Problem Set 5 Liberty University Feb 17 28, 2013 ECON 214 D14 Principles of Macroeconomics 1. What impact will an unanticipated increase in the money supply have on the real interest rate, real output, and employment in the short run? How will expansionary monetary policy affect these factors in the long run? Explain. When income rises, more people are placed in the region above the no tax due cutoff. Others find themselves pushed into a higher tax brackets. Therefore, the process
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Fiat money, as it is designated (from the Latin Fiat “Let it be done”), is the norm today, a currency that has no intrinsic use value but, because it is granted the status of legal tender, acquires an exchange value. The value of money is thus, in part, a matter of convention and trust. So is, in a way, the value of Art. In times of a desperate leap towards ‘development’, a pile of money may appear as a blunt statement exposing the inter-connectedness of money’s fluctuating value and the transiency
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According to the bureau of labor statistics, data trends on unemployment from July to August 2012 were unchanged. At the end of August 2012 there were 3.6 million job openings on the last business day as there were in July. The Department of Labor stated that there is an employee hire rate of 3.3% and a separation rate of 3.3%; this is part of why the number of job openings did not change from July to August. The number of job openings changed in all industries except accommodation and food services
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securitization vehicles, asset-backed commercial paper (ABCP) conduits, money market mutual funds, markets for repurchase agreements (repos), investment banks, and mortgage companies." Shadow banking has grown in importance to rival traditional depository banking and was a primary factor in the subprime mortgage crisis of 2007-2008 and global recession that followed. Shadow banking is sometimes said to include entities such as hedge funds, money market funds, structured investment vehicles (SIV), "credit investment
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Week 4 Homework 1) What is your new value for the money market hedge? Would this affect your initial decision from reading through section 11-2d? Discuss the drawbacks from using different hedging technique. When looking at the numbers of the different hedges I found that the call option and forward contract did not change due to the increase in interests rates however the money market hedge did. The discount borrowing rate seems to be the number I see changing that effects the Roll over USD
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The Implication of Hiked Interest Rates Name of Student Institutional Affiliation The Implication of Hiked Interest Rates The whole of this year has been characterized by speculations regarding the Federal Service’s Open Market Committee’s annunciation of the new increase in interest rates. The last time they were increased was in 2006, when the country’s economy was on course. As a rule, such changes occur at the time when the country’s economy is in a good state, with a steady increase in
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When you look at the everyday spending on houses, cars or gaining a loan from your favorite bank, people will start to become familiar with the term interest rate. A Interest Rate is charged or paid for the use of money. An interest rate is often expressed as an annual percentage of the principal. It is calculated by dividing the amount of interest by the amount of principal. Interest rates often change as a result of inflation and Federal Reserve Board policies. For example, if a lender (such as
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HOMEWORK 1 CHAPTER 2, QUESTION I : HOW DOES THE EXISTENCE OF MONEY REDUCE THE COST OF MAKING TRANSACTION, RELATIVE TO A SOCIETY BASED ENTIRELY ON BARTER? ENGLISH IS BECOMING THE USUAL LANGUAGE FOR INTERNATIONAL TRANSACTION, EVEN IF THE LANGUAGE OF NEITHER COUNTRY IS ENGLISH. HOW DOES THIS REDUCE THE COST OF TRANSACTION? ANSWER: Money is often seen by economist as means of exchange and also a means of eliminating the inefficiency of barter by reducing transaction costs. According
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Current financial crisis Economic growth involves metamorphosis of the financial system. Forms of banks and bank money change. These changes, if not addressed, leave the banking system vulnerable to crisis. There is no greater challenge in economics than to understand and prevent financial crises. The financial crisis of 2007-2008 provides the opportunity to reassess our understanding of crises. All financial crises are at root bank runs, because bank debt—of all forms—is vulnerable to sudden
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1. Macroeconomics is a study about / seeks to understand A. economic growth, business cycles, and inflation. B. industry sales, marketing strategies and corporate growth. C. product demand, product cost, and profit maximization. D. public choices, private choices, and consumer maximization. Makroekonomi merupakan kajian tentang A. pertumbuhan ekonomi, kitaran niaga dan inflasi B. jualan dalam industry, strategi pemasaran dan pertumbuhan korporat C. permintaan
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