ECON330D2 Practice Exercises
Chapter 14
中级宏观经济学代做 Neo-Fisherians believe that if inflation is above the inflation target the central bank should decrease the nominal interest rate.
Selected questions will be discussed by the TAs in conferences. 中级宏观经济学代做
True, False or Uncertain.
Determine whether the following statements are True, False or Uncertain and Justify your response.
- In the Basic New Keynesian model, the Phillips curve specifies that, when the anticipated future rate of inflation increases, inflation increases less than one-for-one.
- In the Basic New Keynesian model, if the central bank is initially achieving its goals, and the natural rate of interest rises, the central bank should increase the nominal interest rate by the amount of the natural real interest rate increase. 中级宏观经济学代做
- In the Basic New Keynesian model if the economy is currently at the bliss point, an optimal monetary policy response to a decline in anticipated inflation will result in real interest rate below the natural rate, a positive output gap and inflation below the target.
- Neo-Fisherians believe that if inflation is above the inflation target the central bank should decrease the nominal interest rate.
- In the New Keynesian rational expectations model, the Phillips curve specifies that inflation increases when anticipated future inflation increases.
Numerical/Graphical Questions. 中级宏观经济学代做
- In the Basic New Keynesian model, suppose initially inflation is at the central bank’s target and the output gap is zero. Explain, with the aid of diagrams, how the degree of price stickiness affects the central bank’s optimal response if
(i)the natural rate of interest rises.
(ii)the anticipated future rate of inflation goes up.
(iii)government spending goes down.2
(i) Use the New Keynesian Rational Expectations (NKRE) model to explain the Neo-Fisherian monetary policy rule. What accounts for the difference between the Neo Fisherian rule and the traditional rule captured in the new basic Keynesian model?
(ii) If the nominal interest rate increases permanently what effect does this have on the NKRE model in the long run?
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