Consider the absence-of-double-coincidence economy depicted in Figur. Determine who would trade what with whom if good 2 were used as a commodity money. Explain your results.
Answer to relevant QuestionsDetermine how increases in the interest rate spread in figure match with recessions in figure. Does an increase in the interest rate spread always occur when there is a recession? Does a recession always occur when there is ...In some countries, price controls exist on some goods, which set maximum prices at which these goods can be sold. Indeed, the United States experienced a period of wage and price controls when the Nixon administration ...In the Diamond–Dybvig banking model, suppose that the banking contract includes a suspension of convertibility provision according to which the bank allows only the first tN depositors in line in period 1 to withdraw their ...Suppose that there are shocks total factor productivity which cause aggregate output to fluctuate. What does this imply for the Friedman rule, that is, how should the central bank conduct monetary policy optimally? Discuss.Suppose that the economy is in a long-run equilibrium where the inflation rate is greater than the optimal rate i*, and then the central bank acts to reduce the inflation rate to i*.(a) Suppose that the central bank decides ...
Post your question