Nominal interest rate and expected inflation, Macroeconomics

Assignment Help:

Q. Nominal interest rate and expected inflation?

When we have inflation, we can't, of course, presume that expected inflation is zero. So real interest rate will no longer be equal to nominal interest rate and we should use R = r + pe. Expected inflation pe is exogenous (even though not essentially constant. In more advanced Keynesian models you would find numerous assumptions on how expectations are formed.


Related Discussions:- Nominal interest rate and expected inflation

Short-run framework, What is the difference between the short-run framework...

What is the difference between the short-run framework and the long-run framework? Discuss how each relates to supply and demand.

Decision maker''s approach or logic, Listed here are several examples of ba...

Listed here are several examples of bad, or at least questionable, decisions. Evaluate the decision maker's approach or logic. In which of the six decision steps might the decision

Give a brief description of the transmission mechanism, Give a brief descri...

Give a brief description of the transmission mechanism 1. When the central bank target rate increases, other interest rates in the economy will increase (and the money supply

Show the different kinds of unemployment, Q. Show the Different kinds of un...

Q. Show the Different kinds of unemployment? All unemployed individuals are presumed to belong to exactly one of these categories so that if we sum unemployment from each categ

Outline two main restrictions by indian government applied t, outline two m...

outline two main restrictions by indian government applied to import. Using the data from your case study analyse and explain who would benefit directly and who would lose directly

What is frictional unemployment, What is Frictional unemployment Ind...

What is Frictional unemployment Individuals who are temporarily unemployed when transiting between jobs or just entering labour market. This kind is typically short in durat

Unemployment classification, Unemployment classification Economists som...

Unemployment classification Economists sometimes differentiate between different types of unemployment. There are many type of ways of classifying unemployment however the foll

Pros and cons of var, Since their inception, VAR models have been at the ce...

Since their inception, VAR models have been at the centre of many controversies associated with econometric modelling. The recurring criticism throughout history is due to the mode

Find out the equilibrium level of income, Suppose you have the following in...

Suppose you have the following information about a closed economy: C = 50 + 0.80 (Y-T) I = 200 G = 100 a) Find out the equilibrium level of income. b) Suppose G in

Using algebra find the equilibrium price, The demand equation for champagne...

The demand equation for champagne is given by P = 10 - Q. The supply schedule for champagne is given by P = Q. Note that P denotes price per bottle in dollars, and Q is quantity me

Write Your Message!

Captcha
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