How does policy forward guidance influence the economy and inflation?
What will be an ideal response?
If the forward guidance is credible it can influence expectations about future short-term interest rates. This will lower long-term interest rates and increase private spending.
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In the United States, domestic investment is greater than national saving
Indicate whether the statement is true or false
The money supply consists of:
A) currency plus reserves. B) currency plus required reserves. C) currency plus excess reserves. D) currency plus demand deposits.
In a small open economy, Sd = 200 + 500rw and Id = 300 - 200rw. If rw = 0.1, then net exports =
A) -50. B) -30. C) 30. D) 50.
Maximum likelihood estimation yields the values of the coefficients that
A) minimize the sum of squared prediction errors. B) maximize the likelihood function. C) come from a probability distribution and hence have to be positive. D) are typically larger than those from OLS estimation.