Desired consumption is Cd = 100 + 0.8Y - 500r - 0.5G, and desired investment is I d = 100 - 500r. Real money demand is Md/P = Y - 2000i. Other variables are: expected inflation = 0.05, G = 200, y
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- The.... real interest rate will be greater than the .... real interest rate when the .... rate of inflation is ...... than the .... rate of inflation a) actual / expected / ex-post / greater / ex-ante b) ex-post / ex-ante / actual / less / expected c) ex-post / ex-ante / actual / greater / expected d) actual / expected / ex-post / less / ex-ante e) actual / expected / ex-post / more severe / ex-anteDistinguish between anticipated, unanticipated, and imperfectly anticipated inflation regarding its consequences in an economy in both the short and long run. In describing these weigh the pros and cons of indexation.With the latest NZ inflation rate of 7.2% at a level much higher than expected, the RBNZ is expected to hike interest rates by more than previously anticipated. This is good news for banks and for financial stability. True or False? Can you explain a little bit? Thank you!
- If you were conducting an actuarial valuation for an Australian superannuation fund, what assumption for salary (wage) inflation would you use? In particular, consider a fund whose members are employed in the university sector, with a valuation date of 30 June 2022. Please justify your answer through consideration of issues such as consumer price inflation, inflation expectations (adaptive and rational), and the relationship between consumer prices and wage inflation.Q 2. Expected inflation can be estimated as a. the return on a TIPS bond b. the return on a Treasury bond c. the return on a TIPS bond minus the return on a Treasury bond d. the return on a Treasury bond minus the return on a TIPS bondIn a hyperinflationary economy, monetary items: a. Are not restated because they are already expressed in terms of the measuring unit current at year-end b. Are measured at fair value c. Are restated applying the general price index d. Are restated applying the specific price index
- (Minimum of 100 Words). Determine how the following situations will affect the nominal interest rate levels: a. There is the anticipated higher government budget deficit. b. The expected inflation in the coming months is high.Suppose the annual interest rate is R = 0.10 (10%). If the expected inflation rate is πe= 0.04 (4%) , then the real interest rate is Group of answer choices A) r = 0.07 B) r = 0.006 C) r = 0.14 D) r = 0.12 E) r = 0.06If the expected real interest rate of 5% and expected inflation rate of 3%, then the nominal interest rate in year t is approximately
- The lower the interest rate: the greater the level of inflation the smaller the present value of a future amount the greater the present value of a future amount None of the statements associated with this question are correct.Markets are ignoring this guidance, with the start of the interest rate hiking cycle starting to be priced into the later part of 2022, just 12 months from now, and around two years before the RBA reckons it will need to move. Recall the current official cash rate is 0.1 per cent. The market is pricing in a 0.5 per cent cash rate by the middle of 2023, 1.0 per cent by the end of 2023 and with further increases through 2024.” Use the dynamic aggregate demand and aggregate supply model to explain the type and how to implement monetary policy and the effects of the monetary policy of the Reserve Bank of Australia according to the statement mentioned above.Suppose a country has a money demand function (M/P)d=kY, where k is a constant parameter. The money supply grows by 12 percent per year, and real income grows by 4 percent per year. What is the average inflation rate?
