Reserve Inflation targeting as the name suggests does not necessarily mean that the bank has only one agenda - correct rate of inflation to target. On the contrary‚ inflation targeting allows the central bank to have an explicit target for the rate of inflation which as a result helps the individuals‚ households and markets form inflation expectations for the future. Secondly‚ targeting inflation means that the central bank will place more weight on controlling inflation and keeping it within the boundary
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Explain the aggregate supply in the short run. In the short-run‚ the aggregate supply curve is upward sloping. There are two main reasons why the quantity supplied increases as the price rises: 1. In the short-run‚ the nominal wage rate is fixed. As a result‚ an increasing price indicates higher profits that justify the expansion of output. 2. An alternate model explains that the AS curve increases because some nominal input prices are fixed in the short-run and as output rises‚ more production
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The only risk to the bank is credit risk‚ i.e. that the loan gets repaid. In the modern scenario we have a 150 day loan at 6% funded by a 7 day deposit at 1%. In this example we have credit risk‚ interest rate risk and liquidity risk. This model facilitates greater margin as it is generally cheaper to borrow in the short term and higher rates available if lending in the longer term. The risks are that in 7 days‚ where will the borrowing rate be (rate risk) and will the bank be able to borrow (liquidity
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International Political Economy – Final Exam Notes The Rise of International Political Economy Classical Political Economy Origins of Political Economy Population and economic growth in the 19th century after a period of stagnation from 1500-1800 Moral philosophy in the 18th century began to focus on the economy when previously religiously based Example: Adam Smith applied philosophical explanations to how the economy works The rise of “economic philosophy” Smith‚ Ricardo‚ Malthus
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14 -0.28% Related Citigroup‚ Four Other Banks Fail Fed Stress Test Citigroup Inc.’s capital plan was among five that failed Federal Reserve stress tests‚ while Bank of America Corp. won approval for its first dividend increase since the financial crisis. Lenders announced more than $60 billion of dividends and stock buybacks after the Fed approved capital plans for 25 of the 30 banks in its annual exam. Citigroup‚ as well as U.S. units of Royal Bank of Scotland Group Plc‚ HSBC Holdings Plc and
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December 2013‚ making China the largest foreign holder of U.S. Treasury securities † (it overtook Japan as the largest holder in 2008).1 Key Points China pursues an exchange rate policy that keeps its currency undervalued. This requires China’s central bank to purchase U.S. dollars entering China’s economy‚ resulting in massive foreign exchange reserves ($3.82 trillion by the end of 2013). A significant portion‚ $1.3 trillion as of December 2013‚ of China’s foreign exchange reserves was invested
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Germany: Country outlook. Retrieved 21 April‚ 2006‚ from ProQuest database. European Central Bank (2006). Retrieved March 2006‚ from www.ebc.com European Central Bank (2000) Eurostat News Release (September 2004). Labour Force Survey 2003. Retrieved March 16‚ 2006‚ from ProQuest database. Federal Reserve Statistical Release. Foreign Exchange Rates. Retrieved April 24‚ 2006‚ from www.federalreserve.gov/releases/h10 The European Union Online Foreign Trade (Aussenhandel). Retrieved April 10‚ 2006 from
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may change over time as priorities change. Fixed Versus Flexible Exchange Rates • Benefits of fixed rate regime – stability in international prices – inherent anti-inflationary nature of fixed prices • Problems of fixed rate regime – Need for central banks
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[pic] Second Examination Spring 2012 Please check to make sure you have 10 pages in your copy of the exam and answer each question in the space provided. You may consult one page of notes and a calculator. I understand that the honor code applies: I will not lie‚ cheat‚ or steal to gain an academic advantage‚ or tolerate those who do. _______________________________________ (Signature) _______________________________________ (Printed Name) _______ (Block) Each of the
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Illegal fund-raising risk 3 1.4 Financial swindling risk 3 2.0 Bank Risk Classification 4 2.1 Credit Risk 4 This is the main risk of commercial banks. Means of access to bank credit to support the possibility of a debtor can not repay on time and in accordance with the contractual principal and interest. In today’s commercial banking business diversification‚ not only the traditional credit risk remains a major risk of commercial banks. Moreover‚ an important risk discounting‚ overdrafts‚ credit
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