Already have an account? Get multiple benefits of using own account!
Login in your account..!
Remember me
Don't have an account? Create your account in less than a minutes,
Forgot password? how can I recover my password now!
Enter right registered email to receive password!
Assume that the central bank follows the following simplified version of the Taylor rule:
(a) What implicit weight is placed on the inflation target under this rule? Discuss. Draw an IS-MP diagram but instead of the usual MP curve, graph the monetary policy rule. You might label this curve MPT for the simplified Taylor rule.
(b) Now consider the effect of a negative aggregate demand shock in the IS-MPT diagram. Compare and contrast the effect of this shock on the economy in the standard IS-MP diagram (without policy response to the shock) versus the IS-MPT diagram. Is there a difference?
(c) Find the equilibrium values of the short-run output and the real interest rate from the IS-MPT model. Explain how these equilibrium values depend on the parameter.
(d) Economists refer to the result in the IS-MPT diagram as "crowding out". What gets crowd out and why?
(e) Briefly compare and contrast the economic effects of a temporary negative aggregate demand shock lasting for 2 periods in the standard AS/AD model (of the textbook) with that in the AS/AD model under the simplified Taylor rule above. Assume that in both cases the economy starts in the same long-run equilibrium.
Why might it be difficult for the Fed to formally adopt inflation targeting? Would inflation targeting be a good policy for the Fed in the present economic environment
In using the Taylor Rule as a guideline for monetary policy, what are the pros and cons of using forecasted values of inflation and output rather than observed values of these variables?
Describe the present economic crisis situation in Europe. Why has it been so difficult for the Europeans to find a solution to this problem? Comment on what implications the crisis may have for the rest of the world if Europeans are not able to ag..
Question:. Explain why there are long-term Federal government budget problems. Explain why the base-line forecast of the CBO is misleading.
Question based on Derive and compare demand curve, Derive Ambrose's demand function for peanuts. How does it compare with Johnny's demand curve for peanuts?
Problem based on Utility Function - Problem, Answer and explain the following using a diagram which is completely labeled.
Question based on Laffer Curve : Tax Rate and Tax Revenue, Do raising tax rates necessarily raise tax revenue? What factors affect how tax revenue changes when tax rates change?
Problem - Income Elasticity of Demand, Interpret the following Income Elasticities of Demand (YED) values for the following and state if the good is normal or inferior; YED= +0.5 and YED= -2.5
Question Positive Balance of Payment: "Things will look good for the US if we could just get to where we are consistently running a positive Balance of Payments."
Comment on the effect of a recession on the investment curve (only) and on the level of savings, investment, and the equilibrium real interest rate in the financial crisis that hits United States first starting in fall 2007.
How will a fall in domestic investment affect the trade surplus and net capital outflows in the domestic economy, the trade deficit and capital inflows in the rest of the world.
Banking crises crisis decreases depositors' confidence in the banking system. What would be the effect of a rumor about a banking crisis on checkable deposits in such a country?
Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!
whatsapp: +1-415-670-9521
Phone: +1-415-670-9521
Email: [email protected]
All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd