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What will the market price of the bond be when the long-term interest rate is 10 percent? What would it be if the interest rate were 5 percent?
How will an increase in the inflation rate affect (a) the money rate of interest and (b) the real rate of interest? Explain.
What real rate of return will you earn? If the inflation rate during the next five years is 6 percent, what will happen to your real rate of return?
How will the profit margins of businesses be affected? How will the actual rate of unemployment compare with the natural rate of unemployment?
Explain why it's possible to temporarily achieve output levels beyond the economy's long-run potential. Why can't the high rates of output be sustained?
What will happen to the real wages of the union members if the price level is constant (unchanged) during the next three years?
What is the current money interest rate on ten-year government bonds? Is this also the real interest rate? Why or why not?
If the real interest rate in the loanable funds market increases, what will happen to the net inflow of foreign capital? Explain.
Why does the short-run aggregate supply curve slope upward to the right? If the prices of both (a) resources and (b) goods and services increased proportionally
What major factors influence our ability to produce goods and services in the long run? Why is the longrun aggregate supply curve vertical?
In your own words, explain why aggregate demand is inversely related to the price level.
Which countries had the highest and the lowest inflation rates? Which one of the countries had the most inflation during this period?
Suppose that the consumer price index at year-end 2003 was 150 and by year-end 2004 had risen to 160. What was the inflation rate during 2004?
When external costs are present, what is likely to be the relationship between market output of a good and the output consistent with ideal economic efficiency?
Discuss what are the necessary conditions for economic efficiency? In what four situations might a market fail to achieve ideal economic efficiency?
What if the pollution invades Baker's home and harms her health? Are her property rights violated? Is an externality present? Explain.
Apply the economic efficiency criterion to the role of government. When would a government intervention be considered economically efficient?
Analyze what is the shortsightedness effect? How does the shortsightedness effect influence the efficiency of public-sector action?
Why will efficient projects necessarily be favored by a majority of voters? Explain.
Government action is based on majority rule. In your own words, explain the meaning of this statement. Is the statement true? Why or why not?
Why might even real GDP be a misleading index of changes in output between 1950 and 2003 in the United States?
How will the construction of the plant affect GDP? Suppose the plant generates $100,000 in corporate profits this year.
A large furniture retailer sells $100,000 of household furnishings from inventories built up last year. How does this sale influence GDP?
If nominal GDP increased by 6 percent during a year, while the GDP deflator increased by 4 percent, by how much did real GDP change during the year?
How would contributions to political campaigns be affected? Do you think politicians are very interested in curtailing the power of special interests?