Macroeconomics (Fourth Edition)
4th Edition
ISBN: 9780393603767
Author: Charles I. Jones
Publisher: W. W. Norton & Company
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Chapter 8, Problem 5E
(a)
To determine
Calculate the long-run inflation rate.
(b)
To determine
Calculate the long-run inflation rate when the growth rate of money is increased by 10 percent.
(c)
To determine
Calculate the long-run inflation rate when the money growth rate increases to 100 percent.
(d)
To determine
Calculate the long-run inflation rate when
(e)
To determine
Calculate the long-run inflation rate when GDP growth rate decreases to 2 percent.
(f)
To determine
Calculate the long-run inflation rate when the velocity of money circulation increases by 1 percent.
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Discussion. Please state your points and reasons according to the material given below.
Inflation is an economic phenomenon that every country has to cope with. This year has seen drastic inflation in a number of countries all over the world. Please write down answers to the questions below based on your finance knowledge.
(1) Explain the causes of inflation and the ways to control it.
2) Suppose you are the consultant of the central bankers in your own country, what suggestions will you give to control and solve the unacceptable inflation
QUESTION ONE
The Central bank of any country is a national bank responsible for the implementation of the monetary and fiscal policy of a country in order to avert or reduce inflation. This means that the bank is a vehicle through which the government accomplishes many of its economic objectives and deliver development to its citizens. Inflation can be too toxic to an economy as it diverts the economic intentions of any government. One of the impact of increased inflation is on an increased unemployment levels (Olivia Beria, 2016).i. Using Philips Curve, illustrate how increased inflations affects unemployment levels. ii. . Real money demand refers to the amount of money people want to hold in real terms, which means adjusted for inflation. It represents the desire for individuals to hold a certain amount of purchasing power in liquid form, in order to facilitate transactionsand make purchases. The real money supply is equal to the nominal amount of M2, divided by the fixed aggregate…
Question 2:___________ inflation is caused by an increase in the cost of production, leading to higher prices for goods and services. This type of inflation can stem from various factors such as increases in labor costs, raw materials prices, or taxes. For example, if the price of oil rises significantly, it can lead to higher transportation and manufacturing costs, which in turn cause an increase in the prices of a wide range of goods and services.A) Demand-pullB) Cost-pushC) Built-inD) Stagflation
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- Suppose that people expect inflation to equal 3 percent, but in fact prices rise by 5 percent. Indicate whether this unexpected higher rate of inflation would help or hurt each of the following groups. a homeowner with a fixed-rate mortgage. a union worker with a fixed labor contract a company that has invested some of its endowment in government bond which pay fixed rate of return.arrow_forwardQuestion 12 If the inflation rate turns out to be greater than was is expected to be, the clear winners are businesses. lenders. borrowers. people on fixed incomes.arrow_forwardPlease see below. These are true or false questions. Need help with all of these please and thank you. T/F Questions. 1. The price level is measured by using a basket of goods and services and calculating how the nominal cost of buying that basket of goods will change over time. 2. The base year values of all price indices is always equal to 1. 3. The rate of inflation is measured as the percentage change between price levels or the values of a price index over time.arrow_forward
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