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How do yield curves act as a predictor of economic activity ? Mention inverse yield curve as predictor of recession etc
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- Q) Show the effects of a decrease in current period productivity in the Keynesian model? Why does the interest rate fail to adjust in the output market? Explain it correct but not copy paste solutionType out the correct answer ASAP with proper explanation of the each step. Thank you. Which method used to predict recessions is based on ten key indicators of economic activity? A.yield curve B.gross domestic product C.National Activity Index D.Leading Economic IndexQuestion: Draw the equilibrium of financial market.From the given below information in which case classical dichotomy will hold.If, saving = investment or saving ≠ investment
- How does the graph look for the effect of a temporary but persistent increase in total factor productivity on current investment. I know that the x axis is the real interest rate and the y axis is level of current investment but im not sure how the graph should look. Could you show me what the graph should look like?When economists say “investment,” they are referring to financial investments, which are purely financial transactions, such as swapping cash for a stock or a bond. Select one: a. True b. FalseQ) Show the effects of a decrease in current period productivity in the Keynesian model? Why does the interest rate fail to adjust in the output market? Explain correctly and not copy paste
- Explain the effect of DEFLATION on the equilibrium interest rates using: 1) Loanable Funds Theory 2)Keynes’ Liquidity Preference Theory.Economics Suppose that the effects of COVID-19 on the economy can be thought of as a permanent negative productivity shock, i.e., a permanent decrease of the production owing to lower total factor productivity. What does the model predict will happen to the following variables: (1) real interest rate, (2) real output), (3) real consumption, (4) real investment, (5) labor input? For each variable explain why COVID-19 would have the predicted effect.Please explain the correct answer(s). An investor wants to be able to buy 4 percent more goods and services in the future in order to induce her to invest today. During the investment period, prices are expected to rise by 2 percent. Which statement(s) below is/are true? 1.I. 4 percent is the desired real risk-free interest rate. 2.II. 6 percent is the approximate nominal rate of interest required. 3.III. 2 percent is the expected inflation rate over the period. A) I only B) II only C) III only D) I and II only E) I, II, and III
- Explain in detail how real business cycle theory is different from the rational expectaion theories of business cycle.?Assume that the United States economy is currently in a recession in a short-run equilibrium. When interest rates fall, what is the impact on each of the following? (i) Investment (ii) Economic growth rate. ExplainThe accompanying graph represents the market for loanable funds in the hypothetical country of Bunko. Assume the market is initially in equilibrium and inflation expectations are 2%. a. Adjust the graph to demonstrate the effects of inflation expectations increasing from 2% to 4%. Market for Loanable FundsInterest rate (%)Quantity of loanable funds (billions of $)02468101214161820012345678910DS b. What is the real interest rate after the change in inflation expectations? 3% 2% 5% 7% c. Which effect below characterizes the relationship between inflation expectations and nominal interest rates? The Leontief Paradox The Inflation effect The Fisher effect The Pigou effect