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According to Baumol and Tobin, the transactions demand for money depends upon the interest rate as well as nominal income. Explain why the transactions demand for money depends upon the interest rate. Why is this important?
Examine the effects of anti-inflation policies on output and prices in the traditional, New Classical, and New Keynesian models
how do you think monetary tightening policy change would affect nominal interest rate?
As the economy begins to worsen Claudia Sahm (formerly director of macroeconomic policy at the Washington Center for Equitable Growth) proposes a new policy that provides American's with an automatic lump-sum stimulus payment when the three-month average national unemployment rate rises by at least .5 % compared to its low in the last year.
What kind of policy is this? Discuss the effects of this policy proposal if it was in place as the changes in (a) took place.
This question will concentrate on using our AS-AD model to understand the economic consequences of the COVID-19 pandemic, as well as policies currently being enacted or considered.
Imagine it is January of 2020, the US economy has record-low unemployment rates, and GDP is above potential GDP.
As awareness about COVID spreads, businesses begin to enact heightened cleaning routines and social distancing which results in a fall in productivity. The stock market falls due to low consumer confidence, and spending on travel and restaurants plummet.
Using an AS-AD diagram (as well as an AE-Y diagram to show the mechanics of any shift to AD), show the effects of these events, discussing real GDP, price levels, and unemployment.
What are the possible impact and effect the current inflow of imports could have on job creation in South Africa?
in macroeconomics how do you think this policy change would affect nominal interest rates?
Suppose that the nominal money supply is growing at the rate of 10% per year and that this growth
rate is expected to persist for ever. Currently, the nominal money supply is M = 400. What are the values
of the real money supply and the current price level? (Hint: What is the value of the expected inflation
rate that enters the money demand function?)
Consumption (C) is 600 when income (Y) is equal to 1500. Solve for autonomous consumption
If wealth increases does spending decrease
