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What do economists mean by the term institutions? How are institutions related to economic growth?
Many historical accounts credit the economic success of the United States to its abundance of natural resources. What is missing from this argument?
How is economic growth measured? What are five human welfare conditions that are positively affected by economic growth?
What are the three factors that influence economic growth? What is human capital, and how is it different from the quantity of workers available for work?
Why does economic growth matter? How do resources and technology contribute to economic growth? What institutions foster economic growth?
Use the AD-AS model to determine the effects on real GDP, unemployment, and the price level in Zhouland in both the short run and the long run.
Explain the importance of the loanable funds market to basic GDP in a macroeconomy.
If the rates of return on fine art purchases fall, how would you expect the allocation of retirement funds to change across the macroeconomy?
List the factors that affect the supply side of the loanable funds market. List the factors that affect the demand side of the loanable funds market.
What will happen to the interest rate in that nation? What will happen to the equilibrium level of investment in that nation?
Suddenly, in the year 2015, the interest rate in Wahooland rises. What are the possible reasons for this rise in interest rates in Wahooland?
Show how the change would affect supply and demand in the market for loanable funds. How would this change affect real GDP in the United States?
What is money? What is the Fed? How is the money supply measured? How do banks create money?
What is the difference between commodity money and fiat money? What are the three functions of money? Which function is the most important?
Why is the actual money multiplier usually less than the simple money multiplier? How does a commercial bank increase the money supply?
Assuming a required reserve ratio of 10%, what is the largest amount by which the money supply can increase as a result of your action?
By how much more does the money supply increase if the Fed lowers the required reserve ratio to 7%?
What is the simple money multiplier if the required reserve ratio is 15%? If it is 12.5%?
What are the tools of monetary policy? What is the effect of monetary policy in the short run? Why doesn't monetary policy always work?
How does the Fed increase and decrease the money supply through open market operations?
explain how unexpected contractionary monetary policy affects interest rates in short run. Explain changes in real GDP, the unemployment rate and price level.
Use what you learned in this chapter to explain why the monetary policy failed to restore the economy to long-run equilibrium.
What kind of fiscal policy would you recommend? Illustrate the impact of your recommendation in a fully labeled aggregate demand-aggregate supply graph.
Illustrate the change in the interest rate and the change to the amount of investment demand when the Fed decides to buy bonds.
Suppose the Fed buys $1 million in government bonds from a commercial bank. What effect will this action have on the bank's reserves and the money supply?