Chapt 17 economics
The $80 is a nominal variable. The quantity of lettuce is a real variable.
Sally sells 40 bags of her letters for a total of $80 at the farmers market
the cost of more frequent price changes induced by higher inflation
Menu cost refers to
Increase, which makes the value of money decrease.
Open market purchases by the Fed make the money supply
Reducing cash holdings.
People can reduce the inflammation tax by
The total quantity of final goods and services produced.
Real GDP measures
Nominal GDP would rise by 5%; real GDP would be unchanged
According to the assumptions of quantity theory, if the money supply increases 5% then
Unemployment.
According to the principle of monetary neutrality, a decrease in the money supply will not change
His real salary has fallen and her normal salary has risen.
And MCC economics instructor gets a $100 a month raise. He figures that with his current monthly salary he can't buy as many goods as he could last year
1.5.
Based on the quantity equation, if M=100, V=3, and Y=200, then P=
Reduces the ability to pay debts and raises the value of money.
Deflation
Real variables.
Economic variables whose values are measured in goods are called
Inflation is 3%, the tax rate is 40%.
Given a nominal interest rate of 8%, in which case below would you earned the highest after-tax real interest rate?
Falls, so the value of money falls.
If the Fed raises the money supply then 1/p
Creditors would gain at the expense of the debtors.
If the economy unexpectedly went from inflation to deflation,
The inflation rate would be about the same as the money supply growth rate.
If velocity in output were nearly constant,
Tightly controlled the money supply.
In order to maintain stable prices, a central bank must
Mean that only real interest earnings are taxed.
Indexing The tax system to take into account the effects of inflation would by itself
Percentage change in the consumer price index.
Inflation can be measured by the
The nominal interest rate adjusts One for one with the inflation rate.
The Fisher affect says that
Move together, which is consistent with quantity theory.
The evidence from hyperinflations indicates that money growth and inflation
3.6%
The nominal interest rate is 4.5% and the inflation rate is .9%. What is the real interest rate?
25%
The price level rises from 120 to 150. What was the inflation rate?
Can explain both moderate inflammation and hyperinflation.
The quantity theory of money
Inflation; 4%.
The real interest rate is 8% and the nominal interest rate is 12%. Is there information or deflation? What is the inflation or deflation rate?
The average number of times per year a dollar is spent.
The velocity of money is
Unexpectedly high.
Wealth is distributed from creditors to debtors when inflation is
Right, raising the price level.
When the money market is drawn with the value of money on the vertical axis, and increase in the money supply shift the money supply curve to the
Increases, so the value of money falls.
When the price level rises, the number of dollars needed to buy a representative basket of goods
And extraordinarily high rate of inflation
Which of the following events and post world war one Germany likely contributed to the rise of nazism and World War II?
