Teil 3 Flashcards

1
Q

AS-Curve

A
  • upward sloping
    • as output is rising so does the rate of inflation
  1. Wage Bargaining: Implies that unions demand higher wage growth when
  • inflation expectations increase
  • labour productivity increases
  • output produced is above long-run ouput (low unemployment)
  • Wage grothw depends positively on Y
  1. Supply Shocks
  • Changes in non-labor cost of production
    • intermediate inputs
    • physical capital
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2
Q

Explane:

Upward sloping AS-Curve

A

As Output is rising:

-> Unemployment falls

–> stronger wage bargaining position of the employees

—>higher Wages

—->higher cost of production

—–>firms charge higher prices

——->higher rate of inflation

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3
Q

AD-Curve (Normal B.C Outcome)

A
  • negative relationship between inflation and output (downward sloping)
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4
Q

Explaine

Downward sloping AD-Curve (Normal B.C. Outcome)

A

As the rate of inflation increases

-> Central Bank increases the rmp following the taylor rule

–> r increases

—-> Crowding Out Effect

—> Lower Output

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5
Q

Shift of the AD-Curve

A
  • When any EXOGENOUS Variable of the IS-TR modell changes
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6
Q

Inflation Expectations

A

Static: πet = πe

Adaptive: πet = πet-1

  • adjust one-to-one to the previous period actual rate of inflation
  • Medium-Run Model is Dynamic
  • Achtung: Quantative Analysis
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7
Q

ZLB Level of Output

A
  • Depends NEGATIVELY on the rate of inflation
    • When π decreases the CB stes the monetary policy rate to be lower and will thus reach the ZLB RMP at a higher level
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8
Q

Extended Risk Premium

= r-ry*(Y-YπZLB)

A

Depends Negatively on the rate of inflation

= r-ry*Y + ryYπZLB

  • when Inflation decreases the comm. bank demand a higher risk premium
    • Economy moves further away from normal times since YZLB increases
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