertical line at the natural rate of unemployment (near 6% in the U.S.). 4) Attempts to keep unemployment too low result in ever-increasing inflation. Title Page ...
... the entire curve shifts upwards. 3) Thus, the long-run Phillips curve is a vertical line at the natural rate of unemployment (near 6% in the U.S.). 4) Attempts to keep unemployment too low result in ever-increasing inflation. Title Page ...
Principles of Economics, Case and Fair,9e
... Sustained Inflation as a Purely Monetary Phenomenon Virtually all economists agree that an increase in the price level can be caused by anything that causes the AD curve to shift to the right or the AS curve to shift to the left. It is also generally agreed that for a sustained inflation to occur, t ...
... Sustained Inflation as a Purely Monetary Phenomenon Virtually all economists agree that an increase in the price level can be caused by anything that causes the AD curve to shift to the right or the AS curve to shift to the left. It is also generally agreed that for a sustained inflation to occur, t ...
ECN 111 Chapter 7 Lecture Notes
... 1. In calculating real GDP (and hence the GDP deflator) the Commerce Department does not directly measure the physical quantities produced but uses estimates by dividing expenditures by price indexes. One of those price indexes is the CPI. So the biased CPI injects a bias into the GDP deflator. 2. T ...
... 1. In calculating real GDP (and hence the GDP deflator) the Commerce Department does not directly measure the physical quantities produced but uses estimates by dividing expenditures by price indexes. One of those price indexes is the CPI. So the biased CPI injects a bias into the GDP deflator. 2. T ...
The Two Triangles
... As intertemporal optimization is formulated in terms of deviations from the steady state, xt denotes the gap between actual output and the “natural rate of output”, σ is the (constant) intertemporal elasticity of substitution of aggregate spending, it is the nominal interest rate, and Etπt+1 is the ...
... As intertemporal optimization is formulated in terms of deviations from the steady state, xt denotes the gap between actual output and the “natural rate of output”, σ is the (constant) intertemporal elasticity of substitution of aggregate spending, it is the nominal interest rate, and Etπt+1 is the ...
Introduction - Ministry of Social Development
... early 1990s, while single-parent and single-adult childless households showed especially large declines in joblessness during the subsequent economic recovery. In 1986, 33% of jobless households were raising children; by 2002, this figure had risen to 44%. This is despite the proportion of total hou ...
... early 1990s, while single-parent and single-adult childless households showed especially large declines in joblessness during the subsequent economic recovery. In 1986, 33% of jobless households were raising children; by 2002, this figure had risen to 44%. This is despite the proportion of total hou ...
Principles of Economics, Case and Fair,9e
... labor market eliminates unemployment and restores its equilibrium? a. The equilibrium wage rises above the wage that prevailed when there was unemployment. b. As it moves toward equilibrium, the market experiences an increase in the quantity of labor demanded and a decrease in the quantity supplied. ...
... labor market eliminates unemployment and restores its equilibrium? a. The equilibrium wage rises above the wage that prevailed when there was unemployment. b. As it moves toward equilibrium, the market experiences an increase in the quantity of labor demanded and a decrease in the quantity supplied. ...
NBER WORKING PAPER SERIES HAS GLOBALIZATION CHANGED INFLATION? Laurence M. Ball
... which flattens the Phillips curve in sticky-price models. Second, the rising credibility of central banks has anchored inflation expectations, which dampens movements in actual inflation. Both of these explanations are more appealing than the globalization story. ...
... which flattens the Phillips curve in sticky-price models. Second, the rising credibility of central banks has anchored inflation expectations, which dampens movements in actual inflation. Both of these explanations are more appealing than the globalization story. ...
The Role of Expectations in the FRB/US Macroeconomic Model
... The lack of adequate data has meant that builders of macroeconomic models have had to specify a priori how individuals form expectations (see box ‘‘Assumptions about the Ways in Which Expectations Are Formed’’). Most models developed in the 1960s and 1970s, including MPS, incorporated the simplifyin ...
... The lack of adequate data has meant that builders of macroeconomic models have had to specify a priori how individuals form expectations (see box ‘‘Assumptions about the Ways in Which Expectations Are Formed’’). Most models developed in the 1960s and 1970s, including MPS, incorporated the simplifyin ...
Expansionary fiscal contraction - University of British Columbia
... tax liabilities fall by the same amount as the present value of government spending. Holding labor supply constant, there would be no impact on aggregate demand, real interest rates, or overall GDP. When we include endogenous labor supply, however, the rise in consumption generates a wealth effect th ...
... tax liabilities fall by the same amount as the present value of government spending. Holding labor supply constant, there would be no impact on aggregate demand, real interest rates, or overall GDP. When we include endogenous labor supply, however, the rise in consumption generates a wealth effect th ...
Lesson 8 - ECO 151
... How much are you going to have to pay these workers to get them to do that? Most likely you will have to pay them more than they are currently making. As you bid up wages in the labor market to attract additional workers, prices in the economy will also rise, because now it costs more to produce you ...
... How much are you going to have to pay these workers to get them to do that? Most likely you will have to pay them more than they are currently making. As you bid up wages in the labor market to attract additional workers, prices in the economy will also rise, because now it costs more to produce you ...
The Costs of Inflation
... and carpenter go to buy from each other, they find they are no better off than before because of higher prices ...
... and carpenter go to buy from each other, they find they are no better off than before because of higher prices ...
INFLATIONARY PRESSURES IN SOUTH ASIA
... instability. Even so, the deficits in general as a percentage of GDP rarely exceeded ten per cent, and for most countries, the deficits widened in periods of low growth such as in the late 1990s, when they were driven by supply rather than demand shocks. Figures 5 to 7 graph the components of demand ...
... instability. Even so, the deficits in general as a percentage of GDP rarely exceeded ten per cent, and for most countries, the deficits widened in periods of low growth such as in the late 1990s, when they were driven by supply rather than demand shocks. Figures 5 to 7 graph the components of demand ...
Output-Employment Relationship across Sectors: A Long
... the short-run output elasticity of demand is smaller than unity and is less than that of the longrun. There might be various reasons for this. First, higher aggregate demand may encourage firms to increase their production but, this increase may not lead to higher number of people worked (employmen ...
... the short-run output elasticity of demand is smaller than unity and is less than that of the longrun. There might be various reasons for this. First, higher aggregate demand may encourage firms to increase their production but, this increase may not lead to higher number of people worked (employmen ...
Economics of Money, Banking, and Financial Markets, 8e
... 2) The combination of a successful wage push by workers and the governmentʹs commitment to high employment leads to A) demand-pull inflation. B) supply-side inflation. C) supply-shock inflation. D) cost-push inflation. Answer: D Ques Status: Previous Edition ...
... 2) The combination of a successful wage push by workers and the governmentʹs commitment to high employment leads to A) demand-pull inflation. B) supply-side inflation. C) supply-shock inflation. D) cost-push inflation. Answer: D Ques Status: Previous Edition ...
9 Keynes and money
... more sophisticated forms of the ‘special case’ classical axioms that Keynes rejected. Consequently Keynes’s revolution against classical theory was almost immediately shunted on to a wrong track as more obtuse versions of classical theory became the keystone of modern mainstream macroeconomic theory ...
... more sophisticated forms of the ‘special case’ classical axioms that Keynes rejected. Consequently Keynes’s revolution against classical theory was almost immediately shunted on to a wrong track as more obtuse versions of classical theory became the keystone of modern mainstream macroeconomic theory ...
Ch22 Inflation Multiple Choice Questions 1. ______ implies that
... 4. Identify the most commonly cited measure of inflation in the United States and explain how it is calculated. Identify and briefly discuss the subtle problem that statisticians have paid considerable attention to in recent years. The most commonly cited measure of inflation in the United States is ...
... 4. Identify the most commonly cited measure of inflation in the United States and explain how it is calculated. Identify and briefly discuss the subtle problem that statisticians have paid considerable attention to in recent years. The most commonly cited measure of inflation in the United States is ...
A Comparison of the Theories of Joseph Alois Schumpeter and John
... employment (Ekelund & Hebert, 1975). In order to achieve this full employment point (point B figure 2), Keynes believed, investment demand must be equal to the gap between the aggregate supply price corresponding to full employment and the amount which consumers in the aggregate choose to spend for ...
... employment (Ekelund & Hebert, 1975). In order to achieve this full employment point (point B figure 2), Keynes believed, investment demand must be equal to the gap between the aggregate supply price corresponding to full employment and the amount which consumers in the aggregate choose to spend for ...
Full employment
Full employment, in macroeconomics, is the level of employment rates where there is no cyclical or deficient-demand unemployment. It is defined by the majority of mainstream economists as being an acceptable level of unemployment somewhere above 0%. The discrepancy from 0% arises due to non-cyclical types of unemployment, such as frictional unemployment (there will always be people who have quit or have lost a seasonal job and are in the process of getting a new job) and structural unemployment (mismatch between worker skills and job requirements). Unemployment above 0% is seen as necessary to control inflation in capitalist economies, to keep inflation from accelerating, i.e., from rising from year to year. This view is based on a theory centering on the concept of the Non-Accelerating Inflation Rate of Unemployment (NAIRU); in the current era, the majority of mainstream economists mean NAIRU when speaking of ""full"" employment. The NAIRU has also been described by Milton Friedman, among others, as the ""natural"" rate of unemployment. Having many names, it has also been called the structural unemployment rate.The 20th century British economist William Beveridge stated that an unemployment rate of 3% was full employment. Other economists have provided estimates between 2% and 13%, depending on the country, time period, and their political biases. For the United States, economist William T. Dickens found that full-employment unemployment rate varied a lot over time but equaled about 5.5 percent of the civilian labor force during the 2000s. Recently, economists have emphasized the idea that full employment represents a ""range"" of possible unemployment rates. For example, in 1999, in the United States, the Organisation for Economic Co-operation and Development (OECD) gives an estimate of the ""full-employment unemployment rate"" of 4 to 6.4%. This is the estimated unemployment rate at full employment, plus & minus the standard error of the estimate.The concept of full employment of labor corresponds to the concept of potential output or potential real GDP and the long run aggregate supply (LRAS) curve. In neoclassical macroeconomics, the highest sustainable level of aggregate real GDP or ""potential"" is seen as corresponding to a vertical LRAS curve: any increase in the demand for real GDP can only lead to rising prices in the long run, while any increase in output is temporary.