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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.
Which of the following would indicate the beginnings of an expansion of the economy? a. Fewer new firms are started. b. Stock market prices decline c. Consumer confidence improves
Suppose that the economy is characterized by the following behavioral equations: C= 170 + 0.7YD I= 170 G= 150 T= 100 a. What does equilibrium output equal? Y=? b. What d
If interest rates increase, which would you rather be holding, long term or short term bond? Why? Which type of bond has the greater interest rate risk?
Define elasticity of supply. What factors influence Elasticity of Supply? There is only one type of identifiable elasticity of supply measuring the responsiveness of market sup
The annual fixed cost for a light fixture manufacturing company are $38,000, and the variable costs are $40 per unit. If the selling price per unit is p = 485 - 1.395X, what is the
In our 2 period consumption savings model (with no leisure, u(c1, c2), suppose interest income in period 2 is taxed at the rates, where 0 a) Write down period 1 and period 2 bu
the central economic problem facing the group of survivors
A friend says that the economy will produce inside the PPF curve (like pt E below) since we in the economy value saving, or for some other reason. You say this is incorrect. Why? U
Aggregate demand in the cross model Because C and Im depends positively on Y while G, I and X are exogenous, aggregate demand Y D will depend positively on Y: Y D (Y) = C(
Functions of Money During the course of history money has taken various forms. In fact, there is no difficulty in identifying money but the problem is defining money. Economis
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