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Explain the difference between final goods and intermediate goods. Why is it sometimes difficult to apply this distinction in practice?
Explain why dividing the two does not give a good estimate of the marginal propensity to consume.
Explain why permanent tax cuts are likely to lead to bigger increases in consumer spending than temporary tax cuts do.
Explain the logic behind the finding that variable imports reduce the numerical value of the multiplier.
Compute the real wage (money wage deflated by the price index) corresponding to each of the following possible price levels: 85, 95, 100, 110, 120.
Explain why a decrease in the price of foreign oil shifts the aggregate supply curve outward to the right. What are the consequences of such a shift?
Since 2008 a rash of bank failures has occurred in the United States. Explain why these failures did not lead to runs on banks.
What is fractional reserve banking, and why is it key to bank profits? Why fractional reserve banking give bankers discretion over how large money supply will?
How is money defined, both conceptually and in practice? Does the U.S. money supply consist of commodity money, full-bodied paper money, or fiat money?
Reduce capital gains taxes only on certain types of investments, such as corporate stocks and bonds. Which of the three options seems most desirable to you?
Which of the proposed supply-side tax cuts appeals to you most? Draw up a list of arguments for and against enacting such a cut right now.
How would GDP in the United States have been affected if this higher defense spending led to larger budget deficits?
The government then proposes to raise both spending and taxes by $100 billion. What should happen to equilibrium GDP on the demand side?
When the income-tax rate declines, as it did in the United States early in this decade. Discuss the pros and cons of having a higher or lower multiplier.
Why, then, don't bankers like to hold excess reserves? What circumstances might persuade them that it would be advisable to hold excess reserves?
Some politicians and others have advocated lower taxes on saving as a remedy. Do you expect such a program to be very effective? Why?
If rent constitutes only 2 percent of the incomes of Americans, why may the concept nevertheless be significant?
Discuss concept of financial rate of return on a college education. If this return is less than return on bank account, does that mean you should quit college?
Theory Based upon the reading of the three short HBR articles on the effects of Tariffs and Quotas respond the following three questions.
Can you characterize the difference between the two types of jobs in general terms?
Explain what a doubling of the number of customers for your snow cleaner will do to the R&D component of your marginal costs.
In the general public, explain why snow cleaner is an externality. How large is it? Is it a beneficial externality?
Can this trend be explained by the operation of supply and demand in the local labor markets? How might things differ if students formed a union?
It seems to be a well-established fact that workers with more years of education typically receive higher wages. What are some possible reasons for this trend?
What are some reasonable goals for a union? Use the tools of supply and demand to explain how a union might pursue its goals, whatever they are.