What is natural about the natural rate of unemployment

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1.Explain the relationship among savings, investment, and net capital outflow.

2.Describe the economic logic behind the theory of purchasing-power parity (PPP). What factors might prevent PPP from holding true?

3. Describe supply and demand in the market for loanable funds and the market for foreign currency exchange. How are these markets linked?

4.What is capital flight? When a country experiences capital flight, what is the effect on the country's interest rate and exchange rate?

5.List and explain the three theories for why the short-run aggregate-supply curve is upward sloping.

6.Suppose that survey measures of consumer confidence indicate a wave of pessimism is sweeping the country. If policymakers do nothing, what will happen to aggregate demand? Explain what the Fed should do if it wants to stabilize aggregate demand. If the Fed does nothing, explain what Congress might do to stabilize aggregate demand.

7.What is "natural" about the natural rate of unemployment? Explain why the natural rate of unemployment might differ across countries.

8.What causes the lags in the effect of monetary and fiscal policy on aggregate demand? What are the implications of these lags for the debate over active versus passive policy?

9.Some economists say that the government can continue running a budget deficit forever. How is that possible?

10.What is the theory of liquidity preference? How does it help explain the downward slope of the aggregate-demand curve?

Reference no: EM13186992

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