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Between 2007 and 2009 the U.S. economy experienced a severe recession. In an effort to stimulate the economy, the federal government passed a stimulus package. Explain the federal government's use of fiscal policy (the stimulus) to promote growth and employment. Support your ideas with concepts found in the assigned reading. Include the following in your response: • Discuss some actions taken by the federal government and whether the recession would have been longer and the unemployment rate higher if the government had not acted by passing the stimulus package? • If left alone, do you believe the economy would have corrected itself as suggested by Classical economic theory? Explain. • Discuss the effect these policies had on increasing the size of the budget deficits and the national debt.
Explain the term- inventory investment We would have a negative inventory investment whenever inventories decrease. By net investments we mean gross investments minus depreciat
What are the contents in the market strikes back? a. Price controls • Price ceiling • Price floor b. Quantity controls quota c. Excise tax d. Inefficiency
The Budget Line: The Consumer Constraints The consumer would like to maximize his satisfaction by reaching the highest possible indifference curve. But in the process, he faces
Determine the exchange rate When a currency is freely floating, the central bank doesn't have to set monetary policy to alter the external value of the currency unless instruct
Q. How to control Monetary policy? Remember that the money supply is equal to the money multiplier times the monetary base. We will presume that money multiplier is constant an
Definition of Exchange rate The exchange rate is stated as the price of one unit of currency in terms of other currency. If one euro costs 1.5 USD then 1 USD costs 1/1.5 = 0.66
Can democracy survive if a majority of the citizen pays little or nothing in taxes while benefiting directly from a higher level of government spending? Why or why not?
Say that the equilibrium price and quantity both rose. What would you say was the most likely cause? There was _____(increase, decrease, no change) in demand and ________(increase,
Liberalisation and Changing Sources of FDI: European countries had been major sources of FDI inflows to India until 1990. However, their relative importance declined in the
The total cost C of producing x units of some commodity is a linear function. Records show that on one occasion, 100 units were made at a total cost of $200, and on another occasio
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