Concept of deflationary gap
Elucidate the concept of deflationary gap. Answer: Deflationary gap is the deficit in aggregate demand from the level needed to maintain full employment equilibrium.
Elucidate the concept of deflationary gap.
Answer: Deflationary gap is the deficit in aggregate demand from the level needed to maintain full employment equilibrium.
Question: 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? Q : Long-term Federal government budget Question: Explain why there are long-term Federal government budget problems. Explain why the base-line forecast of the CBO is misleading. Include in your answer why solutions to the problem will necessarily involve a decision about which
Question: Explain why there are long-term Federal government budget problems. Explain why the base-line forecast of the CBO is misleading. Include in your answer why solutions to the problem will necessarily involve a decision about which
Why is interest received classified as revenue receipt? Answer: Interest received is a revenue receipt since it does not build any liability nor it leads to the red
‘The country is at present in recession and this has led to worse tax revenue and high expenses. The effect is a huge deficit. The government decides to increase taxes and lower government expenses. Is this an excellent idea?’
Question: Hubbard argues that the Fed can control the Fed funds rate, but the interest rate that is important for the economy is a longer-term real rate of interest. How much control does the Fed have o
The hypothetical information in the following table shows what the economic situation will be in 2015 if the Fed does not use monetary policy: Year Potential GDP Real GDP Price Level 2014 $15.2 trillion $15.2 trillion 110.0 2015 $15.6 trillion $15.8 trillion
Describe the following terms: (i) Business fixed investment (ii) Inventory Investment (iii) Residential construction Investment (iv) Public Investment.
Voluntary unemployment: It refers to a condition when person are not willing to do work at customary market wage rate, though they are receiving a work.
Name the six agency function of Commercial Bank. Answer: A) Transfer of funds B) Collection of funds C) Purchase and sale of securities. D) Collection of dividends E) Payment of bills &
Bank rate: This is the rate at which the central bank loans money to commercial bank.
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