Macroeconomics
10th Edition
ISBN: 9781319105990
Author: Mankiw, N. Gregory.
Publisher: Worth Publishers,
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Chapter 16, Problem 5QQ
To determine
Identify the
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state reasons why voters should care about high inflation and it's logical justification and reasons.
A study conducted by Alberto Alesina and Lawrence Summers concluded that countries with ________ had lower inflation rates than countries with ________.
Group of answer choices
A. highly independent central banks; central banks that have little independence
B. low rates of unemployment; high rates of unemployment
C. no private banking system; an independent banking system
D. a large government debt; little to no government debt
How does “people expecting inflation to happen” cause inflation?
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- Inflation – Work It Out: Question 1 In the country of Orcam, the velocity of money is constant. Real GDP grows by 5 percent per year, the money stock grows by 12 percent per year, and the nominal interest rate is 12 percent. Calculate the growth rate of nominal GDP. a. Calculate the growth rate of nominal GDP. growth rate of nominal GDP:arrow_forward“I do not think it is an exaggeration to say history is largely a history of inflation, usuallyinflations engineered by governments for the gain of governments.” F.A Hayek.“The government solution to a problem is usually as bad as the problem and very oftenmakes the problem worse.” M. Friedman“Every government intervention [in the marketplace] creates unintended consequences,which lead to calls for further government interventions.” Ludwig von Misesa) The above quotes criticizes government interventionism to the economy. But,Keynesians believe that there is no way to stabilize the markets other than throughgovernment intervention (spending, taxes, planning and regulation). By givingreferences to the end of the Keynesian Era, explain why government interventionismhas lost its popularity after the 1970s.arrow_forwardIn 1 paragraph, describe what has happened to inflation over the past decade.arrow_forward
- What can be a reason why inflation is not occuring when government spending increases in an economy?arrow_forwardLong-run aggregate supply is the level of output given by a. price stickiness b. aggregate demand c. potential output d. monetary policyarrow_forwardExplain the types of inflation in details with suitable examples in details?arrow_forward
- When stagflation began to appear in the US economy in the late 1960s, economists and policymakers were perplexed because they had never seen __________ and __________ at the same time. a. high inflation rates; high interest rates b. a stagnant economy; high unemployment rates c. high unemployment rates; high growth rates d. high inflation rates; high unemployment ratesarrow_forwardIf leakages are greater than injections into the economy then: a. The economy will grow b. The economy will slow c. Inflation will result d. Business investment spending is guaranteed to balance out the diffferencearrow_forwardThe view being reported in the extract of how the European Central Bank will deal with inflation isarrow_forward
- Which of these is not a factor that causes demand-pull inflation? a. Private consumption b. Population c. Government spending d. Supply side shocksarrow_forwardControlling the quantity of money and interest rates to influence aggregate economic activity is called *a. monetary policy.b. foreign policyc. bank antitrust policy.d. fiscal policy.arrow_forwardWhat does the phrase “inflation is always and everywhere a monetary phenomenon” mean? Printing more money is the main cause of deflation in the economy. Printing less money is the main cause of higher inflation rates in the economy. Increasing the money supply is the main cause of higher inflation rates in the economy. Printing more money is the main cause of a higher standard of living because everyone gets more money to spend so inflation doesn’t matter.arrow_forward
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