How Inflation expectations influence monetary policy effectiveness and should inflation targeting (IT) be adopted in China? Introduction After the 2008 financial crisis‚ to stimulate the economy and stabilize the prices‚ the Chinese central bank implemented a straightforward monetary policy. This policy consists of increasing money supply and lowering interest rates‚ which presented a risk of inflation. According to National Bureau of Statistic (NBS) data‚ there has been a 2.5% increase in Consumer
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Depression of the 1930s has involved a continuing effort by the government to find a mix of fiscal and monetary policies that will allow sustained growth and stable prices. That is no easy task‚ and there have been notable failures along the way. Inflation‚ however‚ has proven more intractable. Prices were remarkably stable prior to World War II; the consumer price level in 1940‚ for instance‚ was no higher than the
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Hidayatullah National law university-Raipur | Relationship of Gold and Inflation in the Indian context | Project for Semester I | | Akanksha Dikshit | 8/21/2012 | The Project analyses the relationship of Gold prices and inflation in India. Gold holds a special place in the Indian psyche and cultural ethos. It influences the Indian economy like no other material. The study is based upon the study of existing research material. | Acknowledgements I thankfully acknowledge the help
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__________ ID: A Test 2 5. If the economy is in a recessionary gap and the price level falls very slowly‚ then the result will be a prolonged period of a. high unemployment. b. production above potential GDP. c. shortages in supply. d. inflation whenever supply increases. Figure 10-8 6. The slope of the consumption function is measured by the marginal propensity to save. 7. If the stock market falls by 25 percent next year and remains down‚ what is most likely to happen to the
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Relationships Due midnight‚ Wednesday‚ 7/17 By Class Time on Thursday‚ 7/18 1. | London | New York | Spot Exchange Rate ($/GBP) | 1.3264 | 1.3264 | Interest Rates | 3.900% | 4.500% | Expected Inflation Rates | 0.650% | 1.250% | a. What is the expected rate of inflation in London? iPC - iBC = PC - BC 4.500% - 3.900% =1.250% - BC PC = 0.650% b. Using Uncovered Interest Rate Parity‚ what is the value of the expected spot exchange rate in two years? E(ST) = S0 * [(1+i)/(1+i*)]T
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taxes‚ lowering disposable income. c. by making alternative‚ nonmonetary assets look relatively less attractive to wealth holders. d. by causing a decrease in the issuance of corporate debt. e. None of the above. 3. An increase in expected inflation causes demand for money to a. fall because of a higher return on alternative assets. b. fall because of a lower return on alternative assets. c. rise because of a lower return on alternative assets. d. rise because of a higher return on
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| | Inflation and its impact on the Pakistan Economy: Introduction: Inflation is the rise in the prices of goods and services in an economy over a period of time. When the general price level rises‚ each unit of the functional currency buys fewer goods and services; inflation is a decline in the real value of money and the loss of purchasing power of people. Inflation is a key indicator of a country and provides important view on the state of the economy and the policies of the government.
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In economics‚ inflation is a rise in the general level of prices of goods and services in an economy over a period of time. When the general price level rises‚ each unit of currency buys fewer goods and services. Consequently‚ inflation also reflects erosion in the purchasing power of money – a loss of real value in the internal medium of exchange and unit of account in the economy. A chief measure of price inflation is the inflation rate‚ the annualized percentage change
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Interest rate is one of the most prominent macroeconomic factors among many other macroeconomic factors. It has direct impact not only on our market but also on other macro economic factors like inflation‚ money supply and investment. Government uses this powerful tool to control money supply‚ inflation‚ recession‚ employment and also investment pattern. Over all‚ we can say that through interest rate government controls the economic phases of a country. Now in question of impact on market; interest
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Sample Macroeconomics Questions for Class Test II (Prepare all questions for 20 marks each) 1. What are factor prices? How are factor prices determined according to Classical theory of income and output? 2. Explain the effects of the followings on economy according to Classical Theory of Income and Output: a) The new government in Nepal has taken initiatives with the assumption that there is no alternative to reconstruct the once demolished infrastructures to rebuild Nepal into a more prosperous
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