economy cannot produce a socially desirable outcome because individuals are motivated by their own selfish interests. ____ 15. Market power and externalities are two possible causes of market failure. ____ 16. Productivity is defined as the quantity of goods and services produced from each unit of labor input. ____ 17. Inflation is the
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|Movie |Original Year Released |Unadjusted Gross Income | |(in order of ranking) | | | | Avatar |2009 |$759,592,778.00 | |Titanic |1997 |$600, 788,188 | |The Dark Night |2008
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There is a great controversy over the question whether inflation promotes economic development. A group of economists including Keynes is of the opinion that inflation, in one form or the other, is a factor which helps economic growth. Usually, two main arguments have been advanced in support of the view. Firstly, it is argued that inflation tends to redistribute income and wealth. The redistributive effect of inflation is always in favour of profit-earning class, that is to say, it redistributes
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The Market Strikes Back ii. Short Supply-Prices Rise iii. Large Quantity-Prices Fall 4. Ceiling on Price or Price Floors a. Such attempts to repeal the laws of supply and demand usually backfire and cause more problems c. Comparative Advantage iv. Even if one of them is more efficient at everything, both countries can gain by producing the things they do best COMPARATIVELY v. Even if you are better at something than someone
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Monetary policy Monetarists emphasize keeping the growth rate of money steady, and using monetary policy to control inflation (increasing interest rates, slowing the rise in the money supply). Keynesians emphasize reducing aggregate demand during economic expansions and increasing demand during recessions to keep inflation stable. Control of aggregate demand can be achieved using both monetary policy and fiscal policy (increased taxation or reduced government spending to reduce demand). (ii)
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of these factors cause change to the currency’s spot rate. Throughout our evaluation of the Great British Pound, we were able to track and measure how each of the factors caused change in the currency’s value. Over the past four months we have seen a significant decrease in the value of the British Pound. As will be explained in this paper, many different factors caused downward pressure to be placed on the currency. Expected changes in the political structure of Britain causes some to feel unwavering
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NBER WORKING PAPER SERIES CAN INFLATION TARGETING WORK IN EMERGING MARKET COUNTRIES? Frederic S. Mishkin Working Paper 10646 http://www.nber.org/papers/w10646 NATIONAL BUREAU OF ECONOMIC RESEARCH 1050 Massachusetts Avenue Cambridge, MA 02138 July 2004 For presentation in a conference in honor of Guillermo Calvo, held on April 15 and 16, 2004 at the International Monetary Fund in Washington, DC. The views expressed in this paper are exclusively those of the author and not those of Columbia University
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potential buyers than sellers. In these instances, the price of the home rises. Inflation and Unemployment * Gregory Mankiw, Harvard Economics professor and author of "Principles of Economics" explains that society experiences a short-run trade-off with rising prices and unemployment: As the monetary supply expands and inflation occurs, unemployment rises. However, the Phillips curve indicates that in the long-run, inflation has no bearing on levels of unemployment. Effects of Price Controls *
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1） Assuming that the nominal interest rate, the inflation rate, the real GDP growth and primary deficit remain constant for the next year, we can compute the projected next year end debt as a percentage of GDP by using the equation: dt+1=dt+i-πdt-grdt-st+1 In this case, dt is the public debt (as % of GDP) of 2011, which is 88%; i is the government interest rate 7% according to our assumption; π is the inflation rate, which was 2% if it is held constant constant in the next year;
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Monetary policy is ineffective under fixed exchange rates 1 Monetary policy ineffective under fixed exchange rates • With a fixed exchange rate, you give up on an independent monetary policy. You cannot use monetary policy to target domestic inflation or to try to smooth out the domestic business cycle • The only hope for independent monetary policy is capital controls to prevent traders buying or selling domestic currency • But capital controls reduce trade and foreign direct investment, and
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