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Next, go to the Bureau of Economic Analysis Web site, and use the interactive feature. By what percentage is real GDP higher or lower than it was 5 years ago?
By what percentage did real GDP decline over this period? Which of the four broad components of aggregate demand decreased by the largest percentage amount?
How would you show this decrease in the aggregate expenditures model? What would be the outcome for real GDP?
What is the role of the Council of Economic Advisers as it relates to fiscal policy? Determine the names and educational backgrounds of present members of CEA.
What are government's fiscal policy options for ending severe demand-pull inflation? How does the ratchet effect affect anti-inflationary fiscal policy?
Explain why such an amendment would force the government to enact a contractionary fiscal policy whenever the economy experienced a severe recession.
Explain the idea of a political business cycle. How might expectations of a near-term policy reversal weaken fiscal policy based on changes in tax rates?
How do economists distinguish between the absolute and relative sizes of the public debt? Why is the distinction important?
Why might economists be quite concerned if the annual interest payments on the debt sharply increased as a percentage of GDP?
What is the index of leading economic indicators, and how does it relate to discretionary fiscal policy?
Which specific components are up, and which are down? What has been the trend of the composite index over the past 3 months?
What are the three basic functions of money? Describe how rapid inflation can undermine money's ability to perform each of the three functions.
How does the purchasing power of money relate to the price level? Who in the United States is responsible for maintaining money's purchasing power?
Suppose the price level and value of dollar in year 1 are 1 and $1, respectively. If price level rises to 1.25 in year 2, what is the new value of the dollar?
What are the composition and purpose of the Federal Open Market Committee (FOMC)?
What are the major categories of firms that make up the U.S. financial services industry?
How do Fedwire and ACH transactions differ from credit card, debit card, and stored-value card transactions?
What have been the largest and smallest U.S. coin denominations since the Coinage Act of 1792?
Households deposit $5000 in currency into the bank that is added to reserves. What level of excess reserves does the bank now have?
Why must a balance sheet always balance? What are the major assets and claims on a commercial bank's balance sheet?
A halfhour later Smith obtains a loan for $750 at this bank. By how much and in what direction has the money supply changed? Explain.
Explain how this principle can affect you or your community or your employment or your city/county/state or the country or another country.
Identify what is the passengers' dominant strategy. Determine why travelers face the Prisoner's Dilemma with the early-bird check-in process.
What assumptions cause the immediate-short-run aggregate supply curve to be horizontal? Why is the long-run aggregate supply curve vertical?
Why is the aggregate demand curve downsloping? Specify how your explanation differs from the explanation for the downsloping demand curve for a single product.