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What can you say about the relative impact of monetary and fiscal policy on consumer spending?
The personal saving rate fell sharply over that period. Why did the saving rate fall after the Reagan tax cut but not after the Kennedy-Johnson tax cut?
Yet during that same period, the personal saving rate as reported by the BEA declined sharply. What factors accounted for this divergence?
What do you think would happen to total consumption? Purchases of consumer durables? The price of pharmaceutical company stocks?
In terms of the LCH, how would these changes affect current consumption plans of those 65 and older?
What were the principal factors that caused the ratio of the purchase of producers' durable equipment to GDP to rise so much during the 1990s?
Explain why you would advocate or oppose this bill as a lobbyist for General Motors, Disney, Exxon Mobil, Georgia Pacific and Citigroup.
If that indeed case do you think subsidy is good public policy? Would your answers be any different if McDonnell Douglas were still in business as a competitor?
Why did firms continue to boost their capital spending even as the rate of capacity utilization declined?
In order to explain the difference in growth rates of the economy during these two periods, what other information would you need?
Explain why you agree or disagree with this last sentence. What do you think would have happened to the personal saving rate?
How do you think the overall economy would have responded? However, suppose government saving had not declined.
The Federal funds rate averaged almost 10% even though the inflation rate for that period was 3.8%. Why do you think the Fed kept it so high?
Bond yields also fell sharply that year. Since funds rate was well below its equilibrium value, why didn't inflationary expectations push bond yields higher?
What causes an inverted yield spread, and why has it always been followed by a recession the next year?
In October 1987, the US stock market crashed, with the Dow Jones Industrial. Why did the decline in stock prices fail to slow the pace of economic activity?
What would you expect to happen to the yield spread under the following circumstances? An energy shock doubles the price of crude oil.
Why did higher interest rates fail to slow down the economy in 1977-8, but cause recessions in 1980 and 1981?
In 1979, Fed Chairman G. William Miller boosted the growth in the money supply in order to keep the economy. What was Miller's principal mistake?
Why would the Fed choose to keep the funds rate away from equilibrium for extended periods of time?
Use the IS/LM diagram to show what would happen to real output and interest rates when the following policy changes are implemented.
What measures of income poverty are favored by development economists? How do income poverty measures differ from the UNDP's Multidimensional poverty index?
Which country was able to stop privatization and how did they do it? From this film whose interest do you think the World Bank and the IMF represent?
Discuss the advantages and disadvantages of maintaining multiple manufacturing sites as a hedge against exchange rate exposure.
Will she fully, under, or over-insure against this risk, and why? What is her optimal bundle of contingent claims?