Why is a flatter Philips curve good news for monetary policy authorities? Draw the Philips curve, discuss the trade-offs it represents, and use those trade-offs to frame your argument.
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- A. How does Dornbusch Sticky Price model explain a quantitative easing effects? B. How does Mundell-flemming model explain quantitative easing effects? C. What are the similarities and differences between Dornbusch model and Flemming and Mundel model?In the time of Covid 19 pandemic, should central bank buy more government securities or sell more govenunent securities? Justify your answer with appropriate a diagram(s). Is this an expansion, or connactionary policy?Identify the factorsunderlying the portfolio choice theory ofmoney demand
- c) Describe the Vickrey-Clarke-Groves (VCG) Mechanism, provide examples and discuss problems with the VCG mechanismHOW DO T-BILL YIELDS GO NEGATIVE? BY THE APLIA ECONOMICS CONTENT TEAM The week of September 15, 2008, was ripe with volatility in U.S. financial markets. Events unfolding in the wake of the mortgage crisis made investors extremely fearful. One result of this fear was a “flight to quality” as investors sought to avoid risk by moving their funds into the safest asset classes. U.S. Treasury securities (or “Treasuries,” as they’re commonly known) are one such asset class, considered to have virtually no risk. An article from the Associated Press (Madlen Read, “Treasures Dip on RTC Speculation, but Anxiety High,” September 18, 2008) discusses some of the factors that led investors to bid up the prices of 3-month United States Treasury bills (T-bills) to such an extent that their yields fell to a shockingly low level. Before 2008, the last time the T-bill yield was negative was 1940, in the early stages of World War II. According to the article: Heavy buying of the 3-month Treasury bill,…Do not use chatgpt for this!Explain why moving from a Pareto inefficient to a Pareto efficient policy need notbe an unambiguously good policy decision. Give a policy example that you thinkillustrates your point.
- Who were the Bernoulli's and what was their contribution the expected utility theory (or decision theory more generally)?Excercise: Consider the Diamond-Dybvig model of bank runs utility function is given by U(c) = √c and that the parameter values are R = 4, discount factor ß = 1/3, and π = 2/5 A) How much do type-1 agents and type-2 agents consume in periods 1 and 2 under autarky, i.e., if there are no banks, insurance companies, or markets? What is the ex-ante expected utility that they derive in this scenario? B) How much do type-1 agents and type-2 agents consume in periods 1 and 2 in the "good" banking equilibrium? What is the ex-ante expected utility that they derive in this scenario? C) How many agents are able to execute their claims in period 1 (i.e., withdraw the maximum amount they have been promised) in the bank run equilibrium?How does a Loan to Value Ratio (say an 80% LVR limit) achieve the objectives of Macro-prudential policy? Prove explanations in detail with an example
- Draw Philips Curve and explain the figure by using the theory of Philips Curve.The Philips curve in the late 20th centuryConsider the Diamond-Dybvig model of bank runs utility function is given by U(c) = √c and that the parameter values are R = 4, discount factor ß = 1/3, and π = 2/5 A) How much do type-1 agents and type-2 agents consume in periods 1 and 2 under autarky, i.e., if there are no banks, insurance companies, or markets? What is the ex-ante expected utility that they derive in this scenario? How much do type-1 agents and type-2 agents consume in periods 1 and 2 in the "good" banking equilibrium? What is the ex-ante expected utility that they derive in this scenario? How many agents are able to execute their claims in period 1 (i.e., withdraw the maximum amount they have been promised) in the bank run equilibrium?