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What effect did the bank hope the action would have on the economy? Be specific. What was the hoped-for result on C, I, and Y?
Describe what happened to demand for commercial and industrial loans as well as the level of optimism for small businesses.
What specific actions would you expect to see the Fed take if the following were to occur?
Explain in detail the effects of such an event on the economy of Paranoia assuming no response on the part of the central bank or the Treasury.
Why might investment not respond positively to low interest rates during a recession?
Explains the negative slope of a simple demand curve and another story that explains the more complex aggregate demand curve (AD).
why expansionary fiscal policy and expansionary monetary policy have opposite effects on interest rate despite having same goal of increasing aggregate output.
Illustrate the position of the Japanese economy with aggregate supply and demand curves. Where on the short-run AS curve was Japan in 2000?
Illustrate your answer with aggregate demand and supply curves. What would you expect to be the effect on interest rates if Fed held money supply constant?
illustrate the worldwide glut gets worse, and the result is a falling price level (deflation) in the United States despite expanding aggregate demand.
What circumstances might lead to an equilibrium at a very flat portion of the AS curve? at a very steep portion?
describe the effects of increase occurs in the money supply above potential GDP on the price level and on equilibrium GDP in the long run.
Two separate capacity constraints are discussed in this chapter. Which is greater, fullcapacity GDP or potential GDP? Why?
Your investments had increased in value by the same percentage as the S&P 500 index had increased, how much would you have today?
How might social, or implicit, contracts result in sticky wages? Use a labor market graph to show the effect of social contracts on wages and on unemployment.
Has unemployment increased or decreased? What has happened to wages? Does the pattern of unemployment help explain the movement of wages?
How will the welfare system affect labor force participation rates, labor supply, and unemployment?
What trends do you observe? Can you explain what you see using aggregate supply and aggregate demand curves?
What seems to be an improved trade-off between inflation and unemployment? What factors might improve the trade-off? What factors might make it worse?
Describe the Fed's tendency to lean against the wind. Do the Fed's policies tend to stabilize or destabilize the economy?
When did fiscal policy become expansionary? Which policy seems to have suffered more from policy lags?
Unions negotiate 3-year contracts. In which country is an expansionary monetary policy likely to have a larger effect on aggregate output?
What can the Argentine Central Bank do to try to lower the expectations to their projected inflation level of 11.2 percent?
Briefly explain how each might work and explain which type or types of unemployment (frictional, structural, or cyclical) each policy is designed to alter.
How might the spending of Asians on American goods be affected? What about Americans who have invested in these countries?