« previous next »

Author Question: What is the argument against the use of autonomous tightening of monetary policy in response to a ... (Read 25 times)

DyllonKazuo

  • Hero Member
  • *****
  • Posts: 565
on: Jun 30, 2018
What is the argument against the use of autonomous tightening of monetary policy in response to a credit-driven asset-price bubble?
 
  What will be an ideal response?

Question 2

Goods in the CPI inflation are weighted by
 
  a. the price of each good.
  b. the share of each good in GDP.
  c. the share of each good in the budget of an average household.
  d. the share of each good in total consumption.


adammoses97

  • Sr. Member
  • ****
  • Posts: 337
Reply #1 on: Jun 30, 2018
Answer to Question 1

Though a bubble may have begun with an abundance of credit seeking a profitable use, restricting credit is unlikely to dampen enthusiasm for assets that are known to be profitable. Indeed, a tightening of credit may impact only those who do not yet possess the lucrative bubble assets and enhance the rewards for those who do. Thus, the credit tightening ensures that the patient (the economy) is thoroughly weakened before the medicine of financial discipline takes effect.

Answer to Question 2

C


Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question
« previous next »
 

Did you know?

There used to be a metric calendar, as well as metric clocks. The metric calendar, or "French Republican Calendar" divided the year into 12 months, but each month was divided into three 10-day weeks. Each day had 10 decimal hours. Each hour had 100 decimal minutes. Due to lack of popularity, the metric clocks and calendars were ended in 1795, three years after they had been first marketed.

Did you know?

According to animal studies, the typical American diet is damaging to the liver and may result in allergies, low energy, digestive problems, and a lack of ability to detoxify harmful substances.

Did you know?

The first war in which wide-scale use of anesthetics occurred was the Civil War, and 80% of all wounds were in the extremities.

Did you know?

A recent study has found that following a diet rich in berries may slow down the aging process of the brain. This diet apparently helps to keep dopamine levels much higher than are seen in normal individuals who do not eat berries as a regular part of their diet as they enter their later years.

Did you know?

In ancient Rome, many of the richer people in the population had lead-induced gout. The reason for this is unclear. Lead poisoning has also been linked to madness.

A stallion exhibiting the characteristics of a Flehmen response A stallion exhibiting the characteristics of a Flehmen response
Spatial and Response Strategies Spatial and Response Strategies
Masters and Johnson’s Four-Phase Model of the Sexual Response Cycle Masters and Johnson’s Four-Phase Model of the Sexual Response Cycle
The Molecules of the Innate Immune Response The Molecules of the Innate Immune Response
The U.S. DOT hazardous materials placards as found in the 2012 Emergency Response Guidebook. ... The U.S. DOT hazardous materials placards as found in the 2012 Emergency Response Guidebook. ...
The CHRIS manual entry for toluene. Useful information includes response information, chemical and ... The CHRIS manual entry for toluene. Useful information includes response information, chemical and ...
Video: Mendel's Pea Experiment

For a complete list of videos, visit our video library