Reference no: EM13772977
For each of the following, predict the effects on the equilibrium levels of aggregate output (Y) and the interest rate (r). Be sure you make predictions for both Y and r!
a. During 2000, the Federal Reserve was tightening monetary policy in an attempt to slow the economy. The Congress passed a substantial cut in the individual income tax at the same time.
b. During the summer of 2003, the Congress passed and President Bush signed the third tax cut in 3 years. Many of the tax cuts took effect immediately. Assume the Fed holds the money supply fixed.
c. In 1993, the Congress and the president raised taxes. At the same time, the Fed was pursuing an expansionary monetary policy.
d. In 2003, the Iraq War led to a sharp drop in consumer confidence and a drop in consumption. Assume the Fed holds the money supply constant.
e. The Fed attempts to increase the money supply to stimulate the economy, but plants are operating at 65 percent of their capacities and businesses are pessimistic about the future.
|
Outline the elements of an IMF stabilization package
: Outline the elements of an IMF stabilization package. Provide example of a country- one where the package has not been successful in heloing with the balance of payment deficit. Explain in detail why the package failed in that country. Be sure to cit..
|
|
Federal indebtedness is much higher than the net public debt
: Read the case "Federal Indebtedness is Much Higher Than the Net Public Debt" on page 313 and discuss the following issue: How could the federal government try to reduce its entitlement indebtedness (the difference between entitlement program spending..
|
|
Explain how increase in taxes with economy growing slowly
: During the third quarter of 1997, Japanese GDP was falling at an annual rate of over 11 percent. Many blamed the big increase in Japan's taxes in the spring of 1997, which was designed to balance the budget. Explain how an increase in taxes with the ..
|
|
Opportunity cost of producing sweater is socks
: Both Dave and Caroline produce sweaters and socks. If Dave's opportunity cost of producing 1 sweater is 3 socks, and Caroline's opportunity cost of producing 1 sweater is 5 socks, then
|
|
Predict effects on equilibrium levels of aggregate output
: For each of the following, predict the effects on the equilibrium levels of aggregate output (Y) and the interest rate (r). Be sure you make predictions for both Y and r! During 2000, the Federal Reserve was tightening monetary policy in an attempt t..
|
|
Suppose a gardener produces both tomatoes and squash
: Suppose a gardener produces both tomatoes and squash in her garden. If the opportunity cost of one bushel of squash is 2/5 of a bushel of tomatoes, then the opportunity cost of 1 bushel of tomatoes is:
|
|
What is the future worth of savings account
: Sally deposited $100 a month in her savings account for 24 months. For the next five years she made no deposits. What is the future worth in Sally's account at the end of seven years if the account earned 6% interest annually, compounded monthly?
|
|
Data characterize the hypothetical economy of trance
: Assume that the following data characterize the hypothetical economy of Trance: money supply = $190 billion; quantity of money demanded for transactions = $160 billion; quantity of money demanded as an asset = $10 billion at 12 percent interest, incr..
|
|
Saving rate on capital per worker ad output per worker
: How to use solow growth model to explain the long run effect of raising the saving rate on capital per worker ad output per worker. Start with an initial steady state and show the new steady state on the graph. Label the graph properly.
|