Q: The Taylor rule suggests that the policy rate target should be increased
The Taylor rule suggests that the policy rate target should be increased when the output gap is positive. Do you think the Taylor rule encourages or discourages demand-pull inflation? Which might be a...
See AnswerQ: Suppose that during the last ten years, Nicole tried to forecast
Suppose that during the last ten years, Nicole tried to forecast future inflation rates to negotiate her salary. Every year, she used all available information and even incorporated news about the con...
See AnswerQ: In 2003, as the economy finally seemed poised to exit its
In 2003, as the economy finally seemed poised to exit its ongoing recession, the Fed began worrying about a “soft patch” in the economy; in particular, it worried about the possibility of deflation. A...
See AnswerQ: Suppose that f is determined by two factors: financial panic and
Suppose that f is determined by two factors: financial panic and asset purchases. a) Using an MP curve and an AS>AD graph, show how a sufficiently large financial panic can pull the economy below the...
See AnswerQ: Suppose a firm has a great idea: overnight shipping. This
Suppose a firm has a great idea: overnight shipping. This idea will decrease costs for many businesses and will therefore result in a more efficient economy. If the entrepreneurs who create this conce...
See AnswerQ: Microcredit programs (i.e., very small loans issued to
Microcredit programs (i.e., very small loans issued to the extremely poor) usually target a group of women and assign funds to them under the condition that decisions about the use of funds are made b...
See AnswerQ: Suppose a given country encourages its citizens to save 20% of
Suppose a given country encourages its citizens to save 20% of their income and then allocates these funds through government owned financial intermediaries. As a result, many government officials get...
See AnswerQ: Identify the type of asymmetric information problem described in each of the
Identify the type of asymmetric information problem described in each of the following scenarios: a) A loan officer requests information about your work and credit history before approving your car lo...
See AnswerQ: Suppose you go to a bank intending to buy a certificate of
Suppose you go to a bank intending to buy a certificate of deposit with your savings. Explain why you would not offer a loan to the next individual who applies for a car loan at the bank at a higher i...
See AnswerQ: In December 2001, Argentina announced that it would not honor its
In December 2001, Argentina announced that it would not honor its sovereign (government-issued) debt. Many investors were left holding Argentinean bonds that were now priced at a fraction of their rec...
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