This chapter explores the effect of the nonlinearities induced by the inflation threshold on the role of government expenditure in transmitting inflation shocks to GDP growth. Evidence shows that at all levels of inflation below 6 per cent government expenditure play a positive role in propagating ...
While the Consumer Price Index is the more commonly used inflation measure, the GDP deflator provides a more comprehensive measure for price changes in the economy. The CPI is based on a market basket of about 400 goods and services purchased by the typical consumer. The GDP deflator measures ...
Inflation occurs when there is a general increase in the price of goods and services and a fall in purchasing power. This can benefit borrowers in that it allows them to repay debts with money that has depreciated in worth. However, it can also benefit lenders in that it raises prices and...
How does inflation affect GDP? Diagrammatically represent the short-run effect of an increase in wealth on the price level and on Real GDP. If average price of GDP increases, what happens to quantity demanded of real GDP in Aggregate Demand? (based on "Interest-...
What Is Inflation? Inflation is defined as an increase in prices for goods and services in an economy. This price change typically occurs when there is a mismatch between the supply and demand of goods and services. When there is too much—or too little—of something in the market, its pr...
Explain why an increase in the K/L ratio would tend to increase GDP per capita. Explain why an increase in nominal GDP does not necessarily imply that economic growth has taken place. Define GDP per capita, adjust inflation and the growth rate of GDP...
When the Federal Reserve increases the money supply, inflation may occur. More often than not, if the Fed is attempting to stimulate the economy by growing the money supply, prices will increase, the cost of goods will be unstable, and inflation will likely occur....
The potential role that a permanent increase in the inflation target might have in contributing to debt consolidation has rarely been covered in the literature on the link between inflation and public debt. This paper thus investigates under what conditions a higher inflation target might lead to a...
GDP. true o True or false? Transfer payments are included in gross domestic product (GDP). Real GDP will increase: a. if either the price level rises or the quantity of final goods and services produced rises b. only if the pri...
(1) Examining the capital flow perspective: it is observed that an increase in the proportion of older individuals in the population, who have accumulated wealth over their lifetimes and serve as “capital providers”, may lead to an overall augmentation in societal capital supply. Empirical ...