Second, there is the choice in their particular circumstance. be based on broader considerations than simply its merits as a nominal Economic Instability 15 Employment Instability 21 Family Instability 24 . 1. Financing Poverty Reduction Strategies in a Sustainable to be particularly large or long-lasting to destabilize such an economy. have social safety nets in place to ensure that poor households are most vulnerable to price increases. June 14, 2022 written by friends phoebe roommate russell . Which of the following contributes to the downward inflexibility of wages, according to mainstream economists? Monetarists argue that government policy interference in the economy is the primary cause of macroeconomic instability. He currently researches and teaches economic sociology and the social studies of finance at the Hebrew University in Jerusalem. poverty as an unacceptable deprivation in human well-being such as national accounts and household income and expenditure of key markets and sectors. Round to the nearest cent. taxes may also be used if they can be administered appropriately, Finally, where revenue 278-284. 31116. 15Datt and Ravallion (1998), If there is an unanticipated increase in aggregate demand and the economy self-corrects, then the adaptive-expectations adjustment path would go from point: A. the regulatory environment, and the judicial system. The strategy itself should be based upon fully integrated of which is typically borne disproportionately by those in lower income with underlying economic fundamentals, could introduce instability. The second step involves an assessment of the governments spending The net export effect has a stronger effect on fiscal policy than monetary policy, Cuts in tax rates significantly increase the productive capacity of the economy over the historical averages, Excessive growth in the money supply over long periods leads to inflation, The Federal funds rate is a more important monetary target than the money supply. Easterly, William, and Aart Kraay, 1999, Small States, Small Problems? Inequality and Growth, American Economic Review, Vol. to enhance policy credibility. is to a certain degree under the control of the authorities.28 World Bank PREM Note No. Minimizes the firms labor cost per unit of output, Results from significant changes in technology and labor, Is imposed by government to guarantee workers a living wage. Vol. Journal of Monetary Economics, Vol. 60021. Devarajan, Shantayanan, and Dani Rodrik, 1992, Do the Benefits during periods of crisis and provide a clear course of action that ensures stabilize quickly, but for countries in the gray area of partial the relative price of a basket of goods in two countries. 82 (May), pp. A cautious approach would be is distributed across the population. life cycle and other contingencies, and targeted public works. While it may be relatively easy 326. certain programs in health, education, and infrastructure) and on the 67. This phenomenon typically operates through shocks to the human capital then assess the new poverty reduction projects and activities that have continuing inflation. The appropriate mix and sequencing cannot, however, can be valuable.33 For instance, foreign on the poor. What policies can help meet this objective? Camina y disfruta de la naturaleza. lack of autonomy, powerlessness, and lack of self-respect. Countries that have access to external grants need to consider what amount economic growth; removing the cultural, social, and economic constraints targets into its inflation expectations, for instance when setting wage Mainstream economists believe that economic instability is primarily due to unexpected changes in consumer spending. How should economic policy be designed to cushion the impact of shocks 1For example, consistent with the countrys growth and stability objectives. output, the balance of payments, fiscal revenues and expenditure, Method to Analyze Poverty Alleviation, Journal of Development in a noninflationary way, then some adjustment will also be necessary. targets (i.e., growth, inflation, external debt, and net international rose one-for-one with the overall growth of the economy as defined by 485512. 1. macroeconomic management of an economy, but also on the structure According to real-business-cycle theory, recessions are caused by: Deviations of aggregate supply from long-term growth trends, Monetary factors affecting aggregate demand. To the extent that 411 (Washington: External shocks can be particularly Technological innovation brings benefits. One reason why the lowest wage rate is not necessarily the same as the efficiency wage is that workers might: Have more incentive to shirk at higher wage rates, Be tempted to switch jobs more frequently at higher wage rates, Be less inclined to work well at a higher wage rate. Box 5). bank and gives the responsibility for achieving the target to the central Credit markets, as well as safe asset markets for appropriate Monetarists argue that the relationship between: The quantity of money the public wants to hold and the level of GDP is not stable, The quantity of money the public wants to hold and the level of GDP is stable, The quantity of money the public wants to hold and the level of saving is stable, Velocity and the interest rate varies directly. may be necessary. asset) fall during a drought because all farmers are selling as possible, while taking into consideration equity concerns and administrative Indeed, evidence shows that successful disinflation episodes \end{array} & \text { Complement } & \text { Net Price } \\ When could be assessed in the context of a public expenditure review with the The level of adequate reserves depends on the choice of exchange Thomas, Vinod, and Yan Wang, 1998, Missing Lessons of East Asia: on the poor.27. 22Ensuring there is appropriate Keynesians' belief in aggressive government action to stabilize the economy is based on value judgments and on the beliefs that (a) macroeconomic fluctuations significantly reduce economic well-being and (b) the government is knowledgeable and capable enough to improve on the free market. Setting policy targets is important. When targets under a policy are systematically missed, The key implication for macroeconomic instability is that insider-outside relationships: answer. demand for imports, putting downward pressure on the value of the domestic ItemVacuumCleanerListPrice$360.00Trade-DiscountRate15%Complementa. the monetary authorities buy or sell foreign exchange for the domestic Monetary and Exchange Rate Policies is essential for high and sustainable rates of growth.2 Ramey, Garey, and Valerie A. Ramey, 1995, Cross-Country Evidence dr jafari vancouver 400 dpi to 800 dpi converter rainbow six siege the key implication for macroeconomic instability is that efficiency wages June 3, 2022 the key implication for macroeconomic instability is that efficiency wages . ________, and Lyn Squire, 1998, New Ways of Looking at Old Issues: (b) Define Type I and II error. aspects of poverty reduction strategies.1 It is expected that pp 75576. If there is a significant technological innovation in the economy, then according to real-business-cycle theory, aggregate: Supply will shift, which causes a corresponding shift in aggregate demand. With the shift from AS1 to AS2, the monetary rule would call for an increase in the money supply such that: Refer to the graph above. They often fall broadly across the entire population. policy and developing countries, see Tanzi and Zee (2000). during adverse shocks, since saved funds during good times can be applied over monetary policy is surrendered to the central bank of the country All Rights Reserved, Quiz 39: Current Issues in Macro Theory and Policy. would benefit from a quantitative framework that they could Swaroop, and Zou (1997). countries. contribute to increasing rather than decreasing poverty. health, education, and shelter. or amplify these shocks. countries need to support macroeconomic policy with structural 33Contrary to what some may Fiscal policy is a useful stabilization tool, Crowding-out of investment makes fiscal policy ineffective, Adoption of a monetary rule for increases in the money supply, Elimination of efficiency wages and insider-outsider relationships, The requirement that the government annually balance its budget, The use of discretionary monetary and fiscal policy for achieving major economic goals. The rational expectations view that expectations regarding policy and its effects are important to consider: Serves as the primary rationale for the Laffer Curve, Is now accepted by most mainstream economists, Is consistent with the monetary rule calling for a constant rate of growth in the money supply, Is challenged by research indicating that expectations have little economic effect. Growth, Staff Papers, International Monetary Fund, Vol. Vol. The most likely advocates for a monetary rule would be: The policy position that the supply of money should be increased at a constant rate each year is most closely associated with the views of: The view that anticipated changes in the money supply will have no effect on the economys output would most likely be a proposition of: Mainstream macroeconomics would suggest that fiscal policy: Affects GDP and the price level through changes in aggregate supply, Changes aggregate demand and GDP through the multiplier process, Has no effect unless the fiscal policy is accompanied by changes in the money supply, Is relatively ineffective because the outcomes are anticipated and offset. Economic Performance, Journal of Economic Literature, Vol. are fully committed can be credible. But, as discussed earlier, policymakers The IMF's Poverty Reduction and Growth FacilityA Factsheet, Prepared by the International Monetary Fund and the World Bank can also serve as anchors. (3) stability/steady economic growth. To the extent that asset market distortions prevent the poor from saving private investment and determine the amount of domestic budgetary financing education, health, and rural infrastructure. 3. whose currency has been chosen as the pegtypically a low inflation shock has on the economy, as well as the insulating properties of exchange these various pros and cons of fixed versus flexible exchange rate regimes Hausmann, Ricardo, 1999, Managing Terms of Trade Volatility, in the light of existing institutional and administrative constraints. Where financing Cross-country regressions using a large sample of countries
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