Determine which scenario would NOT call for the Fed to intervene. Annual inflation is around 2%....

Determine which scenario would NOT call for the Fed to intervene.

Annual inflation is around 2%.
Prices are decreasing quickly; real value of the currency is rising.
The economy is reaching hyperinflation.
Prices are increasing rapidly; real value of the currency is falling.

Expert Solution

a. Fed usually targets inflation of 2% so the fed will not interfere in this scenario only.

If the prices are decreasing quickly, it is deflation that is harmful to a country so fed will have to intervene. The real value of currency is rising. When this happens, the imported goods will be cheaper and if a country imports raw material, almost all goods become cheap Like a Petroleum importing country will suffer if the value of its currency goes up quickly. When this happens over time, it does not affect that much as the economy compensates for it automatically.

Hyperinflation like recently in Venezuela is also really bad, in hyperinflation, the value of the currency goes down quickly and people are able to buy less from the money they have as time passes.

If prices are rising quickly, it is inflation but at a rapid rate, inflation is also bad. The real value of the currency is falling meaning the currency will now be exchanged for less with other currencies. This happens when supply is more and the demand for the currency is less.

Rahul Sunny answered 1 year ago

What would determine whether the German continued to intervene on this scale in the future?

1. Given the choice, which is a worse scenario: recession or inflation? 2. What are the...

1. Given the choice, which is a worse scenario: recession or inflation? 2. What are the "benefits" and cons of each happening? 3. Which scenario do you think we can recover from faster? A recession or a period of Inflation?

Assume the Fed has a target inflation rate of 2% and that the values for how...

Assume the Fed has a target inflation rate of 2% and that the values for how much the nominal target federal funds rate responds to a deviation in inflation from its target,g, and how much the nominal target federal funds rate responds to real GDP , h, are both 0.5 According to the taylor rule if inflation increases by 6% the real interest rate will increase by

Why would someone need to use a call option? Give a scenario of why someone would...

Why would someone need to use a call option? Give a scenario of why someone would want to use one. Also, pick a stock that has a call option written on it and describe how it would benefit someone who would purchase a call option. Showing math is required.

If the economy is experiencing accelerating inflation, what (traditional) policy would the Federal Reserve System (Fed)...

If the economy is experiencing accelerating inflation, what (traditional) policy would the Federal Reserve System (Fed) implement with regard to interest rates? Explain briefly, including what specifically the Fed would do in the implementation of the policy. Note that the appropriate policy is the opposite of what the Fed would do to combat a recession. Show graphically how the Fed policy you described above would affect the market for loanable funds. Explain briefly.

Scenario: You are an accounting manager at a mid-sized public company with annual Revenues around $200M...

Scenario: You are an accounting manager at a mid-sized public company with annual Revenues around $200M and Net Income around $15M. The 2017 year has ended and you've been working hard to close the books and support the audit. The company has released earnings (which requires some audit procedures and the "ok" from the audit firm) to the public and is now in the process of wrapping up the full 10K financial report to file with the SEC with the...

Scheduling Criteria Response Time Turn- Around Time Waiting Time Throughput CPU utilization Scenario: A call center...

Scheduling Criteria Response Time Turn- Around Time Waiting Time Throughput CPU utilization Scenario: A call center ( Several Systems are connected to a single printer through a network) Explain the scheduling criteria conflict that would occur in this scenario. Indicate factors that would impede or improve the overall utilization and performance.

The main argument for Fed independence is that monetary policy which affects interest rates, inflation, exchange...

The main argument for Fed independence is that monetary policy which affects interest rates, inflation, exchange rates and economic growth is too important and technical to be determined by politicians Question 67 options: True False

2. a. Does the US Fed follow inflation targeting? b. What are the US Fed’s monetary...

2. a. Does the US Fed follow inflation targeting? b. What are the US Fed’s monetary policy objectives? c. What are the tools of US monetary policy? d. Explain how those tools impact on interest rates and money supply.

2.How would you differentiate between a Webcast and a Webinar? Describe a scenario in which the...

2.How would you differentiate between a Webcast and a Webinar? Describe a scenario in which the use of a Webcast would be appropriate. Describe a scenario in which the use of a Webinar would be appropriate. 4.What are some potential legal and privacy issues that could arise when posting to a corporate blog? Discuss how you are protected by the First Amendment when posting to a corporate blog. 6. Which features of online project management software are most important to...

Question