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Explain why a tax cut would have a greater stimulatory impact on the economy during a recession than during a boom.
Economic historians have determined that it took about 40 years from the harnessing of electricity. Explain why you think that hypothesis is valid, or why not.
That would reduce Sf, ceteris paribus. Explain what happens to the other components of I and S, and show how the economy returns to equilibrium.
Calculate the simple multiplier if the marginal propensity to consume is 0.4, investment rises $0.05 for every $1 billion increase in income, and net exports.
Explain which factors would cause the IS curve to be steeper. When is the IS curve more likely to be steep - during recessions or booms?
Explain what steps you would take under the assumptions that Both wages and prices are flexible.
What do you think happened to the money supply growth over the same time? What do you think happened to the real growth rate over the same time?
During periods of hyperinflation, real growth invariably declines and the unemployment rate rises sharply. Explain the mechanism by which this occurs.
What were the principal factors that caused the inflation rate to fall so much? Explain whether or not this is an example of Phillips curve tradeoff at work?
The guidelines remained in place under Johnson, but the rate of inflation gradually rose to almost 6%. What factors rendered the guidelines ineffective?
Explain why the rate of inflation reacted so differently to similar changes in oil prices.
What caused unemployment to decline in the UK at the same time it continued to rise across the Channel?
What factors caused this tradeoff to occur in Britain but not in Continental Europe?
From 1993 through 1995, compensation per hour in the US rose an average of 2.2%. Using the standard labor market diagram, explain how these events were related.
Assuming that Krueger is correct, why is he less confident' that a further boost in the minimum wage would have no adverse effects?
Suppose real growth slows down to 2½% because of a change in consumer and business sentiment. How much would the unemployment rate change each year?
Explain how each of the given factors kept wage gains from accelerating. Demise of the efficiency wage and Reduced power of unions.
What impact do you think that had on the real wage and employment gains for the rest of the decade?
Over the period from 1979 through 1989, manufacturing employment fell by 1.6 million. What factors caused the relative decline in manufacturing employment?