Growth-unemployment and inflation
Problem: Discuss the three primary concerns in macroeconomic analysis. Growth, unemployment, and inflation.
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The Fed loosened monetary policy in various ways in 2007, but has recently started tightening monetary policy again. Explain how each instrument they have used works and whether it is a loosening or tightening policy. (1 sentence explanation): 1)
(1) Calculate the equilibrium level of output. Graph your solution. (2) If the government spending increases by 50 what is the new equilibrium level of output? Use the government spending multiplier.
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1) Which strategy offers both Westinghouse and General Electric the best financial outcome? 2) Does either firm have a dominant strategy? If yes, which firm and what strategy?
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