Start Discovering Solved Questions and Your Course Assignments
TextBooks Included
Active Tutors
Asked Questions
Answered Questions
The budget deficit projections in this chapter include net interest on the debt, which depends on interest rates. Use the loanable funds model to explain what is likely to happen to interest rates and
Studies have shown a link between rising debt-to- GDP ratios and real interest rates. Investment is not the only category of spending that might be sensitive to interest rates.
How might budget deficits affect long-term economic growth?
Suppose that a country has a debt-to-GDP ratio of 64%. The growth rate of real GDP is 3%. Assume that seignior age is zero and the real interest rate is 2%.What primary deficit as a percentage of GDP
Given this information, was Japanese fiscal policy sustainable? If not, what would the primary budget deficit have to be to make fiscal policy sustainable?
What are the consequences of having a fiscal policy that is not sustainable?
Marty has been laid off from her job at an aircraft plant but expects to be recalled when the economy picks up.
The quantity theory of money states that changes in the money supply have predictable effects on the price level, or, in other words, that money growth determines inflation in the long run. Under what
The Federal Reserve unexpectedly increases the rate of growth of the money supply by 1%, and this change is expected to be permanent. What nominal interest rate will banks charge on new mortgages?
With a falling price level, what happens to the actual real interest rate? Does your answer depend on what happens to the nominal interest rate? Briefly explain.
What is seignior age? In what sense is it an inflation tax? What are shoe-leather costs? What are menu costs?
What is hyperinflation How does hyperinflation occur?
If the production function is Y = A K1/2L1/2 what is total factor productivity?
Graph the production function, with capital on the horizontal axis, and use your graph to explain the difference between a doubling of the labor force and a doubling of total factor productivity.
Describe how real GDP per capita has changed throughout the world from 1820 to the present. 1.3 How is labor productivity related to the standard of living?
The Effect of a Decrease in the Growth Rate of the Money Supply
The Effect of an Increase in the Growth Rate of the Money Supply on the Interest Rate
What is a store of value? What types of assets act as a store of value?
A New York Times column in the fall of 2009 reported that the value of the dollar was falling, in part, because “investors who had sought shelter in the American currency’s perceived stabi
How does the money multiplier change when the nonbank public decides to hold more currency relative to deposits?
In April 2011, the money supply, as measured by M1, was approximately $1,917 billion. The monetary base was approximately $2,494 billion.
State the quantity equation.What is the velocity of money?What is the difference between
What will happen to the inflation rate if the rate of growth of the money supply increases to 7%, and, at the same time, the growth rate of velocity increases to 2%?
In 2010, the money supply, M1, was $1,832 billion.Nominal GDP was $14,660 billion. What was the velocity of money measured using M1?
Suppose that the production function were . Assume that A = 100,000, and that the current level of the capital stock is 10,000.