Chapter 22 The Demand for Money T 1) Multiple Choice The quantity theory of money is a theory of (a) how the money supply is determined. (b) how interest rates are determined. (c) how the nominal value of aggregate income is determined. (d) all of the above. Answer: C Question Status: Previous Edition 2) Because the quantity theory of money tells us how much money is held for a given amount of aggregate income‚ it is also a theory of (a) interest-rate determination. (b) the demand for
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Erik Moutenot Dr. Pelham MKT 370-01 12/15/14 Case 4: Lafarge – Aget Heracles 1. Argue the potential influence of competitive forces upon the cement industry. The cement buyers influence competition by merging up and piling pressure on the suppliers‚ which in turn makes the suppliers to reduce prices in order to maintain or increase the market share. The decrease in prices in turn affects the company’s profit margin. Equally‚ with some of the customers‚ like governments and hospitals‚ in need
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consumers and firms alike choose to save their money. The reasoning behind avoiding bonds and investing is that interest rates will soon rise. As a result‚ bonds will devalue and hence consumers do not wish to hold bonds. This is known as the liquidity trap (Blanchard‚ 2000; Eggertsson‚ Gauti and Michael Woodford‚ 2003). Also‚ drawing a parallel with the U.S to Japan‚ it is seen that lowering interest rates has little to no effect when rates are near zero. This is proven when Donner and Peters say
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Summary: Paul Krugman‚ Nobel Prize in Economics in 2008‚ made a remix of a previous book on the Asian crisis to explain the crisis of 2008. Examines with an entertaining crises that followed the Great Depression of 1929 and focuses on Asian and Latin American 90s and 2000‚ he drew attention for its stagnation. He says that when all augured an era of unlimited growth after learning the lessons of the Great Depression and the elimination of the cyclical crises in Asia happened just the opposite. For
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that has been launched into a recession by a global financial crisis. Their normal practice of lowering the federal funds rate became ineffective as the nominal interest rate approached the Zero Lower Bound (ZLB). Monetary policy fell into the “liquidity trap”‚ with the Federal Reserve running out of room to lower the nominal interest rate through open-market operations. As a result of this situation‚ many leading economists‚ including Olivier Blanchard‚ head of the International Monetary Fund (IMF)
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John Keynes and Milton Friedman were the most influential economists of the 20th century. Friedman spent much of his intellectual energy attacking the legacy of Keynes‚ it is natural to consider them opposites. Their differences were‚ indeed‚ profound and so was what they shared. Believe it or not‚ neither won or lost: today’s policy orthodoxies are a synthesis of their two approaches.( http://gecon.blogspot.com July 19‚ 2009) Some of there key differences were Keynes thought the great depression
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Bessembinder and Maxwell (2008) Transparency and the Corporate bond market ‚ The Journal of Economic perspectives‚ 22‚ 217-234. Biais‚ B‚ Declerck‚ F‚ Dow‚ J‚ Portes‚ R‚ Ernst-Ludwig von Thadden (2006) European Corporate Bond Markets: transparency‚ liquidity‚ efficiency. Centre for Economic Policy Research. Innes‚ R‚ (1990) Limited Liability and Incentive contracting with Ex-ante action Choices‚ Journal of Economic Theory‚ 62‚ 45-67. Patil‚ R.H. (2005) Report of High Level Expert Committee on Corporate
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If you were having a conversation with a Keynesian and a Classical economist‚ and the conversation turned to why the economy is experiencing high unemployment and what the government should do about it‚ how would each economist explain unemployment and what policies would each advocate? If I were having a conversation about why the economy is experiencing high unemployment and what the government should do about it‚ with a Keynesian and a Classical economist I think that the economists would explain
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college or a university which is to basically to debt themselves into attaining multiple students loans from companies that only trick them into then paying more and more of what the first started of with. You also expressed that private loans rely on liquidity from investors which is a controversy in itself because it can be damaging to loaners. In the first article you mention Sallie Mae which I learned this year in the PBS documentary we watched in classs was a private loaning business that attracts
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Impact of fiscal and monetary policy on the economy Economic stability is the most important thing for any county in the world. Central banks‚ Governments often intervene in their economies in an attempt to maintain the economic stability. So to maintain the economic stability‚ fiscal and monetary policies plays a major role in it. In most of the economies the objective of fiscal policy is to increase the output of the country while the monetary policy deals with the control of interest and inflation
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