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Given this information in mid-2002 - and disregarding what we know about what happened afterward - did Fed follow the correct policy by easing further to 1¼?
Why did monetary policy fail to work? What else do you think the Bank of Japan could have done to stimulate real growth?
Which do you think has changed more - the multiplier or the accelerator? What are the principal reasons for that change?
Why did the US economy go into recession in 2001 even though inflation and interest rates had not risen at all in the previous year?
Why has the average recession in the postwar US economy lasted about ten months? Why were the 1974-5 and 1981-2 recessions about six months longer?
What lessons were learned from the Great Depression that presumably will not be repeated?
Explain which of the post-WWII recessions in the US were caused by fiscal shocks?
Which of the post-WWII recessions in the US were caused by energy shocks? Do you think the US economy would be plunged into recession or not?
Explain how automatic stabilizers have reduced the length and severity of recessions in the post-WWII period.
What are the principal factors that determine whether inflation accelerates or not once the economy reaches full employment?
Why doesn't the Fed refrain from taking those measures that apparently cause recessions?
Using the ‘Okun's Law' approximation, how fast would the economy be growing during that part of the expansion phase?
If not, what other factors have depressed the growth rate in Germany relative to France? Do you expect those factors to continue in the future?
outline the changes you would take to keep productivity growth from declining, given these increased expenditures and the overall constraint of balanced budget.
How would you change the capital gains tax to maximize the long-term productivity growth rate?
Assuming this argument has some merit, how would you measure whether the taxpayers are essentially getting their money's worth out of the ethanol subsidy?
Determine how each of the industries (A)-(J) would view this increase, if in fact it affected their business at all.
Outline the arguments that would lead you to conclude which type of expenditure is more likely to increase the long-term productivity growth rate.
Now suppose a 5% boost in the stock market raised real GDP by ½%. Calculate the ex post change in the Federal budget position.
Explain what factors caused the surplus in one case, and the deficit in the other case.
Based on these figures, do you think the ITC accomplished its stated objectives? What other data would be necessary for you to make an informed judgment?
If in fact the risk factor dropped from 6% to 3.5%, how much of the remaining difference could be explained by that factor?
Discuss the pros and cons of investors switching their assets from stocks to bonds in mid-2002.
Why has the total yield on bonds remained so volatile after 1983 when the core rate of inflation has gradually declined from 4% to 2%, with a peak of only 5%?
Why did the market exhibit such an unusual pattern in 2002? How would you expect the stock market to behave following future recessions?