Macroeconomics (Fourth Edition)
4th Edition
ISBN: 9780393603767
Author: Charles I. Jones
Publisher: W. W. Norton & Company
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Question
Chapter 8, Problem 6E
(a)
To determine
The impact of increase in real GDP by 4 percent during the period of boom.
(b)
To determine
The impact of decrease in real GDP by 1 percent during recession.
(c)
To determine
The impact on money supply when real GDP is growing at 3 percent per year.
(d)
To determine
The impact of increase in velocity of money on money supply.
(e)
To determine
The impact of decrease in velocity of money on money supply.
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If the money supply (M) is $300, the real GDP
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Suppose that an economy has a constant nominal money supply, a constant level of real output Y = 1500, and a constant real interest rate r = 0.05, and it’s expected rate of inflation is 2%, i.e, πe = .02. Suppose that the income elasticity of money demand is ηY = 0.5 and the interest elasticity of demand ηi = –0.2.
(a) Suppose that Y decreases to 1425, r remains constant at 0.05 and there is no change in the expected rate of inflation. What is the percentage change in the equilibrium price level?
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Continued monetary tightening
05 October 2022
The Monetary Policy Committee today increased the Official Cash Rate (OCR) to 3.5% from 3.0%. The Committee agreed it remains appropriate to continue to tighten monetary conditions at pace to maintain price stability and contribute to maximum sustainable employment. Core consumer price inflation is too high and labour resources are scarce. Global consumer price pressures remain heightened. The global demand for goods and services is exceeding supply capacity, putting upward pressure on prices. Food and energy prices are being particularly exacerbated by the war in Ukraine. A recent decline in oil prices and an easing in some supply-chain constraints have seen headline inflation measures fall in some countries. However, core measures of inflation have risen and persist. Central banks are tightening monetary conditions, implying a weaker growth outlook for New Zealand's trading partners. In New Zealand, the level of domestic spending has…
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Macroeconomics (Fourth Edition)
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