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Discuss: Discretionary Fiscal Policy
Task: Write a response explaining why time lags in discretionary fiscal policy can adversely affect the efforts of the Congress and the President in attempting to maintain a healthy economy. Could it happen that these time lags could actually work to destabilize the economy?
Objective:
- Identify current trends in macro and microeconomics.
- Analyze the relationship between fiscal and monetary policy in an open economy.
- Critically analyze the role of the government in a market economy.
Which of the following is the best example of a monopolistic competitor? Firms in a monopolistically competitive industry produce:
In the country A, all wage contracts are indexed to inflation. That is, each month wages are adjusted to reflect increases in cost of living as reflected in changes in price level. Explain answer with aggregate supply and aggregate demand curves.
What are the firm's fixed costs? What is the firm's marginal cost? Now suppose other firms in the market sell the product at a price of $10.
Suppose you are running a photo copy center that makes illegal copies of the textbook. An illegal copy of the book sells for $10 and you only have one copy machine.
According to the Solow growth model, a country that increases its rate of capital investment can overcome diminishing marginal returns to capital and achieve sustained high growth over time.
Illustrate what fiscal policies are needed to fight unemployment
Throughout this course we have discussed the 'agency problem' - i.e., when the interests of owners and managers are not properly aligned.
Explain how each of the following will affect the relative values of the dollar and the euro:
Give at least three explanations of why economic reasoning would argue that this is to be expected.
Discuss briefly what you think the way in which the HDI is constructed. (Briefly means no more than five lines of text. Excesses are severely penalised.)
Credit cards are sometimes discussed as a public problem. In 2001, purchases on credit cards accounted for 21% of consumer spending in America, which has the lowest savings rate of any big country.
Read the following text and answer the questions below: Discuss the limitations of this model as an explanation of the effects of government expenditure on GDP.
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