« previous next »

Author Question: What is the argument against the use of autonomous tightening of monetary policy in response to a ... (Read 33 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?

Hippocrates noted that blood separates into four differently colored liquids when removed from the body and examined: a pure red liquid mixed with white liquid material with a yellow-colored froth at the top and a black substance that settles underneath; he named these the four humors (for blood, phlegm, yellow bile, and black bile).

Did you know?

The average office desk has 400 times more bacteria on it than a toilet.

Did you know?

Computer programs are available that crosscheck a new drug's possible trade name with all other trade names currently available. These programs detect dangerous similarities between names and alert the manufacturer of the drug.

Did you know?

Most strokes are caused when blood clots move to a blood vessel in the brain and block blood flow to that area. Thrombolytic therapy can be used to dissolve the clot quickly. If given within 3 hours of the first stroke symptoms, this therapy can help limit stroke damage and disability.

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.

The cellular response of skeletal muscle cells to epinephrine The cellular response of skeletal muscle cells to epinephrine
An Overview of Perceptual, Stimulus–Response (S-R), and Motor Learning An Overview of Perceptual, Stimulus–Response (S-R), and Motor Learning
The inhibitory response of rods to light. When light bleaches rhodopsin molecules, the rods’ ... The inhibitory response of rods to light. When light bleaches rhodopsin molecules, the rods’ ...
Food policy can drive the food industry Food policy can drive the food industry
Acquisition and Extinction of a Salivary Response Acquisition and Extinction of a Salivary Response
The executive legislative "struggle" over foreign policy The executive legislative "struggle" over foreign policy
Video: Coaductile pathway, Timing of contraction signal & Conduction system and ECG

For a complete list of videos, visit our video library