Econ 110B Ch14 Questions

Econ 110B Ch14 Questions - the nominal money supply. 8)...

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Economics 110B Practice Questions for Chapter 14 Questions 1) What does the nominal interest rate represent?  What does the real interest rate  represent? 2) Under what conditions, if any, would the nominal interest rate increase while the real  interest rate simultaneously decreases? 3) Using the IS-LM model, graphically illustrate and explain what effect an increase in money  growth will have on output, the nominal interest rate, and the real interest rate in the short  run. 4) How will monetary policy affect the nominal interest rate in the short run and in the medium  run?  Explain. 5) How will monetary policy affect the real interest rate in the short run and in the medium  run? Explain. 6) What does the Fisher effect/Fisher hypothesis represent? 7) What is the "natural real interest rate."  Explain what effect each of the following will have  on the natural real interest rate: (1) a reduction in government spending; (2) an increase in 
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Unformatted text preview: the nominal money supply. 8) What are the determinants of the nominal interest rate in the medium run? To what extent can monetary policy affect the nominal interest rate in the medium run? To what extent can fiscal policy affect the nominal interest rate in the medium run? Explain. 9) To reduce the nominal interest rate in the short run, what type of policy should the central bank pursue? Explain. 10) To reduce the nominal interest rate in the medium run, what type of policy should the central bank pursue? Explain. 11) What is the relationship among the nominal interest rate, the natural rate of interest, and money growth in the medium run? What effect will a reduction in money growth have on the nominal interest rate and the natural real interest rate in the medium run? Explain. 1...
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This note was uploaded on 05/01/2011 for the course ECON 110B taught by Professor Peters during the Spring '07 term at UCSD.

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