Der Vortrag „Monetary Policy and Fiscal Policy IV“ von Edu Pristine ist Bestandteil des Kurses „Archiv - Economics“. Der Vortrag ist dabei in folgende Kapitel unterteilt:
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... and expected inflation: Rnom = Rreal + E[I] " Real rates are relatively stable and changes in interest rates are driven by changes in ...
... 3 " Investors bear an additional risk as the actual inflation may/ may not be as expected. Hence we add a component ...
... nominal interest rate is 8% and inflation expectations are 6%. What has happened to real interest rates between year 1 and year 2? They: A. Increased by 1% B. Decreased by 1% C. Increased by ...
... " B Because the nominal interest rare was I0% and the expecte d rate of inflation was 7% in the first year, the real ra te of interest was 3% (10% - 7%). One year later with the nominal intere st rate at 8% and ...
... person who has taken a fixed rate, 30-year housing loa n B. A person who has substantially invested in floating rate notes C. A large bank which has a substantial part of its loan portfolio in fixed-rate auto ...
... " C " If there is an unanticipated increase in inflation in the economy, the losers will be those who are contracted to receive fixed-payments in the ...
... t?? rol?s and objectives of central banks ...
... policy " Sole supplier of currency " Banker to the government " Regulatory authority " Lender ...
... such goals: " Bank Rate: (discount rate): Rate of interest which a cen tral bank charges on the loans and advances to commercial banks and other financial intermediaries " Lower rate makes reserves less costly to banks encouraging lending=> decrease ...
... rate " Cash Reserve: % of deposits that banks retain in cash or deposit with Fed Increasing % => decreases funds available for lending => increase interest rates Decreasing %=> increases funds available for lending => decreases interest rates " Open Market Operations: Fed buy or sell treasury securitie s in open market On buying securities, money supply ...
... reserves => further increase in the real money due to multiplier impact => shifts real money supply curve to right Excess supply of money balances decreases interest rates MS 0 Interest RateMS 1 " If Central Bank wants to decrease short-term interest ra tes ...
... only " A central bank is least likely to perform the following functions I. Fiscal deficit control II. Monetary policy control III. Currency circulation ...
... are most likely to happen when Fed raises the interest rate? A. ...
... " B. As more people invest in the domestic currency due to increase in interest rates and hence increase in ...