About the income-price level and expected inflation effects

Assignment Help Business Economics

Reference no: EM131245944

M1 money growth in the U.S. was about 16% in 2008, 7% in 2009 and 9% in 2010. Over the same time period, the yield on 3-month T-bills fell from almost 3% to close to 0%. Given these high rates of money growth, why did the interest rates fall, rather than increase?

What does this say about the income, price level and expected inflation effects?

Draw a graph to illustrate all these effects.

Reference no: EM131245944

Questions Cloud

Explain how large increase in the income level : Explain how a large increase in the income level in U.K., along with no growth in the U.S. in come level lwill effect U.K. demand for U.S. goods and the value of british pounds. ?

Calculate the residual of each observation : Suppose you are given the following simple dataset, regress Y on X: y=β0+β1x+u X Y 1 2 2 5 5 7 4 6 1) Calculate and . Show algebraic steps. Interpret and Calculate the predicted(fitted) value of each observation. Calculate the residual of each observ..

Consider drug shop that sells malaria treatment : Consider a drug shop that sells malaria treatment. Product can be stored costlessly from dry to rainy reason but it is impossible to store any crop from rainy to dry season. Dry season demand for malaria treatment is Xd=120-4Pd and the supply of mala..

Relationship in economics-business concepts-social status : Discuss the relationship between economics, business concepts (such as targeted marketing), social status, and wellness. Discuss how the relationship you describe relates to the concept of wellness as defined in this course and how it relates to spec..

About the income-price level and expected inflation effects : M1 money growth in the U.S. was about 16% in 2008, 7% in 2009 and 9% in 2010. Over the same time period, the yield on 3-month T-bills fell from almost 3% to close to 0%. Given these high rates of money growth, why did the interest rates fall, rather ..

Using the supply-demand framework in bonds market : The president of the Fed announces in a press conference that he will fight the higher inflation rate with a new anti-inflation program. Using the supply-demand framework in bonds market, predict what will happen to interest rates?

Volatility of gold prices have on interest rates : What effect will a sudden increase in the volatility of gold prices have on interest rates?

How will the textbook describe money and banking : Imagine you come back to your economics class in the year 2050. How will the textbook describe money and banking? Based on trends you see today, make a prediction for the future of money. Explain why you think this trend will occur and how it will af..

Calculate the expected rate of capital gain and loss : Consider a coupon bond that has a $1000 par value and a coupon rate of 10%. The bond is currently selling for $1044.89 and has two years to maturity. What is the bond’s yield to maturity? If the expected price of this bond next year is $1000. Calcula..

User Account

All Pages