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Under the gold standard, if the velocity of money were stable when the economy was expanding, what would have had to happen to keep prices stable?
The economy of Albernia is facing a recessionary gap, and the leader of that nation calls. Explain what policies each economist would recommend and why.
Which of the following policy recommendations are consistent with the classical, Keynesian, monetarist, and Great Moderation consensus views of macroeconomy?
What was Popania's balance of payments on financial account in 2014? What was its balance of payments on current account? What was the value of its imports?
Given inflation and the change in the nominal exchange rate, which nation's goods become more attractive?
how must a government react to an increase in the demand for the nation's goods and services by the rest of world to keep the exchange rate at its fixed value?
If central banks lose the ability to use discretionary monetary policy under fixed exchange rates, why would nations agree to a fixed exchange rate system?
How should the government respond to this news? What are some policy measures that could be used to help neutralize the effect of falling consumer confidence?
Calculate the initial change in aggregate consumer spending as a consequence of this policy measure if the marginal propensity to consume (MPC) in US is 0.5.
In the short run, how will the quantity of aggregate output supplied respond to fall in prices? What will happen when firms and workers renegotiate wages?
What happens to the wealth effect of a change in the aggregate price level as a result of this allocation of assets?
Suppose that the economy is currently at potential output. Also suppose that you are an economic policy maker. How would you rank them and why?
Explain how Wageland will move from one short-run macroeconomic equilibrium to another. Illustrate with a diagram.
Data taken from the Department of Energy indicate that the average price of crude oil. Would an increase in oil prices cause a demand shock or a supply shock?
Illustrate with diagrams. In each case, what are the short-run and long-run effects on the aggregate price level and aggregate output?
What type of fiscal policies would help move the economy back to potential output? How would your recommended fiscal policy shift the aggregate demand curve?
He also argues that if you have large budget deficits, you must have a large debt. In what ways is your study partner correct and in what ways is he incorrect?
Calculate both the change in government purchases of goods and services and the change in government transfers necessary to close the gap.
Most macroeconomists believe it is a good thing that taxes act as automatic stabilizers and lower the size. How can you explain this apparent inconsistency?
The government's budget surplus in Macroland has risen consistently over the past five years. Can you determine which policy maker is correct? If not, why not?
How will the money supply change if the required reserve ratio falls to 5%? How will the money supply change if the required reserve ratio rises to 25%?
By how much will the money supply in the economy contract in response to Ryan's withdrawal of $400?
How does the deposit initially change the T-account of the local bank? How does it change the money supply?
Calculate the dollar cost of the annual interest on the government's total debt assuming the interest rate and debt figures cited above.
The town of Ithaca, New York, prints its own currency, the Ithaca HOURS, which can be used to purchase local goods and services.