Suppose the central bank decides to reduce the cash rate to 0. What do you think will be the effect on AUD? Use UIP to explain the effect.

Q: If, over time, wages and salaries on average rise at least as fast as inflation, why do people worry…

A: Inflation refers to the situation where the general price level is increasing. Real income refers to…

Q: Using a demand-supply diagram for loanable funds, show what happens to the nominal interest rate and…

A: The total amount of money that individuals and institutions in an economy have agreed to save and…

Q: In which of the following situations would you prefer to be borrowing? A) The interest rate is 2…

A: In the field of economics, Inflation is generally defined as the increase in the price level of…

Q: What is  the difference between interest rates and inflation rates? Give an example of each.

A: Interest Rate and Inflation rate are different from each other. Inflation is the rise in the general…

Q: What is the effect of inflation on the real value of money? а. No effect

A: Real value = Nominal value / Price level So, % change in real value = % change in nominal value - %…

Q: What do you expect about the unemployment rate and inflation rate when we have the actual level of…

A: Actual level of output refers to the production of goods and services that are actually produced in…

Q: Is it possible for the central bank to control inflation despite a spike in the CPI? *please explain

A: Central bank is  the apex bank which controls and regulates the entire monetary structure of…

Q: In what way can inflation distort purchasing power over time for individuals?

A: The economic growth of an economy is generally measured as the growth rate of GDP over time. GDP is…

Q: By how much did the pace of tuition hikes exceed the 2016 average rate of inflation?

A: Inflation can be defined as a general increase in prices and a fall in the purchasing power of…

Q: What is the relationships of interest rate to unemployment under the Keynesian Theory of Wages?

A: Keynes stated that the interest rate changes and try to balance the supply and demand for money in…

Q: Suppose RBA decides to reduce the cash rate to 0. What do you think will be the effect on AUD? Use…

A: RBA reduces the cash rate to 0, in this the banks will not pay anything to customers who bank with…

Q: what is the relationship between money demand and GDP in developing countries

A: Compared to industrialized nations, developing countries have a gross domestic product (GDP) that is…

Q: What measures should the central bank take to reduce inflation? Show by drawing a graph.

A: There are major measures the central bank can take to control inflation in the economy, which can be…

Q: What causes the rate of inflation in macroeconomics?

A: Inflation reflects a constant rise in the price level over time or it is a sustained increase in the…

Q: We said in class that when prices rise (as in inflation), nominal interest rates tend to These rise…

A: At the marketplace, any change in inflation will lead to change the nominal interest rate as there…

Q: Fearing a recession, the government decides to give citizens a tax rebate to buy Christmas gifts.…

A: The government makes a decision according to the current market situation and future expectations.…

Q: Suppose an economy has a high rate of unemployment and a high rate of inflation. What kind of policy…

A: The measure that depicts a general rise in the price level of goods and services during a specified…

Q: Q1 a) Briefly explain why the discount factor could credibly be interpreted as the probability of…

A: As there are multiple question, the first question would be answered, to get answers to the rest of…

Q: Which of the following describes a situation in which the person is hurt by inflation? Select one:…

A: Inflation is an general increase in the overall price level.

Q: The 2008 financial crisis had a dramatic impact on the wealth of households. ? Was the recovery of…

A: As we know that in communist type of government, there is complete control of government over the…

Q: Which substitute we may use if future prices are not expected to follow thegeneral inflation rate?

A: Future price refers to the future value of the same commodity at some set future date.  The general…

Q: Why do economists insist on emphasizing the difference between money and income? Why is this…

A: Money is anything that accepted by all the people in the transaction of goods and services. It is a…

Q: What is your advice to the investor if the economy faces inflationary pressure?

A: Inflationary pressures apply to supply-side and demand-side pressures that may contribute to a rise…

Q: Why do workers, firms, banks and investors in macroeconomics care about the future rate of…

A: Inflation refers to persistent rise in prices. Inflation erodes the purchasing power. Due to…

Q: What is a monetary offset?

A: please find the answer below.

Q: Suppose the government decides to borrow money. The equilibrium interest rate will _____ and the…

A: The following problem has been answered as follows:

Q: Outline the main reasons for the Australian government introduction of a set of policies described…

A: Traveling between Australian colonies was difficult due to trade restrictions; free traders were…

Q: Bankers make loans in the Nominal Interest Rate, so why do bankers care so much about the Real…

A: We know,  Nominal interest rate = Real interest rate - inflation rate

Q: why is the capital market is riskier than the money market?

A: A market where buyers and sellers engage in financial securities trade such as stocks, bonds, etc.…

Q: What are the major differences between the four CPM loans?

A: Payments completely amortized: It refers to a form of periodic debt repayment. The mortgage is…

Q: Differentiate between the General Inflation Rate and Specific Inflation Rate?

A: Inflation can be defined as a condition, when the demand for a particular good service upsurges…

Q: What does it mean when we say that the inflation gap isnegative?

A: The inflation gap refers to a difference between the current level inflation rate and the target…

Q: Fully explain why unanticipated inflation can decrease the level of economic activity

A: unforeseen inflation is a term used to describe inflation that occurs unexpectedly. When the price…

Q: How is the Inflation-free interest rate an estimate of the true earning power of money?

A: The rise in the price of services and commodities over time is said as inflation.

Q: What are likely changes in interest rates and inflation rates and how might these impact on the…

A: If there is inflation in an economy, then government takes measures to control the prices before it…

Q: How the GSIS and SSS different to each other? Explain in your own opinion.

A: The Government Service Insurance System (GSIS) is a country P government-owned and controlled…

Q: how does discount rate affect inflation?

A: Answer: Introduction: Discount rate: it refers to the short-term interest rate charged by the…