Many economists have argued that Japan’s economic problems during the 1990s were caused largely by bank failures and the failure of the Japanese government to clean up the banking system. Explain how a collapse of the banking system could cause a fall in real output. Can monetary policymakers do anything to revive the economy under such circumstances?
Answer to relevant QuestionsIf offered the choice of receiving $1,000 today or $1,000 in one year’s time, which option would you choose, and why?Plot the level of real GDP (FRED code: GDPC1). Then plotthe rate of economic growth as the percent change from a year ago of this index. Describe how real GDP behaves in recessions, which are denoted in the FRED graph by ...Considering the impact of the U.S. house price bubble that led to the financial crisis of 2007-2009, how do you think monetary policymakers should respond to bubbles in asset markets? Explain why the traditional interest-rate channel of monetary policy transmission from monetary policy actions to changes in investment and consumption decisions may be relatively weak. In conducting monetary policy, the European Central Bank (ECB) must balance the needs of euro-area countries with differing economic conditions. Plot since 1990 the yield spread between government bonds in Italy (FRED code: ...
Post your question