will expansionary monetary policy affect these factors in the long run? Explain. “In the short run‚ shifts in monetary policy exert an impact on real output and employment. A shift to a more restrictive policy will tend to reduce real output and employment‚ while a shift to a more expansionary monetary policy will tend to increase them. However‚ if the more expansionary policy persists‚ the long-run impact will be inflation and higher nominal interest rates‚ without any positive impact on real
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for Cambridge AS and A Level Economics Learner Guide for Cambridge AS and A Level Economics How to use this guide The guide describes what you need to know about your Economics examination. It will help you to plan your revision programme and will explain what Cambridge International Examinations is looking for. The guide contains the following sections: Section 1: How will you be tested? This section will give you information about the different examination papers you will take. Section 2: Examination
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ASSIGNMENTS Weekly Point Values |ASSIGNMENTS |Due |Points | |Individual (70%) | | | |Fundamentals of Macroeconomics Paper |Week 2 |15 | |Federal
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(i) Explain the concept of the consumer price index (CPI) and explain how it is measured. What is the latest CPI figures in Australia (Sept 2012) and what were the main factors influencing the CPI movements in this quarter. (ii) Is the CPI an accurate measure of inflation? Explain the importance of inflation when calculating the real interest rate. (iii) What are the economic costs of inflation? (iv) Is deflation a potentially more serious problem than inflation? In writing
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means that in that particular year the economy produced no capital goods at all.” Do you agree? Why or why not? Explain: “Though net investment can be positive‚ negative‚ or zero‚ it is quite impossible for gross investment to be less than zero.” 4. (7 points) What are the major factors that have affected U.S. household consumption since the recession in 2001? 5. (7 points) Briefly explain how the following would shift the IS function to the right. a. A change to lump-sum taxation (Specify whether
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labour | 850 | Consumption expenditure | 1‚100 | Profit‚ interest and rents | 340 | Investment | 170 | Government expenditure | 310 | Net exports | −54 | (a) Calculate the country’s GDP in 2012. (1 mark) (b) Explain the approach (expenditure or income) that you used to calculate GDP. (1 mark) An economy produces only apples and oranges. The base year is 2011‚ and the table gives the quantities produced and the prices. Quantities | 2011 | 2012 | Apples
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monetarism has dramatically impacted and helped explain changes in monetary policy and the banking system for nearly one hundred years. To fully grasp this economic theory‚ the history behind it and what influenced its existence must be understood. Following the Great Depression‚ Keynesian economics mainly dominated the United States as well as countries globally. This economic theory focused on total spending in the economy and its effects on output and inflation (Blinder). Keynesians traditionally saw
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points each part) A newspaper article once reported that the U.S. economy was experiencing a low rate of inflation. It said that "low inflation has a downside: 45 million recipients of Social Security and other benefits will see their checks go up by just 2.8% next year." a. Why does inflation affect the increase in Social Security and other benefits? b. Is this effect a cost of inflation‚ as the article suggests? Why or why not. 4. (5 points each part) Suppose a country has a money demand
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severe demand-pull inflation? Which of these fiscal policy options do you think might be favored by a person who wants to preserve the size of government? A person who thinks the public sector is too large? How does the ‘ratchet effect’ affect anti-inflationary policy. Options are to reduce government spending‚ increase taxes‚ or some combination of both. See Figure 30.2. If the price level is flexible downward‚ it will fall. In the real world‚ the goal is to reduce inflation—to keep prices
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Write the quantity equation and explain it. Money x Velocity = Price x Transactions Money x Velocity = Price x Output This theory seeks to explain how money affects the economy‚ and is based on the fact that money is demanded as a medium of exchange. We can say that price level is a function of the quantity of money in circulation. The transaction version of the quantity theory states that the changes in money supply other things remaining the same‚ brings a directly proportionate change in the
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