constantly which most people do not quite understand. These terms will be identified and explained in terms that the average person can comphrend. These terms are the Gross Domestic Product (GDP)‚ Real GDP‚ Nominal GDP‚ Unemployment rate‚ Inflation rate‚ and Interest Rate. The Gross Domestic Product is defined as the total market value of all the final goods and services produced in an economy within a country during a given period. Real Gross Domestic Product (real GDP) is thought to be a country’s
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The present growth rate of our country has dropped to nearly three and a half year low of 5.5%. India’s GDP growth for the 1st quarter of the current FY 2012-13 stood at 5.5% compared to 5.3% in the last quarter of the previous financial year. Also it is much lower compared to 8% GDP growth in the same quarter last financial year. Though the inflation has fallen to eight month low of 7.45% in October 2012 from 7.81% the previous month‚ but it is certainly at a very high rate. The reason for the
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monetary policy in which a central bank purchases government securities or other securities from the market in order to lower interest rates and increases the money supply. Quantitative easing increases the money supply by flooding financial institutions with capital in an effort to promote increased lending and liquidity. Quantitative easing is considered when short-term interest rates are at or approaching zero‚ and does not involve the printing of new banknotes. Typically‚ central banks target the supply
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Econ 2123 Problem Set 2 Instructor: Wenwen Zhang TA: Mike Cheng Lecture: L5‚ L6 Due date & Homework Submission Location: Before 10/14 Tue 5:30p.m. Dropbox on the LSK 6th floor (Outside Econ Department) Name: _________________________________ Student ID: _____________________________ Lecture: ________________________________ Multiple Choices 1. Which of the following would NOT be considered part of fixed investment spending (I)? A) Toyota buys a new robot for its automobile assembly
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operations are used to implement monetary policy‚ which involves dealing in markets to influence the interest rate on overnight funds in the money market. A target cash rate is set by the RBA for a period which in effect determines the interest rate that ADI’s charge on loans. Once the target cash rate is determined it is then the responsibility of the Domestic Markets department of the RBA to manage the cash rate and keep it in line with the target. One of the major indicators is the balance ADI’s hold in
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Chapter 8 The Money Markets 8.1 Multiple Choice 1) Activity in money markets increased significantly in the late 1970s and early 1980s because A) of rising short-term interest rates. B) of regulations that limited what banks could pay for deposits. C) of both (A) and (B) of the above. D) of neither (A) nor (B) of the above. Answer: C 2) Money market securities are A) short-term. B) low risk. C) very liquid. D) all of the above. E) only (A) and (B) of the above. Answer: D 3) Money market instruments
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and savings) schedule is a locus of points giving all the combinations of interest rate and income at which the goods market is in equilibrium‚ ceteris paribus. The IS curve is downward sloping because as interest rates fall‚ investment increases‚ thus increasing output. The steepness of the slope depends upon the sensitivity of investment to interest rate changes. The more interest sensitive the investment‚ the more interest sensitive the IS curve‚ i.e. the flatter the IS curve. We can derive the
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that they will demand a premium for investing in non-liquid assets such as bonds‚ stocks and real estate. The theory suggests that the premium demanded for parting with cash increases as the period (term) for getting the cash back increases. The rate in the increase of this premium‚ however‚ slows down with the increase in term. Liquidity means the convenience of holding cash. Liquidity preference means desire to hold cash. Everyone in this world likes to have money with him for a number
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mortgage market. The sustained rise in asset prices‚ particularly house prices‚ on the back of excessively accommodative monetary policy and lax lending standards during 2002-2006‚ increased innovation in the new financial instruments‚ unusual low interest rates resulted in a large rise in mortgage credit to households; particularly low credit quality households‚ the greed of investors’ for ever higher returns coupled with very minimal down payments‚ along with the dependence on major global rating agencies
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NAME: _________________________________ Student ID: __________________________ College of Business Administration Department of Economics Principles of Macroeconomics O. Mikhail ECO 2013 - 0008 Spring 2004 QUIZ V – Version 2 • • • • • This closed book QUIZ is worth 100 points. The exam totals 45 Multiple-Choice questions. Each Multiple-Choice question is worth 2.22 points. Allocate your time accordingly. Including the cover page‚ the exam totals 10 pages. DO NOT forget to write your name and
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