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Is capitalism or socialism the better economic system? Why? Why does an economy's strength ultimately reside in its people?
In a market economy, what is the central coordinating mechanism? In a centrally planned socialist economy, what is the central coordinating mechanism?
Why is entrepreneurship a central part of any business? List the three major forms of business. What form is most common?
What are the two largest categories of federal government expenditures? What are the six roles of government listed in the text?
Give an example of a merit good, a demerit good, a public good, and a good that involves an externality.
What arguments can you give for supporting a socialist organization of a family and a market-based organization of the economy?
If the government had imposed capital controls before the increase in the money supply, would this have had any effect on the exchange rate depreciation?
Determine the effects on aggregate output, the price level, the exchange rate, and the real interest rate. Explain your results.
Determine the equilibrium effects on the domestic economy in the case where there are no capital controls.
Suppose that the exchange rate is flexible. What are the equilibrium effects on the price level and the exchange rate?
Discuss the effects on aggregate output, absorption, the current account surplus, the nominal exchange rate, and the price level.
Determine the effects on aggregate output, absorption, the current account surplus, the nominal exchange rate, and the price level.
What will be the equilibrium effects under a flexible exchange rate regime, and under a fixed exchange rate regime? Explain your results.
How does the exchange rate regime matter for stabilization policy in the New Keynesian model?
What do capital controls imply for the response of the economy to shocks? Are capital controls a good idea? Why or why not?
Give two examples of fixed exchange rates within the United States. What are the advantages and disadvantages of a common currency area or currency union?
What are the effects of a devaluation of the domestic currency under a fixed exchange rate? List the key pros of fixed versus flexible exchange rate regimes.
What are the effects on the domestic economy of an increase in the world real interest rate under a flexible exchange rate and under a fixed exchange rate?
What are the different systems for fixing the exchange rate? Describe how each works. Describe the role of the International Monetary Fund.
What countries in the world have flexible exchange rates? Which have fixed exchange rates? Does it hold in the long run? Why or why not?
Plot the current account surplus and net exports. How much difference is there between the two time series? Comment on the significance of this.
Is the asset a long-maturity asset or a shortmaturity asset? Is the asset high risk or low risk? Explain why the asset has the above four properties.
How would we modify the Friedman rule in the context of a New Keynesian sticky price model like the one, assuming that monetary policy is the only policy.
What does this imply for the Friedman rule, that is, how should the central bank conduct monetary policy optimally? Discuss.
How would the Friedman rule for monetary policy be altered under these circumstances?