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Suppose that survey measures of consumer confidence show that a large wave of pessimism regarding the future performance of the economy is sweeping the country. Likewise, U.S. stock price indexes (the Dow Jones Industrial Index, the S&P 500 Index, and the Nasdaq) are all falling rapidly. 1. If, in the short run, policy makers do nothing, what will happen to U.S. aggregate demand and what especially would we expect to happen to the "Personal Consumption" and "Domestic Private Investment" components of U.S. aggregate demand? Explain.
2. What, again in the short run, should the Federal Reserve do if it wants to stabilize aggregate demand? Please be specific in your discussion of the specific policy tools that are available to the Fed.
3. If the Fed were to do nothing, what might the U.S. Congress do to stabilize aggregate demand? Again, please be specific.
4. If both the Federal Reserve and the Congress were to do nothing, what could the President do to stabilize U.S. aggregate demand?
Event 1: The wages for all dental assistants increase, increasing the costs of inputs. Event 2: The government provides national dental insurance benefits for all U.S. citizens that cover 100% of the cost of all dental services. There are two effe..
Which of the following has occurred when government directives do not produce better economic outcomes?
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At one time, it was believed that the way for a nation to prosper was to export as much as possible while importing as little as possible. More money would flow into a country than out of a country. Is this really a sound economic strategy? What is t..
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