Fill This Form To Receive Instant Help

Help in Homework
trustpilot ratings
google ratings


Homework answers / question archive / arises when the best course of action at a particular moment in time differs from the best course of action in generation - government often have this optimal strategy this year is to declare that it will use monetary policy next year to maintain price stability; if workers believe that government is committed to price stability, they will set nominal wages accordingly and once next year's nominal wages are set, however, the government can use monetary policy to reduce the rate of unemployment by raising inflation above the level that it had announced and on which workers had based their nominal wage contracts, the government reduces real wages and raises employment, this decrease in unemployment can boost the government's popularity, making it more likely to win the next election, the government's monetary- policy preferences are not consistent over time as it has an incentive to convince wage bargainers that it is committed to low inflation but then, once it has done so, it has an incentive to expand the money supply to reduce unemployment because the government has time- inconsistent monetary policy preferences, wage bargainers have little incentive to believe any inflation target the government announces - because workers recognize that government has an incentive to go back on a promise to deliver low inflation, they will always expect the government to deliver higher inflation than it promises- these expectations of higher- than- announced inflation cause workers to seek nominal wage agreements that protect real wages from the inflation that they expect rather than the amount the government promises to deliver center of contemporary economic theory that asserts that there are no stable trade- off between inflation and unemployment (unlike the Keynesian economic theory), - this is the economy's long- run equilibrium rate of unemployment, rate of unemployment to which economy will return after a recession or boom - determined by economy- wide real wage (wage at which all workers who want to work can find employment) - never zero and be substantially above zero - institutions such as the labor market institutions, labor unions, labor market regulations that govern minimum wages, hiring/ firing practices, unemployment compensation, and other social welfare benefits can raise this substantially and because these institutions can raise economy- wide real wage , reduce the demand for labor and raise this economic reasons: pegged/ fixed exchagne rate, dependence on short- term capital; ISI to export- oriented growth => crony capitalism, over- optimism and moral hazard in finance and investment; Europe: Decade of Crises: 1992- 1993 crisis, 2

arises when the best course of action at a particular moment in time differs from the best course of action in generation - government often have this optimal strategy this year is to declare that it will use monetary policy next year to maintain price stability; if workers believe that government is committed to price stability, they will set nominal wages accordingly and once next year's nominal wages are set, however, the government can use monetary policy to reduce the rate of unemployment by raising inflation above the level that it had announced and on which workers had based their nominal wage contracts, the government reduces real wages and raises employment, this decrease in unemployment can boost the government's popularity, making it more likely to win the next election, the government's monetary- policy preferences are not consistent over time as it has an incentive to convince wage bargainers that it is committed to low inflation but then, once it has done so, it has an incentive to expand the money supply to reduce unemployment because the government has time- inconsistent monetary policy preferences, wage bargainers have little incentive to believe any inflation target the government announces - because workers recognize that government has an incentive to go back on a promise to deliver low inflation, they will always expect the government to deliver higher inflation than it promises- these expectations of higher- than- announced inflation cause workers to seek nominal wage agreements that protect real wages from the inflation that they expect rather than the amount the government promises to deliver center of contemporary economic theory that asserts that there are no stable trade- off between inflation and unemployment (unlike the Keynesian economic theory), - this is the economy's long- run equilibrium rate of unemployment, rate of unemployment to which economy will return after a recession or boom - determined by economy- wide real wage (wage at which all workers who want to work can find employment) - never zero and be substantially above zero - institutions such as the labor market institutions, labor unions, labor market regulations that govern minimum wages, hiring/ firing practices, unemployment compensation, and other social welfare benefits can raise this substantially and because these institutions can raise economy- wide real wage , reduce the demand for labor and raise this economic reasons: pegged/ fixed exchagne rate, dependence on short- term capital; ISI to export- oriented growth => crony capitalism, over- optimism and moral hazard in finance and investment; Europe: Decade of Crises: 1992- 1993 crisis, 2

Management

  1. arises when the best course of action at a particular moment in time differs from the best course of action in generation
    - government often have this
    optimal strategy this year is to declare that it will use monetary policy next year to maintain price stability; if workers believe that government is committed to price stability, they will set nominal wages accordingly and once next year's nominal wages are set, however, the government can use monetary policy to reduce the rate of unemployment

    by raising inflation above the level that it had announced and on which workers had based their nominal wage contracts, the government reduces real wages and raises employment, this decrease in unemployment can boost the government's popularity, making it more likely to win the next election, the government's monetary- policy preferences are not consistent over time as it has an incentive to convince wage bargainers that it is committed to low inflation but then, once it has done so, it has an incentive to expand the money supply to reduce unemployment

    because the government has time- inconsistent monetary policy preferences, wage bargainers have little incentive to believe any inflation target the government announces

    - because workers recognize that government has an incentive to go back on a promise to deliver low inflation, they will always expect the government to deliver higher inflation than it promises- these expectations of higher- than- announced inflation cause workers to seek nominal wage agreements that protect real wages from the inflation that they expect rather than the amount the government promises to deliver
  2. center of contemporary economic theory that asserts that there are no stable trade- off between inflation and unemployment (unlike the Keynesian economic theory),
    - this is the economy's long- run equilibrium rate of unemployment, rate of unemployment to which economy will return after a recession or boom
    - determined by economy- wide real wage (wage at which all workers who want to work can find employment)
    - never zero and be substantially above zero
    - institutions such as the labor market institutions, labor unions, labor market regulations that govern minimum wages, hiring/ firing practices, unemployment compensation, and other social welfare benefits can raise this substantially and because these institutions can raise economy- wide real wage , reduce the demand for labor and raise this
  3. economic reasons: pegged/ fixed exchagne rate, dependence on short- term capital; ISI to export- oriented growth => crony capitalism, over- optimism and moral hazard in finance and investment; Europe: Decade of Crises: 1992- 1993 crisis, 2.25 % band to 15% band for pegged rates - triggered by danish rejection of Maastricht Treaty and tight monetary policy by Bundesbank and the Asian Financial Crises- 1997-98: massive outflow of foreign capital, collapse of domestic banking system, subsequent exacerbation with IMF austerity programs
  4. this high interest rates in US led to
    - recession in OECD, less demand for LDC exports
    - rise in global interest rates... increases LDC debt burden
    - appreciation of US dollar, increases LDC debt burden
  5. Bretton Woods- 4 innovations- greater exchange- rate flexibility, capital controls, a stabilization fund, and IMF- capital flows allow countries to finance current- account imbalances and use foreign funds to finance productive investment, exchange restrictions- gov regulation on use of foreign exchange where government can assume monopoly on foreign exchange- controlling purchases and sales of foeign exchange- gov can limit financial capital in and out of domestic economies

 

Option 1

Low Cost Option
Download this past answer in few clicks

2.91 USD

PURCHASE SOLUTION

Already member?


Option 2

Custom new solution created by our subject matter experts

GET A QUOTE

Related Questions