As a result of many years

Reference no: EM13134028

Question 1.

a. In the winter of 2010, many European countries experienced difficult times. As a consequence, their imports from the United States decreased. Use a graph to explain the effect on inflation, interest rates, and aggregate output of a decrease in net exports in the United States.

b. Suppose that as a result of many years of investment in research and development of new technologies, an economy discovers a new way of producing energy using renewable sources, like wind or solar power. Explain the effects of this technological breakthrough on real interest rates, inflation, and aggregate output.

Question 2.

a. Problem 7, p.341.
b. Problem 8, p.341.

Question 3.

Explain what is meant by the 'divine coincidence'. Assume that the economy is hit by a financial crisis. What should the central bank do? Now assume that the economy is hit by a natural disaster, such as a flood. What should the central bank do? Will the divine coincidence prevail in each case? Use the AD/AS model to show the impact of each shock and the effect of policy action taken by the central bank.

Question 4.

a. What is the 'time inconsistency' problem and what role does it play in the debate between advocates of discretion and rules in policy making?

b. Explain how a credible nominal anchor helps improve the economic outcomes that result from a positive aggregate demand shock.

Question 5.

a. How does a supply side analysis of the effects of a tax cut differ from one that focuses solely on aggregate demand?

b. How does the Ricardian equivalence view of the effects of tax cuts (and budget deficits) differ from the traditional view? What objections to the Ricardian equivalence view have been raised?

Reference no: EM13134028

Questions Cloud

What amount of these expenses can earl computers take : the check was not received by the printer until January 2, Year 2. What amount of these expenses can Earl's Computers take into account for Year 1?

Research issues are being debated and discussed in the u.s. : 1: ResearchLook through current newspapers and periodicals to determine what issues are being debated and discussed in the U.S. and around the world. (You must find at least one source related to your topic published within the last two years.) Some ..

Determine the probability that the bill will pass : Thirty-five percent of the democrats and 70% of the republicans favor the bill. the bill needs a simple majority to pass. using a probability tree, determine the probability that the bill will pass.

Corporation payout ratio : Ferman Corporation's common stockholders' equity at the beginning and end of 2010 was $870,000 and $1,130,000, respectively. Ferman Corporation's payout ratio for 2010 was ?

As a result of many years : Suppose that as a result of many years of investment in research and development of new technologies, an economy discovers a new way of producing energy using renewable sources.

What volume of base will it take to reach equivalent point : A 36.3 mL aliquot of 0.0529 M H2SO4 (aq) is to be titrated with 0.0411 M NaOH (aq). What volume (mL) of base will it take to reach the equivalence point?

Determining right angled triangle : Anne is pulling on a 60-foot rope attached to the top of a 48-foot tree while Walter is cutting the tree at its base. How far from the base of the tree is Anne standing?

Participation in the years net income : Determine Hassell's and Lawson's participation in the year's net income of $342,000 under each of the independent assumptions above.

Australian wool industry : Australian Dairy farmers - Hybrid car (choose one brand) - Australian wool industry

User Account

All Pages