Calculate the lowest price level that might occur

Assignment Help Econometrics
Reference no: EM13191160

Suppose that the Fed is required to keep the inflation rate between 1 percent and 2 percent a year but with no requirement to keep trend inflation at the midpoint of this range The Fed achieves its target.

a. If initially the price level is 100,
i. Calculate the highest price level that might occur after 10 years.

ii. Calculate the lowest price level that might occur after 10 years.

iii. What is the range of uncertainty about the price level after 10 years?

b. Would this type of inflation goal serve the financial markets well and provide an anchor for inflation expectations?

Reference no: EM13191160

Questions Cloud

How to indicate the minimum efficient scale : Industry studies often suggest that firms may have long - run average cost curves that show some output range over which there are economics of scale and wide range of output over which long- run average cost is constant.
Define the open end of a melting point capillary tube : the open end of a melting point capillary tube allow you to measure the melting point of a compound that sublimes?
Determine the probability that four or fewer people arrive : Suppose that men arrive at a ticket counter according to a Poisson process at the rate of 120 per hour, and women arrive according to an independent Poisson process at the rate of 60 per hour. Determine the probability that four or fewer people ar..
Define zinc hydroxide is insoluble in water : zinc hydroxide is insoluble in water but dissolves when nitric acid solution is added
Calculate the lowest price level that might occur : Suppose that the Fed is required to keep the inflation rate between 1 percent and 2 percent a year but with no requirement to keep trend inflation at the midpoint of this range The Fed achieves its target. a. If initially the price level is 100
How many fingers does a martian have : In Martian number system, 5 and 8 are the roots of the equation 5X2 - 50X + 125 = 0. Assuming that the number system on Mars developed in the same way as the number system on Earth, how many fingers does a Martian have?
State a two-component mixture of volatile liquids : A two-component mixture of volatile liquids was separated by gas chromatography using a 25 meter capillary column. The separation was insufficient with this column to see resolution of both fractions
What is the standard deviation of number of hours worked : most people work full time 43.4 hours normally distributed. 12% work 48 hours per week what is the standard deviation of number of hours worked per week.
What is the area of triangle abc : In triangle ABC, a = 8, b = 9, and m<C = 135 degree. What is the area of triangle ABC?

Reviews

Write a Review

Econometrics Questions & Answers

  What is the price elasticity of demand

What is the income elasticity of demand for kitty litter when P(D)=30,P(C)=20, m=50? What is the cross-price elasticity of demand for kitty litter when  P(D)=30,P(C)=20, m=50? Are kitty litter and cat food substitutes or complements?

  Seasonal economic factors and cyclical economic factors

The United States is currently recovering from its bad recession in over twenty-five years. Applying the resource provided in this and earlier modules of course describe what factors or activities you think helped cause this economic condition.

  How much revenue will the government get

There are three firms in an economy: A, B, and C. Firm A buys $250 worth of goods from firm B and $200 worth of goods from firm C, and produces 200 units of output, which it sells at $5 per unit. Firm B buys $100 worth of goods from firm A and $15..

  What is the size of your mpc and mps

Keynes rejected the classical notion of Say's law. He argued that under-spending was very likely. Keynes focused on aggregate demand (total spending) as being the key determinant to the level of macroeconomic activity not aggregate supply which wa..

  Find the marginal propensity to consume

According to the United States informationfor 1965-IQ to 1983-IQ (n=76), James and Adibi obtained the folowwing regression to explain personal consumption expenditure in the United States

  When the allocatively efficient output is being produced

What is the dollar value of the total surplus (producer surplus plus consumer surplus) when the allocatively efficient output Q1 level is being produced How large is the dollar value of the consumer surplus at that output Q1 level

  How much deadweight loss will your firm create

Now what will your price be? How much deadweight loss will your firm create?(d)  After the election, you decide your firm is not making enough money. So you hire the lobbying firm C&E. C&E are able to convince regulators that you should set ..

  Which process should be selected on the basis of future

Two processes can be used for producing a polymer that reduces friction loss in engines. Process T will have a first cost of $750,000, an operating cost of $60,000 per year, and a salvage value of $80,000 after its 2-year life.

  What is the per worker production function

Suppose initially (period 0) the economy is endowed with $5 (billion) of capital stock and 10 (thousand) workers (let's ignore the units). We know that saving rate s is 0.15, population growth rate n is 0.01 and depreciation rate d is 0.09.

  Determine the output per worker

In this question we are going to incorporates investment in human capital by agents, in a form similar to physical capital. Labor units are replaced by human capital units Y = AK?(?H)1?? where • H ? Units of Human Capital • ? ? [0, 1] ? Fraction of..

  What is the cross elasticity of demand

When the price of good X falls from . 10 to . 9, the demand for good Y Increase from 20 Kg. to 25 Kg. a) What is the cross elasticity of demand of good Y for good X b) Are goods X and Y compliments or substitutes

  Which country has comparative advantage in producing wheat

the following information concerning production of wheat and cloth in the United States and in the United Kingdom: Labor Hours Required to Produce One Unit United Kingdom United States Wheat 2 ..

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd