Question
In: Economics
The inflation -------------------- refers to the reduction in the real value of savings
The inflation -------------------- refers to the reduction in the real value of savings, cash holdings, and non-indexed interest income that follows from an increase in the -------------- level
Irving Fisher thought the Fed should target a 0% inflation rate. This policy is called ------- seigniorage.
Solutions
Expert Solution
The inflation refers to the reduction in the real value of savings, cash holdings, and non-indexed interest income that follows from an increase in the ---PRICE-- level
Reason- Rise in price level leading to fall in the real value is called inflation.
Irving Fisher thought the Fed should target a 0% inflation rate. This policy is called LIQUIDITY TRAP.
Reason- When interest rate is zero people hold to money as it also gives zero interest rate and people are not willing to buy bonds. Increase in quantity of money doesn't induce people to buy bonds but further decreases the interest rate. This situation is called liquidity trap.
Rahul Sunny answered 2 years agoRelated Solutions
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Q2
People complained about ‘negative real interest rates’ in the
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Deflation refers to the phenomenon of a negative inflation rate. (In 2004, the inflation rate was...
Deflation refers to the phenomenon of a negative inflation rate.
(In 2004, the inflation rate was negative in Hong Kong and we say
Hong Kong suffered deflation in 2004.) Many people regard deflation
as bad. Can you explain why? Is deflation sometimes good (at least
for some people)?
Deflation refers to the phenomenon of a negative inflation rate. (In 2004, the inflation rate was...
Deflation refers to the phenomenon of a negative inflation rate.
(In 2004, the inflation rate was negative in Hong Kong and we say
Hong Kong suffered deflation in 2004.) Many people regard deflation
as bad. Can you explain why? Is deflation sometimes good (at least
for some people)?
Deflation refers to the phenomenon of a negative inflation rate. (In 2004, the inflation rate was...
Deflation refers to the phenomenon of a negative inflation rate.
(In 2004, the inflation rate was negative in Hong Kong and we say
Hong Kong suffered deflation in 2004.) Many people regard deflation
as bad. Can you explain why? Is deflation sometimes good (at least
for some people)? (400 words)
your savings account yielded 1.5% last year. the inflation rate was 2%. what real return did...
your savings account yielded 1.5% last year. the inflation rate was
2%. what real return did you earn on this account. round your
answer to the nearest tenth of a percent
Suppose Inflation is 2 percent and the inflation gap is 2percent and real GDP is...
Suppose Inflation is 2 percent and the inflation gap is 2
percent and real GDP is 2 percent above its potential. What would
the Taylor Rule imply for the value of the Federal Funds target? If
real GDP falls to 4 percent below its potential and the inflation
gap becomes negative 2, what would the Taylor rule suggest happens
to the federal funds rate? What does result suggest about the state
of the economy?
1. Deflation is: Select one: a. a reduction in the rate of inflation. b. an increase...
1.
Deflation is:
Select one:
a. a reduction in the rate of inflation.
b. an increase in prices.
c. a decrease in prices; that is, a negative inflation rate.
d. an increase in the rate of inflation.
2.
Which of the following is true regarding the Federal Reserve
Select one:
a. It is charged with collecting taxes
b. It's board members are elected by the people living in the
bank's district
c. They are a branch of the Federal Government...
Specifically explain the problems with inflation. Is the inflation consumers have in their real life really...
Specifically explain the problems with inflation. Is the
inflation consumers have in their real life really greater or less
than the government's recorded inflation rate? What does this mean
about the real GDP growth rate for the economy based on real life
inflation if the nominal GDP growth rate stays the same?
Suppose Inflation is 2 percent and the inflation gap is 2 percent and real GDP is...
Suppose Inflation is 2 percent and the inflation gap is 2
percent and real GDP is 2 percent above its potential. What would
the Taylor Rule imply for the value of the Federal Funds target? If
real GDP falls to 4 percent below its potential and the inflation
gap becomes negative 2, what would the Taylor rule suggest happens
to the federal funds rate? What does result suggest about the state
of the economy?
1. Stagflation refers to low _______ and high inflation. The US experienced a period of stagflation...
1. Stagflation refers to low _______ and high inflation. The US
experienced a period of stagflation in the _____ 's.
-Fill in the blanks
2. The Phillips _____ matches the data for the U.S. especially
well during the ______'s
-Fill in the blanks
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