« previous next »

Author Question: What is the argument against the use of autonomous tightening of monetary policy in response to a ... (Read 71 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?

It is widely believed that giving a daily oral dose of aspirin to heart attack patients improves their chances of survival because the aspirin blocks the formation of new blood clots.

Did you know?

You should not take more than 1,000 mg of vitamin E per day. Doses above this amount increase the risk of bleeding problems that can lead to a stroke.

Did you know?

The use of salicylates dates back 2,500 years to Hippocrates's recommendation of willow bark (from which a salicylate is derived) as an aid to the pains of childbirth. However, overdosage of salicylates can harm body fluids, electrolytes, the CNS, the GI tract, the ears, the lungs, the blood, the liver, and the kidneys and cause coma or death.

Did you know?

Approximately one in four people diagnosed with diabetes will develop foot problems. Of these, about one-third will require lower extremity amputation.

Did you know?

Immunoglobulin injections may give short-term protection against, or reduce severity of certain diseases. They help people who have an inherited problem making their own antibodies, or those who are having certain types of cancer treatments.

Response of a yeast cell to glucose Response of a yeast cell to glucose
Cultural Variations in the Strange Situation Across cultures, most toddlers exhibit secure attachme Cultural Variations in the Strange Situation Across cultures, most toddlers exhibit secure attachme
Drug tolerance: A shift in the dose-response curve to the right as a result of exposure to the drug. Drug tolerance: A shift in the dose-response curve to the right as a result of exposure to the drug.
The Cells of the Innate Response The Cells of the Innate Response
International Economics: Theory and Policy (10th Edition) International Economics: Theory and Policy (10th Edition)
Acquisition and Extinction of a Salivary Response Acquisition and Extinction of a Salivary Response
Video: Molecules, Membrane Permeability and Structure

For a complete list of videos, visit our video library