Some claim that adoption of a gold standard would contribute to price stability. Was price stability a feature of the U.S. gold standard that prevailed prior to World War I (see Applying the Concept on page 537)?Based on a plot of the general price level (FRED code: M04051USM324NNBR), discuss U.S. price developments from 1880 to 1914.
Answer to relevant QuestionsChina is the world’s largest exporter and has a fixed nominal exchange to the U.S. dollar. However, China’s real exchange rate, which determines the country’s competitiveness, can change even when the nominal rate is ...Suppose that expected inflation rises by 3 percent at the same time that the yields on money and on non-money assets both rise by 3 percent. What will happen to the demand for money? What if expected inflation rose by only 2 ...Why is inflation higher than money growth in high inflation countries and lower than money growth in low inflation countries? Plot the percentage change from a year ago of the velocity of money (FRED code: A14187USA163NNBR) between 1922 and 1939. Compare the typical scales of the velocity declines during the recessions of this “interwar” period ...Assume the short-run aggregate supply curve can be expressed algebraically asY = 4,800 + 3,000πand the dynamic aggregate demand curve can be written as Y = 5,000 – 1,000π.Find the numerical value for equilibrium output ...
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