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Macroeconomics 11th Edition by Michael Parkin
Edition 11ISBN: 9780133423884Macroeconomics 11th Edition by Michael Parkin
Edition 11ISBN: 9780133423884 Exercise 1
Use the following news clip to work the Problems.
Sorry Ben, You Don't Control Long-Term Rates
Perhaps Ben Bernanke didn't learn in school that long-term interest rates are set by the market, but he is about to learn this lesson. Long-term interest rates cannot be manipulated lower by the central bank for a great length of time.
a. Is it the long-term nominal interest rate or the long-term real interest rate that influences spending decisionsExplain why.
b. How does the market determine the long-term nominal interest rate and why doesn't it move as much as the short-term interest rates?
Sorry Ben, You Don't Control Long-Term Rates
Perhaps Ben Bernanke didn't learn in school that long-term interest rates are set by the market, but he is about to learn this lesson. Long-term interest rates cannot be manipulated lower by the central bank for a great length of time.
a. Is it the long-term nominal interest rate or the long-term real interest rate that influences spending decisionsExplain why.
b. How does the market determine the long-term nominal interest rate and why doesn't it move as much as the short-term interest rates?
Explanation
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Verified
(a) Demand and supply in the market for ...
Macroeconomics 11th Edition by Michael Parkin
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