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Why would a reduction in the required reserve ratio not be a powerful tool when banks choose to hold substantial quantities of excess reserves?
Why would the transactions motive and the precautionary motive for holding money both tend to vary directly with the price level?
In the move from an above equilibrium interest rate to the equilibrium interest rate, what happens in the bond market and the loan market?
How does a higher price level affect the money market? How does it affect aggregate demand?
Why would banks prefer to hold deposits as savings accounts rather than checking accounts, other things equal?
What happens if people begin to anticipate future monetary policy correctly based upon past experience?
Predict whether unemployment will increase or decrease as a result of each of the following monetary policies. If it is unanticipated? What if it is anticipated
What is happening to real wages? What would happen to unemployment as a result? What would happen to SRAS as a result?
Is there any way that, starting from a long-run stable price equilibrium, an increase in aggregate demand could result in an increase in unemployment and a decr
Why does a movement up and to the left along a Phillips curve correspond to a movement up and to the right along a short-run aggregate supply curve?
Why do economists who believe people form rational expectations have little faith that announced changes in monetary policy will have substantial effects on rea
Suppose Mexico can produce cars at an opportunity cost of eight computers for each car it produces. Indicate how both countries can gain from free trade.
How would the size of the crowding-out effect affect the size of the change in aggregate demand that would result from a given increase in government purchases?
Illustrate diagrammatically the short-run and long-run effects of a government budget deficit. Describe the mechanism that makes these effects different.
Explain the difficulties that an economics professor might face in purchasing a new car under a barter system.
Analyze how the law of demand applies to a recent purchase that you made.
Explain the fiscal tools available to the federal government. Explain the limitations and problems associated with fiscal policy.
Why can a decrease in tax rates increase AS as well as AD, whereas an increase in government purchases will increase AD but not AS?
Explain why an equal dollar increase in both government purchases and net taxes would increase aggregate demand.
Why does it take a larger reduction in taxes to create the same increase in AD as a given increase in government purchases?
What is a recessionary gap? What would be the appropriate fiscal policy to combat or offset one? What is an inflationary gap?
If the current budget shows a deficit, what would an increase in taxes do to it? What would that increase in taxes do to aggregate demand?
Why are increases in both government purchases and net taxes at the same time expansionary or contractionary?
Why federal government actions that increase deficits considered expansionary fiscal policy and those that decrease deficits considered contractionary policy?
What would an increase in government purchases do to it? What would that increase in government purchases do to aggregate demand?