In Figure 20.1, which compares money growth and inflation over an extended time period, is Mexico a country above or below the 45oline? Plot since 1987 on a quarterly basis the percent change from a year ago of the consumer price index (FRED code: MEXCPIALLQINMEI) and of M1 (FRED code: MYAGM1MXM189N) in Mexico. Then download the data and calculate the averages of these inflation and money growth measures. Where would Mexico appear on Figure? Were there episodes since 1987 when Mexico was on the other side of the 45-degree line? If so, why?
Answer to relevant QuestionsIn theory, the velocity of money should rise with the cost of holding it. To assess the theory, plot the opportunity cost of holding M2 – defined as the difference between the three-month Treasury bill rate (FRED code: ...Explain why the short-run aggregate supply curve is upward sloping. Under what circumstances might it be vertical? Explain how each of the following affects the short-run aggregate supply curve. (LO2)a. Firms and workers reduce their expectations of future inflation.b. There is a rise in current inflation.c. There is a fall in oil prices.How sensitive is private investment to risk? Plot since 2004 the share of real gross private domestic investment (FRED code: GPDIC1) in real GDP (FRED code: GDPC1) and (on the right scale) a measure of anticipated stock ...Starting with the economy in long-run equilibrium, use the aggregate demand-aggregate supply framework to illustrate what would happen to inflation and output in the short run if there were a rise in consumer confidence in ...
Post your question